3 Ways to Reduce Teen Car Insurance

The top three ways to reduce teen car insurance are keeping the teenage driver on a parent's policy, buying a safe vehicle, and taking advantage of student auto insurance discounts. Keeping teen auto insurance costs low is just a matter of finding a good insurance company through research and review. Use our free tool below to find student car insurance rates from top-rated companies near you.

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Tonya Sisler has a Bachelor’s Degree from the University of South Carolina in Journalism and has worked for 15+ years in management. She has also completed a proofreading certification and is currently a professional writer.

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Brad Larson has been in the insurance industry for more than a dozen years. He started out as a claims adjuster for a national carrier. He has since switched to the agency side of the business. Brad is licensed in all P&C lines.

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Reviewed by Brad Larsen
Licensed Auto Insurance Agent

UPDATED: Jun 4, 2021

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Teen car insurance is at the top of the heap when it comes to cost, but there are ways to cut the costs for your teen and make their insurance more affordable. A primary way to reduce the cost of car insurance for drivers of any age is to compare and contrast estimates from several insurance companies.

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The most effective way to compare auto insurance rates is to establish the type and amount of coverage you need then submit the same level of insurance to different companies for estimates. Most companies will offer free estimates with no obligation to purchase the insurance, and you can include your current insurance company in the mix. You can mention you are looking to purchase insurance for a teen driver and are hoping to find the best cost for the best quality insurance.

Car insurance is a highly competitive field, so don’t be shy about asking what an insurance company may be able to do for you to help woo you over to its camp. Also, keep an eye on three ways to help reduce teen car insurance before you even let the bidding wars begin.

Teen Insurance Money Saving Tip No. 1

Once teens obtain a driver’s license, they are typically allowed to hold their own insurance policies. Establishing a policy in a teen’s name, however, may be the most expensive route to take, according to the Rocky Mountain Insurance Information Association (RMIIA).

Cutting costs may instead come from simply adding the teen to the parents’ existing policy as an additional driver. While this may still increase the overall premium, the rate of increase is generally lower than having a separate policy just for the teen.

You may also get a bit of leeway while the teen is still learning to drive. Some companies may not charge an additional premium until the teen officially gets his or her driver’s license. This gives you a free ride, so to speak, while the teen still holds only a driver’s permit.

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What You Don’t Want to Do

Being honest about adding a teen driver to your policy is a must, the RMIIA warns. If you simply let the teen drive on your policy without adding him or her as a driver on the policy, you may be guilty of being fraudulent. Fraudulent practices are generally frowned upon in any degree when it comes to insurance. You may put your entire policy at risk if you are found to be lying to the insurance company.

What You Want to Make Sure to Do

It is important to inform the insurance company when there are changes to your teen’s location, mainly when your teen heads off to college. You can end up getting a break on your insurance costs if a teen is no longer living at home and using the vehicle regularly but you still want to keep him or her on the policy.

A teen who is driving while living away at college or otherwise out of the home can merit different rates than a teen living at home, the Texas Department of Insurance says. Location is a factor when it comes to setting insurance rates, and your teen living in a new location can

Rates may increase in urban areas with higher risks of theft, damage, and collisions. Rates may decrease in rural areas with lower risks associated with driving in that area. If you child moves out of state, you should also check to make sure the policy has at least the minimum amount of coverage required for that particular state.

Your rates may also go down for other reasons related to your teen’s driving, says the Utah Insurance Department. Some insurance companies may offer a rate reduction once your teen hits the ripe old age of 18 and has gained more driving experience than he or she had from the get-go.

Removing a vehicle from your policy can also reduce rates. This may come into play if you or your teen no longer uses a certain auto that was part of his or her early driving experience.

Teen Insurance Money Saving Tip No. 2

The type of vehicle you choose for your teen to drive impacts your insurance rates, according to the RMIIA. Factors that go into setting rates for vehicles include the make, model, year, and market value. Rates also depend on how expensive the car is to repair, how safe it is to drive and how likely it is to be stolen.

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What You Don’t Want to Do

Handing over the family vehicle for a teen to drive may be the most economical solution on the surface, but it could end up costing you more in the long run. For starters, the family vehicle may be costlier to insure than a used car bought specifically with the teen driver in mind. Secondly, it may be costly to repair or replace if damage is done.

Buying a newly licensed teen a sports car may be another bad idea. Sports cars are usually expensive, flashy and fast, not factors that mix well with young drivers. The expense part can haunt you with costly repairs and high premiums. The flashy and fast aspects can backfire by encouraging teens to take undue driving risks, such as speeding, while driving the car.

An old jalopy is not a good choice, either. While such a vehicle may be very cheap to insure because it is not worth much, it may also be lacking vital safety devices and the stability and durability that is so very important for newly licensed drivers.

What You Want to Make Sure to Do

Researching a number of different vehicle types before handing over a car to your teen is a good idea. You can research safety by reviewing crash test results and safety statistics.

You can even keep an eye on the likelihood of the car being stolen by checking out the annual Hot Wheels report issued by the National Insurance Crime Bureau.

The report lists the top 10 vehicles stolen in any given year. Results for 2009 include the 1994 Honda Accord, the 1995 Honda Civic, the 1991 Toyota Camry and the 1997 Ford F-150 pickup. Other pickups on the list are the 2004 Dodge Ram and the full-size 1994 Chevrolet. The 2000 Dodge Caravan made the list, as did the 1994 Acura Integra, 2002 Ford Explorer, and 2009 Toyota Corolla.

Teen Insurance Money Saving Tip No. 3

Discounts may be available for your teen driver, even those at the most inexperienced level, the RMIIA says. Being a good student that maintains a B average or better can be worth a few bucks off the policy. In some cases, the good student discount can reach as high as 25%.

Being a good driver with no tickets or accidents can also merit a discount, as can gaining more experience on the road through an official driver’s education course. Such a course is typically more intense than the usual driver’s training offered at the teen’s school. Check with each particular insurance company to see what courses may apply for an additional discount.

The Utah Department of Insurance adds the possibility of extra-curricular activities into the potential savings mix. Mention the various youth organizations or groups to which your teen belongs to see if the insurance company may offer discounts for such affiliations.

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What You Don’t Want to Do

If your teen receives a traffic ticket or gets in a crash, not being honest about it with your insurance company can again lead to mounds of trouble down the road. Although a traffic ticket or crash may mean the teen loses the good driver discount and could even incur a penalty fee if he’s at fault for the accident, the increased premium is worth the honesty.

The state department of motor vehicles has infractions and accident on record, usually even if the driver does not report them. This means the insurance company, too, has access to these records. It is much better if you tell them about an infraction or crash than having them find out you were not upfront about the incidents.

What You Want to Make Sure to Do

Discounts can often go beyond just the teen, so researching additional discounts may save you even more money on your policy. Companies may offer discounts for insuring more than one vehicle with them. They may also give you a reduced rate for moving your other types of insurance, such as home or life insurance, into their realm.

Safety devices, security devices and low mileage may lead to discounts off auto insurance, and discounts are not the only ways to shave money off your rates. Increasing your deductible can lower your rates, as long as you can afford a higher deductible.

Regularly reviewing your policy can also bring savings to light that you perhaps were unaware existed. As cars get older, you may not need to keep a high level of collision or comprehensive coverage. You may not need to keep that type of coverage on the vehicle at all.

Going to the bare minimum coverage is not usually a good idea, especially with a new driver at the wheel. However, you can cut down on optional coverage that may not have been helpful in the past or for services you can obtain elsewhere. Cutting out optional insurance that covers towing, for instance, may be possible if you are already a member of an auto club that covers towing for its members.

Teen driving can be a costly endeavor all around, but finding quality insurance does not have to be. Keeping your teen covered is of the utmost importance, and finding insurance companies to do it at an affordable rate is possible through research and review.

Enter your ZIP now to research and review auto insurance rates with our FREE tool on this page!

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