Adding Teens to Your Car Insurance: Costs, Coverage, and Savings

A new driver in the house means more freedom for everyone. Teens no longer have to ask for rides, and parents get a break from carpooling. This big step can feel both exciting and a little scary for many families, and it can also be expensive. 

Here’s what you need to know about the increased cost of adding teens to your car insurance—and how to keep those costs down.

How much will your auto insurance cost increase?

“I’ve seen premiums go up 25 percent to doubling, just by adding a youth driver,” says Toni Heidel, an insurance agent at AAA based in Florence, Kentucky.

Industry data backs this up—and in real dollars, that increase can be significant. Recent analyses show that adding a 16-year-old driver to a parent’s policy can raise annual premiums by several thousand dollars on average, in part because teen drivers are statistically more likely to be involved in crashes.

Can you obtain an insurance estimate?

Auto insurance companies can often provide an estimate even before your child starts driving. Let them know you plan to add a teen driver to your policy in about six months, and ask for a rough idea of what the cost might be, recommends Heidel.

Can shopping around help?

Shopping around with different auto insurance providers every two to three years is important, says Heidel, because companies upgrade their systems and the algorithms change. “It's about keeping the premiums down without decreasing your coverages,” she says.

Show the new company your declaration page—which lists your insurance type, covered drivers, coverage limits, deductibles, and premiums—and ask them to match the coverage.

What influences the cost?

Aside from the driver's age and years of behind-the-wheel experience, factors that influence premiums include the driver's sex, demographics, training, and grade point average (GPA). Insurance coverage for males typically costs more than coverage for females. 

The price will also vary based on the vehicle your teen drives, explains Dan Scroggins, vice president of sales of personal lines insurance at AAA Club Alliance in Cincinnati. “A sportier vehicle is going to cost more,” he says.

Are there discounts to seek out? 

Check with your insurance provider to see if they offer any driving programs for teens. Also, have your child take a defensive driving course, recommends Scroggins, as some insurance carriers will reduce the cost of coverage.

Students with high GPAs typically get a discount, so ask your insurance company what documentation you need to provide to qualify.

Let the insurance company know if your teen lives at college at least 100 miles away and doesn’t take a car. Heidel says you could get a significant discount during that time. “[The teen is] on the policy, but we don't have to rate them as a regular driver because they’re probably only going to be home on the weekends or maybe just for the holidays,” she says.

Are there coverage requirements?

There are no coverage requirements for teen drivers, aside from adding the driver to the policy. Heidel recommends, depending on your liability limits, a minimum of $250,000 per person, $500,000 per accident, and property damage coverage of at least $100,000.

How can you talk to your teens about staying safe?

Teen drivers will be rated as youth drivers until they are 25 years old, and any at-fault accidents will further increase car insurance costs. At one point, Heidel had three male teenagers on her car insurance policy, and she had conversations with her boys about the seriousness of careful driving.

“It's a hard conversation you have to have,” she says. “You're not a friend—you're a parent—and at that time, you're financially liable for that driver until they're out on their own.”

AAA offers resources to help parents coach their new teen drivers, including a templated Parent–Teen Driving Agreement. 

At the end of the day, smart planning can go a long way. Our teens gain their independence and stay safe while parents keep financial costs under control.