Car Insurance 101 for Teen Drivers

By Abbey Tiderman 03.24.2015 blog
Policy And Cash

A long-time American right of passage, driving provides teens with an entirely new level of independence. As with most privileges, however, driving comes with some pretty big responsibilities. Safety is of course top priority, but one necessity many new drivers may not be aware of is the importance of having auto insurance coverage. In the event of an accident, car insurance protects you (and depending on the insurance type, others involved) from serious financial loss.

Students with a learner’s permit are generally covered under their parent’s existing insurance plan and don’t need to be added. Once you’ve gone through your state’s graduated driving program and have that driver’s license in hand though, the law requires that your name be added to an insurance policy. Typical car insurance policies must be renewed every six months, while some offer 12-month policies. Whether you start your own policy or are added to a parent’s plan, it’s your responsibility to make sure everything is set up so that there aren’t any lapses between coverage.

What else do you need to know before getting behind the wheel? Let’s explore some key questions when it comes to car insurance.

How Are Car Insurance Rates Determined?

When setting premium rates, insurance companies evaluate risk based on a variety of factors including age, gender, driving record, geographic location and type of car. Because teens are such inexperienced drivers and are statistically involved in far more accidents, they face the highest insurance premiums.

The National Safety Council found that a staggering “Half of all teens will be involved in a car crash before graduating from high school.” The cost of those crashes matter to insurance companies, and when you consider that 15- to 24-year-olds “account for 30 percent ($19 billion) of the total costs of motor vehicle injuries among males and 28 percent ($7 billion) of the total costs of motor vehicle injuries among females,” according to the Centers for Disease Control and Prevention, you can start to see why insurance costs so much for your age group—boys in particular.

How Can Students Save?

When families add a teen driver to their insurance policy, premiums tend to go up pretty significantly, but in most cases, it’s still more affordable than a teen driver getting his or her own policy. Most insurance agencies have discount programs that can help teen drivers and their families. Here are some ways you may be able to save:

1. Keep up Those Grades

If your grades are in the B average range or higher, you may qualify for a discount of anywhere from 15 to 35 percent on car insurance. Report cards or letters from your school administrator will prove your star student status, so go ahead and hit those books, hard!

2. Complete Driver’s Education

Enrolling in and completing an approved driver’s education course will likely get you a discount.

3. Diligent Driving

Most insurance companies provide a “Good Driver” discount to teen drivers who maintain clean driving records. Even one traffic violation incurred will result in the removal of that discount. The cleaner your driving record is over time, the lower your premiums will be.

4. Consider Your Car

You may find some savings if the car you’ll be driving has modern safety features like lane departure warning systems and anti-lock brakes. On the other hand, if you drive an old car that doesn’t carry a lot of value, it may be cheaper to insure.

Mid-sized sedans are highly recommended for teen drivers, as opposed to small cars that offer little protection, sporty cars or oversized vehicles and trucks prone to rolling over.

The likelihood of your car being stolen can also affect premium rates. According to a 2013 National Insurance Crime Bureau report, Honda Accords, Honda Civics, Chevrolet Pickups and Ford Pickups were stolen most often. The type of car you’ll be driving can impact your insurance rates so be sure to ask how different cars affect your premium.

5. Resident Student Discount

If you attend a college far enough from home, usually at least 100 miles away, and won’t be driving while at school, there may be some solid savings possibilities. Don’t worry; under this discount you’ll still get to use the family car with coverage during the summer and on breaks when you’re home!

6. Take a Safety Course

Insurance companies value teens that prioritize safe driving. Taking a course such as teenSMART will help reduce your chance of having an accident, and thus, you may get an insurance discount for doing so.

7. Make a Pact with Your Parents

Communication with your parents about a range of financial, health and safety topics is important, and insurance agencies acknowledge that. Many offer discounts to students and parents who sign a Parent-Teen Driving Contract acknowledging safe conduct on the road, which includes abstaining from texting, speeding and drinking while driving.


What Insurance Terms Should I Know?

Each state has its own insurance coverage requirements. Visit your state’s official website for details and information on that, but a few basic insurance terms regarding coverage to be aware of include:


Under collision, even if you are at fault in an accident, insurance will pay for damages to your vehicle. However, you may have to pay a set fee up front, also known as a deductible.


If your car is damaged in any way (perhaps by weather or fire), is stolen or is vandalized, the cost of repairs will be covered under comprehensive insurance. However, there may be a set deductible you must pay first.

bodily injury liability

If you are at fault in an accident, and as a result, someone else is injured or loses their life, your bodily injury liability insurance will cover associated costs.

medical payments

Depending on your specific policy, funeral or medical expenses will be covered for yourself or your passengers if you’re involved in an accident, regardless of who is at fault.

property damage liability

When an accident you’re at fault for damages another’s property, this type of insurance will cover the costs.

uninsured motorist bodily injury

Offering limited protection, uninsured motorist bodily injury insurance covers costs of injury or death to you or your passengers when an uninsured driver has struck your vehicle.

Where Can I Find Insurance Rate Quotes?

You can get free quotes online from most insurance agencies, and the rates can vary widely from company to company, so do shop around. Whether you’re looking for car insurance as an individual or alongside your parents, being able to compare various plans and the benefits that come along with those will help you make the best decision for you and your budget.

Driving & Insurance Resources

National Highway Traffic Safety Administration

Safer Car

Insurance Institute for Highway Safety/Highway Loss Data Institute

Centers for Disease Control Teen Driver Stats

American Automobile Association: Teen Driving


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