Cheap Car Insurance for Young Drivers

Who is considered a new driver?

Each state sets its own minimum auto insurance requirements, and car insurance for new drivers will look the same as any other driver’s policy. While a lack of driving experience doesn’t change how much insurance you need, it will impact the price. Here are some examples of people who could be considered new drivers:

  • Teens
  • Older individuals without a driving record
  • People who immigrate to the U.S.

There’s no specific auto insurance policy for new drivers. You’ll be expected to purchase at least your state’s minimum required coverage, which typically includes bodily injury and property damage liability car insurance. Some states also require and personal injury protection.

What influences the price of insurance? 

Car insurance companies review a number of factors when giving estimates for coverage. Some center on the auto policy itself, but many others have to do with a driver’s demographics and driving record. Age and driving experience are two factors that insurers weigh heavily, as they’re key indicators of how likely a driver is to get into an accident.

Here are some of the main factors that influence

Here are some of the main factors that influence car insurance quotes:

  • Age
  • Gender
  • Marital status
  • Location
  • Vehicle make, model and mileage 
  • Credit score
  • Driving history  
  • Coverage limits

Car insurance rates by age and credit rating

Because having a poor credit score can make your rates go up, building good credit before you start driving is a smart way to get cheaper car insurance as a new driver. Here’s how car insurance rates compare between two age groups and across three credit ratings, according to our cost estimates.

Final Verdict

With multifaceted coverage, State Farm offers some of the most affordable rates for teens and young drivers who need auto insurance. It’s available in almost every state, and it provides comprehensive coverage with a number of easily accessible discounts.

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The cost of insuring young drivers

There are several considerations that go into the cost of insuring young drivers. The amount of driving experience, the type of license they have, and the make and model of their vehicle are three things at which insurance companies look. Typically, a longer driving history and clean record will lower rates. Most young drivers operate with a license to drive personal vehicles, but drivers with a license to operate larger vehicles such as busses and trucks with heavy towing capabilities may pay higher premiums for insurance as their vehicles and towed items may cost more to cover. Newer cars can also increase the cost of insurance because of the greater value of the vehicle compared to older models.

  • Adding to an existing policy – Parents who opt to add their young drivers onto their existing policy will see an increase in their overall insurance premium. However, it’s easier for new, inexperienced drivers to become insured this way. The young driver insurance policy cost won’t increase as much if the child is driving mom or dad’s car. If they are driving their own vehicle, the existing rate could increase by a few hundred dollars a month.
  • Opening a new policy – Opening a new car insurance policy for teens isn’t often recommended because of the high cost. Insurance companies consider these young drivers a higher risk and as such, it’s not uncommon for an auto insurance policy for teens to cost upwards of a thousand dollars per year. Many teens can’t afford these rates, even if they are working full time. It’s not impossible to find affordable car insurance for teens, especially if the vehicle being driven is older and doesn’t require comprehensive coverage.

How to Add a Teen Driver to your Car Insurance

For parents, it’s important that your teen driver has the proper amount of car insurance coverage before they get behind the wheel. Luckily, adding them to your auto insurance policy is easy. It may also be cheaper than getting them a new policy of their own. Contact a GEICO agent when your teen gets their permit or driver’s license to get a quote for a new driver on your policy.

Car insurance for first-time drivers

Teenagers aren’t the only ones driving for the first time. A person of any age who has lived in a large city and primarily relied on public transportation or who hasn’t had the means to purchase a car could also be considered a new driver.

As we mentioned above, factors like the vehicle you choose, as well as your age, location and credit score, will impact the price of car insurance. Even though you may not have experience on the road, if you’re over 25, you may see lower rates than a teen driver.

Another thing to consider is that if you live in an area that has public transit or you don’t plan on driving much, there are alternatives to traditional insurance, like usage-based insurance. Also known as pay-per-mile insurance, this type of coverage measures driving behaviors and mileage and uses this data to set rates. By linking a monthly bill to the actual time on the road and good driving habits, usage-based insurance policies usually end up costing customers less than traditional auto insurance, according to the National Association of Insurance Commissioners.

Usage-based policies may not be available in every state. They’re also not a good option if you drive often or have a long commute, and people with poor driving habits may actually see their rates increase.

Car Insurance and Accidents

What Factors Affect the Cost of Car Insurance for Young Drivers?

Teens have little to no experience behind the wheel, so rates can be much more expensive than for the average driver. Other factors that can impact the cost of auto insurance for teens are the amount of coverage you buy, the kind of car you drive, and how much you drive each year. Moving violations or accidents on your driving record can also increase rates.

Expert Insights to Help You Make Smarter Financial Decisions

ValuePenguin has curated an exclusive panel of professionals, spanning various areas of expertise, to help dissect difficult subjects and empower you to make smarter financial decisions. Read on for auto insurance insights. Do you feel that parents having their teen children take on the responsibility of a big purchase, such as a car, provides a teachable moment that is worth the monetary cost? Why or why not? Some states prohibit the use of gender to determine insurance rates, even though the motor vehicle death rate of male 16- to 19-year-olds is nearly double that of females of the same age. How do male and female teens pose different levels of risk to insurers? The North Carolina Department of Transportation has the right under law to suspend teens’ driving privileges if they drop out of school or do not pass at least 70% of their courses. Should academics play a strong role in a teen’s eligibility to drive? Why or why not? What is the psychological difference between learning in the classroom and learning “on the road” as a driver? Emily Barkley-Levenson, Ph.D. Assistant Professor of Psychology Read Answer The commentary provided by these industry experts represent their viewpoints and opinions alone.

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Emily Barkley-Levenson, Ph.D Assistant Professor of Psychology, Hofstra University Do you feel that parents having their teen children take on the responsibility of a big purchase, such as a car, provides a teachable moment that is worth the monetary cost? Why or why not? A lot of the attributes that make up what it means to be responsible, like self-control and delayed gratification, are still developing during adolescence and into early adulthood. In fact, the part of the brain that is responsible for these processes, the prefrontal cortex, is still maturing until around age 25. These are also skills that can be trained and improved with practice, which means that the teen years are a great time to work out those self-control muscles, so to speak. Taking on increased responsibility and autonomy with a car can provide an adolescent with lots of chances to build up their self-control and delayed gratification skills. There’s also a phenomenon called the endowment effect, where we value things more if they belong to us or we have a sense of ownership over them. So having your teen pay for their car themselves (or at least contribute their own money toward it) should increase the value they place on it, leading to safer and more responsible behavior. Some states prohibit the use of gender to determine insurance rates, even though the motor vehicle death rate of male 16- to 19-year-olds is nearly double that of females of the same age. How do male and female teens pose different levels of risk to insurers? The research is quite clear that men engage in more risky behaviors than women, including wearing seat belts less frequently and running yellow lights more often. Women perceive a higher likelihood of negative consequences and less enjoyment from these actions than men do, which leads to less risk-taking behind the wheel. I expect these findings would play out similarly with adolescent boys and girls as well. That said, statistical averages can’t predict the actions of any particular individual; teens of all genders can be reckless and risk-taking, and there are many teen boys who are extremely safe drivers. The North Carolina Department of Transportation has the right under law to suspend teens’ driving privileges if they drop out of school or do not pass at least 70% of their courses. Should academics play a strong role in a teen’s eligibility to drive? Why or why not? The reasons why driving privileges are revoked typically have to do with safety (underage possession of alcohol, speeding or reckless driving, etc.). In this case, if there isn’t a strong connection between dangerous driving and poor academic performance, then linking the two in terms of policy doesn’t seem particularly effective. Academic performance does relate to other health-risk behaviors (like violence and drug use), but this is one of those cases of correlation not being the same thing as causation: Other factors such as family stress and poverty can make teens more likely both to underperform academically and to engage in health-risk behaviors, but skipping school doesn’t cause you to drive more poorly. What is the psychological difference between learning in the classroom and learning “on the road” as a driver? Something that shows up over and over again in research with adolescents is a big difference in behavior between “cold” settings (nonemotional, intellectual contexts like a lab or a classroom) and “hot” settings (emotional situations in the real world, especially when peers and social pressure are involved). A teen may make entirely rational and safe decisions in the classroom (or when a driving instructor is in the car) but take risks on the road when they are more “amped up” by the presence of their friends. Back to all experts {“backgroundColor”:”white”,”content”:”\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\”ShortcodeImage–root left\” \u003E\n \u003Cdiv class=\”ShortcodeImage–image-container \”\u003E\n \u003Cimg alt=\”headshot of expert\” class=\”ShortcodeImage–image lazyload\” style=\”width: 60px;\” data-src=\”https:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_60\/v1\/emily-barkley-levenson_uajgkh\” src=\”https:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_2.0,e_blur:1000,f_auto,h_1600,q_1,w_60\/v1\/emily-barkley-levenson_uajgkh\” data-srcset=\”https:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_60\/v1\/emily-barkley-levenson_uajgkh 1x, https:\/\/res.cloudinary.com\/value-penguin\/image\/upload\/c_limit,dpr_2.0,f_auto,h_1600,q_auto,w_60\/v1\/emily-barkley-levenson_uajgkh 2x\”\u003E\n \u003C\/div\u003E\n\u003C\/div\u003E\u003C\/p\u003E\n\n\u003Ch3 id=\”expert-emily-barkley-levenson\”\u003EEmily Barkley-Levenson, Ph.D.\u003C\/h3\u003E\n\n\u003Cp\u003EAssistant Professor of Psychology, Hofstra University\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\”ShortcodeToggle–root ShortcodeToggle–article \” id=\u003E\n \u003Cbutton class=\”ShortcodeToggle–toggle\” onclick=\”this.parentNode.classList.toggle(‘ShortcodeToggle–open’);\”\u003E\u003Cp class=\”ShortcodeToggle–label\”\u003ESee their advice\u003C\/p\u003E\u003C\/button\u003E\n \u003Cdiv class=\”ShortcodeToggle–contents-wrapper\”\u003E\n \u003Cdiv class=\”ShortcodeToggle–contents\”\u003E\n \u003C\/p\u003E\n\n\u003Ch4\u003EDo you feel that parents having their teen children take on the responsibility of a big purchase, such as a car, provides a teachable moment that is worth the monetary cost? Why or why not?\u003C\/h4\u003E\n\n\u003Cp\u003EA lot of the attributes that make up what it means to be responsible, like self-control and delayed gratification, are still developing during adolescence and into early adulthood. In fact, the part of the brain that is responsible for these processes, the prefrontal cortex, is still maturing until around age 25. These are also skills that can be trained and improved with practice, which means that the teen years are a great time to work out those self-control muscles, so to speak. Taking on increased responsibility and autonomy with a car can provide an adolescent with lots of chances to build up their self-control and delayed gratification skills. \nThere\u2019s also a phenomenon called the endowment effect, where we value things more if they belong to us or we have a sense of ownership over them. So having your teen pay for their car themselves (or at least contribute their own money toward it) should increase the value they place on it, leading to safer and more responsible behavior.\u003C\/p\u003E\n\n\u003Ch4\u003ESome states prohibit the use of gender to determine insurance rates, even though the motor vehicle death rate of male 16- to 19-year-olds is nearly double that of females of the same age. How do male and female teens pose different levels of risk to insurers?\u003C\/h4\u003E\n\n\u003Cp\u003EThe research is quite clear that men engage in more risky behaviors than women, including wearing seat belts less frequently and running yellow lights more often. Women perceive a higher likelihood of negative consequences and less enjoyment from these actions than men do, which leads to less risk-taking behind the wheel. I expect these findings would play out similarly with adolescent boys and girls as well. That said, statistical averages can\u2019t predict the actions of any particular individual; teens of all genders can be reckless and risk-taking, and there are many teen boys who are extremely safe drivers.\u003C\/p\u003E\n\n\u003Ch4\u003EThe North Carolina Department of Transportation has the right under law to suspend teens\u2019 driving privileges if they drop out of school or do not pass at least 70% of their courses. Should academics play a strong role in a teen\u2019s eligibility to drive? Why or why not?\u003C\/h4\u003E\n\n\u003Cp\u003EThe reasons why driving privileges are revoked typically have to do with safety (underage possession of alcohol, speeding or reckless driving, etc.). In this case, if there isn\u2019t a strong connection between dangerous driving and poor academic performance, then linking the two in terms of policy doesn\u2019t seem particularly effective. Academic performance does relate to other health-risk behaviors (like violence and drug use), but this is one of those cases of correlation not being the same thing as causation: Other factors such as family stress and poverty can make teens more likely both to underperform academically and to engage in health-risk behaviors, but skipping school doesn\u2019t \u003Cem\u003Ecause\u003C\/em\u003E you to drive more poorly.\u003C\/p\u003E\n\n\u003Ch4\u003EWhat is the psychological difference between learning in the classroom and learning \”on the road\” as a driver?\u003C\/h4\u003E\n\n\u003Cp\u003ESomething that shows up over and over again in research with adolescents is a big difference in behavior between \”cold\” settings (nonemotional, intellectual contexts like a lab or a classroom) and \”hot\” settings (emotional situations in the real world, especially when peers and social pressure are involved). A teen may make entirely rational and safe decisions in the classroom (or when a driving instructor is in the car) but take risks on the road when they are more \”amped up\” by the presence of their friends.\u003C\/p\u003E\n\n\u003Cp\u003E\u003Cdiv class=\”ShortcodeAlign–root ShortcodeAlign–horizontal-center\”\u003E\n \u003Cdiv class=\”ShortcodeAlign–container\”\u003E \n \u003Cspan\u003E\u003Ca class=\”ShortcodeLink–root Button–root Button–primary Button–auto-width\” title=\”Back to all experts\” href=\”#expertadvice\”\u003EBack to all experts\u003C\/a\u003E\u003C\/span\u003E\n \u003C\/div\u003E\n\u003C\/div\u003E\n\u003C\/p\u003E\n\n\u003Cp\u003E\n \u003C\/div\u003E\n \u003C\/div\u003E\n\u003C\/div\u003E\n\n”,”padding”:”double”}

Best Cheap Car Insurance for Teens FAQ

No. It’s usually cheaper to keep a teen driver on a parent’s policy. There are some cases where a separate auto insurance policy can be cheaper. For example, if a parent has a sports car on the policy, and the insurance company matches the teen driver with the costliest vehicle (some do), then the combination of the car and novice teen driver could push rates sky high.

For national averages, we found the cheapest rate for a family with a teen driver from American Family, Geico, Nationwide, State Farm and USAA. Our rankings also factor in complaints and collision repair scores.

You normally need to add a teen to your insurance when they get a driver’s license. Most insurance companies will cover the teen with your policy while they have a learner’s permit. So if they spend two years learning to drive with a permit—for example, from ages 16 to 18—you can enjoy those two years before high rates kick in.] However, some companies, like USAA, request that you add the teen as soon as they get their permit. With this in mind, don’t assume your teen with a permit is covered. Instead, ask your agent when the young driver must be added (during the permit stage or when fully licensed).

When should I consider purchasing auto insurance for my teen?

Purchasing auto insurance for teens typically occurs after they pass a driving test and get their licenses. Before obtaining a driver’s license, young drivers with a learner’s permit should also be covered under an auto policy. Most auto policies will cover teens with a learner’s permit that are driving the car of an adult in the same household, but it’s never a bad idea to confirm coverage with your car insurance provider.

Most insurance agencies will require licensed drivers — even teens — living in the same household to be covered. Younger drivers are typically added to their parent’s policy as it’s usually more affordable. The insurance laws do vary from state to state, so it’s always a good idea to speak to your agent about young driver insurance as your child approaches driving age.

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