What is the Cheapest Car Insurance for Young Drivers?
Last Updated on October 16, 2022
Young drivers pay the highest rates for car insurance. Young drivers are inexperienced and high-risk, so insurers naturally charge more for car insurance.
Fortunately, there are ways to get cheap car insurance as a young driver. Today, we’re explaining how to get the cheapest car insurance for young drivers.
The Cheapest Car Insurance is a Basic Liability Plan
Every state requires drivers to have some type of liability coverage. This type of insurance protects other drivers on the road from any damage you cause.
If you want the cheapest car insurance as a young driver, then there’s nothing wrong with getting basic liability coverage. It lets you legally drive on the road without much-added protection.
Basic liability coverage consists of two components, including:
Bodily Injury Liability Coverage: This coverage protects other drivers from any damages you cause. It can cover another driver’s medical bills after an accident you caused, for example. It can also cover lost wages and other damages.
Property Damage Liability Coverage: This coverage reimburses property owners for any damage they inflict. It covers the other driver’s car repair costs, for example, or your neighbors’ repair costs after hitting their fence.
Certain states have additional minimum car insurance requirements. Drivers in North Carolina, for example, are required to have uninsured and underinsured motorist coverage. This insurance protects you during a collision with a driver who has no insurance or too little insurance.
By matching your state’s minimum requirements, you can legally drive on the road while paying the lowest possible amounts for car insurance.
Compare basic liability plans with top providers in your area. GEICO, USAA, and Nationwide all tend to offer the cheapest rates for young drivers, although rates fluctuate wildly across the United States.
What’s the Downside of Basic Liability Coverage?
There’s a big downside to basic liability coverage: you don’t get collision coverage or comprehensive coverage. Yes, you’re saving thousands of dollars per year on car insurance, but you’re missing out on a significant amount of coverage:
No Collision Coverage: Collision coverage covers any damage to your own vehicle after an accident. If you cause an accident and you were at-fault, then collision coverage compensates you for repairing or replacing your vehicle. Without collision coverage, you need to pay these costs out of pocket.
No Comprehensive Coverage: Comprehensive coverage covers the cost of repairing or replacing your vehicle after a non-accident event. If your vehicle is involved in a hit-and-run, for example, or if a tree branch falls on your windshield, then you might make a claim under comprehensive coverage.
These coverages are important. However, they’re not as important for older, cheaper vehicles. If you have an old vehicle that’s only worth $3,000, for example, then it may not be worth maintaining collision or comprehensive coverage. Even a minor accident will cause your car to be declared a total loss.
Pros and Cons of Maintaining Basic Liability Coverage
As a young driver, maintaining basic liability coverage is one of the best ways to get cheap car insurance. However, there are pros and cons of only having basic liability coverage.
- It offers the cheapest possible car insurance rates.
- It allows you to legally drive on the road.
- It will match your state’s legal minimum limits.
- It does not cover your own vehicle for accidents, theft, vandalism, storm damage, etc.
- It may leave you with too little coverage in a lawsuit.
- Certain states have very low minimums that can leave you dangerously underinsured.
Overall, it’s up to you to decide how much risk you want to take on. Maintaining basic liability coverage can save you (literally) thousands of dollars per year, but it also leaves you underinsured for many situations.
Get Listed Under Your Parents’ Policy to Save Money
Another helpful tip for a young driver is to get listed under a parent’s insurance policy. You can get listed under one or both of your parents’ policies as long as you are living at home.
In fact, most car insurance companies require you to be listed as a named driver on your parents’ policy as long as you are living at home.
As a young driver, getting listed under your parents’ policy will increase the cost of their policy significantly. However, it’s still generally less than you would pay for your own car insurance policy.
Let’s say your parents pay the nationwide average of about $100 per month for car insurance. Getting listed as a 16-year-old under your parents’ policy could easily double their insurance premiums to $200 per month ($2400 per year). However, getting your own car insurance as a 16-year-old costs, on average, $4,000 per year. You’re still saving a significant amount of money.
Are you still living at home? No matter what age you are, you should be able to get listed under your parents’ policy to access the cheapest insurance as a young driver.
Take Advantage of Young Driver Insurance Discounts
Car insurance companies offer dozens of different discounts. Many of these discounts are targeted specifically towards young drivers, including:
Good Grade Discounts
Many insurance companies now offer good grade discounts. If you have an average of B+ or higher in high school or college, then you can save 5% to 10% on car insurance premiums. Car insurance companies aren’t just being nice; statistics show that good students also tend to be low-risk drivers. You should qualify for this discount as long as you maintain your good grades.
Defensive Driving Course Discounts
Did you take part in a driver’s education program? Many insurance companies offer discounts of 5% to 15% for drivers who have completed some type of defensive driving course or driver training program. These programs have been statistically shown to reduce the risk of car accidents, so insurers are happy to provide a small discount.
Driver Tracking Device Programs
Many major insurance companies now offer discounts to drivers who temporarily install a tracking device (telematics). Some driver tracking systems consist of an app that runs every time you drive. Other systems are installed into your vehicle’s onboard diagnostic port. After installing the tracking device, the insurer manages your driving habits for a brief period of time. Then, based on your speed, mileage, braking habits, and other data, the insurance company can offer you a discount of anywhere from 5% to 30%. If you know you’re a good driver and don’t want to get looped in with all of the other bad young drivers, then these driver tracking programs may be the right choice for you. GEICO has DriveEasy, for example, Allstate has Drivewise and Milewise, and Nationwide has SmartRide.
Good Driver Discounts
Are you a good driver? You should receive a discount on car insurance for every year you go without making a claim or being involved in an accident. As a young driver, these discounts can take a few years to accrue (say, 3 to 5 years without making a claim). Once this discount is active, however, you can save hundreds per year on car insurance.
Paid in Full Discounts
Some young drivers split car insurance into manageable monthly payments. Other young drivers get a small discount for paying their car insurance in full. You can save 3% to 5% on car insurance by paying your premiums in full at the start of each year.
Equipment and Safety Feature Discounts
Do you have a modern vehicle with the latest safety features? Side airbags and similar features can help you save 10% or more on car insurance. Many young drivers drive older, cheaper vehicles with fewer safety features. If you drive a new vehicle, however, then these equipment discounts can help you save.
Wait to Get Older
As a young driver, there are only so many things you can do to get cheaper car insurance. At some point, your car insurance is as cheap it can be within your control. That’s why one of the best tips we can recommend is to wait to get older. As you get older and maintain a safe driving record, your rates will continue to drop substantially. In fact, once you reach your late 20s and early 30s, your car insurance premiums are fairly close to the lowest they’ll be. You pay the highest rates between ages 16 and 25, although rates always drop as you get older.
Which Companies Offer the Cheapest Car Insurance to Young Drivers?
Certain insurance companies appreciate having young drivers in their insurance pools. Young drivers pay higher premiums and help balance out the pool.
Other companies are less interested in insuring young drivers. They charge higher premiums to young drivers, preferring instead to insure low-risk, older drivers.
However, rates vary widely between regions, especially for young drivers. That’s why we recommend comparing insurance quotes today. Enter your ZIP code to find the cheapest car insurance providers in your region.
Final Word on Insurance for Young Drivers
The cheapest car insurance for young drivers is generally basic liability insurance that meets your state’s legal limits. It’s also possible to get cheap car insurance as a young driver by getting listed under your parents’ policy (assuming you’re still living at home) or by taking advantage of car insurance discounts for young drivers (like good student discounts or driver’s education course discounts).