How to Get the Cheapest Car Insurance for Teens
Last Updated on December 16, 2022
Getting cheap car insurance as a teenager can be challenging. Teens pay higher rates for car insurance than drivers of any other age.
Getting cheap teen car insurance is challenging – but it’s certainly not impossible. Below, we explain everything you need to know about getting the cheapest car insurance as a teenage driver.
- How Car Insurance Works as a Teenage Driver
- What Coverage Do Teens Need?
- Staying on your Parent's Policy Versus Getting your Own Insurance
- Discounts for Teen Drivers
- Top Twenty Cheapest Car Insurance Companies for Teens
- Drop Collision and Comprehensive Coverage for Maximum Savings
- Drive a Cheaper, Safer Car
- Insurance Premiums for Teenage Drivers Vary Widely: Compare Quotes Today
- Final Word on Auto Insurance for Teens
How Car Insurance Works as a Teenage Driver
Teenage drivers need to follow the same car insurance rules as adults. Each state has its own car insurance requirements. In most states, drivers are required to have some level of basic liability insurance, which includes property damage liability coverage and bodily injury liability coverage.
If you are still living at home with your parents, then you can get listed under your parent’s car insurance policy. This will significantly increase the cost of your parent’s car insurance policy, although it’s much cheaper than getting your own car insurance.
Alternatively, as a teenage driver, you can also get your own car insurance policy.
If you are under 16, then you will need the signature of a legal guardian on the insurance contract. As a minor, you cannot sign a legally-binding contract – including a car insurance contract – without a legal guardian’s signature.
If you are living away from home, then you will need to have your own car insurance policy. You cannot share car insurance with your parents when you are living at a separate address.
There is an exception to this rule for college students. If you are living away from home and going to college, then you should be able to stay on your parent’s insurance policy and remain covered.
What Coverage Do Teens Need?
Specific car insurance requirements vary between states. However, teenage drivers are legally required to have the exact same car insurance as older drivers:
- Bodily Injury Liability Coverage: This coverage covers certain damages incurred by other drivers as a result of your actions, including the hospital bills and lost wages of anyone injured in a car accident that was your fault.
- Property Damage Liability Coverage: This coverage covers damage you inflict on another person’s property. It covers the cost of repairing the other driver’s car in an accident where you were at fault, for example.
- Other Requirements: Certain states require teen drivers to have other types of car insurance, including uninsured/underinsured motorist coverage or personal injury protection (PIP).
You don’t need to worry about meeting these specific requirements. If you buy car insurance in your state, then that car insurance is guaranteed to meet the minimum required coverage limits.
Drivers in California, for example, are required to have a minimum of $15,000 of bodily injury liability coverage per person, $30,000 of bodily injury liability coverage per accident, and $5,000 of property damage liability coverage. This policy is expressed as a 15/30/5 plan. California, like certain other states, also requires drivers to have $15,000 of uninsured motorist bodily injury coverage per person and $30,000 of uninsured motorist bodily injury coverage per accident.
Staying on your Parent’s Policy Versus Getting your Own Insurance
Teenage drivers have a decision to make: you can stay on your parent’s policy or get your own insurance.
In almost every case, staying on your parent’s policy will be the cheapest option for teenage drivers. Instead of paying $6,000 per year for your own policy, you might pay just $2,000 per year under your parent’s policy.
However, you cannot stay on your parent’s policy if you are living away from home unless you’re at college.
Pros and Cons of Staying on your Parent’s Policy
- Pro: Cheapest car insurance for teen drivers
- Pro: Get the same car insurance as your parents at a cheaper price
- Con: Not available for teenage drivers who live away from home (except for college students)
Pros and Cons of Getting your Own Policy
- Pro: More freedom and independence
- Pro: Build an insured history and credit history from an early age
- Con: Most expensive option for teen drivers
Discounts for Teen Drivers
One of the best ways for teen drivers to get the cheapest rates on car insurance is to take advantage of discounts. There are dozens of car insurance discounts available for teen drivers. If you qualify for just a few of these discounts, then you can save hundreds – even thousands – per year.
Student Living Away from Home Discount: If you are living away from home and going to college full time, then you may qualify for a “student living away from home” discount. This discount lets you continue to drive a vehicle when visiting your home – say, during school holidays.
Telematics or Driver Tracking Program Discounts: Many insurance companies also offer driver tracking program discounts. These telematics programs require you to install a tracking device in your vehicle (or use an app) to track your driving habits. Good drivers can save up to 30%. As a teenage driver, that could mean thousands of dollars in savings.
Defensive Driving Course Discounts: Did you take a driver’s education program? Are you planning to take one? If so, then you may qualify for a defensive driving course discount. Not only do these courses get you an insurance discount, but they can also help you learn how to be a safe driver.
Top Twenty Cheapest Car Insurance Companies for Teens
Certain car insurance companies are known for offering relatively cheap rates to teenage drivers. Based on our research, here are the top five cheapest car insurance companies for teen drivers:
- USAA: If you or a parent is an active duty or retired member of the military, then you may qualify for USAA car insurance. USAA is one of the cheapest and best-rated car insurance companies in the United States. If you or an immediate family member qualifies for USAA, then USAA car insurance is typically the cheapest option for teenage drivers.
- GEICO: GEICO tends to offer the cheapest car insurance prices in America for drivers of any age. In many states, they’re the cheapest or second cheapest option for teenage drivers. GEICO is available to drivers nationwide.
- Travelers: Travelers offers surprisingly affordable insurance premiums to teenage drivers in many states. Typically, it ranks just below GEICO and USAA in terms of cheap rates for teenage drivers.
- Allstate: Allstate is one of America’s largest car insurance companies, so it makes sense they have low prices for teenage drivers. Teens can also take advantage of the many discounts available from Allstate.
- Progressive: Progressive offers affordable car insurance to teenage drivers in all 50 states. Progressive is also one of the best car insurance companies for discounts.
- State Farm: State Farm insures more vehicles across the United States than any other company on this list. They’re large, well-known, and great for teen drivers who want the convenience and affordability of a large provider.
- Liberty Mutual: Liberty Mutual is popular with all drivers – including teens – for allowing drivers to mix and match policies to pay for what they need. Although Liberty Mutual has average ratings for claims satisfaction, the company is one of America’s largest insurers for a reason.
- Farmers: Farmers consistently ranks highly for customer service and claims satisfaction, and it has one of the highest rates of renewal among major insurers. Farmers also offers competitive prices and extensive discounts to teen drivers across the country, and it may be one of the cheapest options in your area.
- Nationwide: Nationwide is a good choice for teen drivers with a clean record and a good credit score (assuming you have a credit score). However, it’s less ideal for drivers with a poor record, bad credit score, or other factors increasing risk.
- AAA: AAA offers multiple subsidiaries across the United States, and they frequently rank among the best insurers in multiple states. As a teen driver, you may pay higher rates with AAA – but you can enjoy perks like superior customer service, better claims satisfaction, and more.
- American Family: American Family lives up to its name by offering competitively-priced car insurance for your entire family – including teen drivers. Although American Family has average ratings for claims satisfaction, customer service, and pricing, it could be one of the best choices for teen drivers in some states – especially if parents already have an American Family policy.
- Erie: Erie provides car insurance in 12 states, including Illinois, Indiana, Kentucky, Maryland, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, and Wisconsin, along with Washington, D.C. If Erie is available in your area, then it’s one of the best options as a teen driver, and Erie is known for its high claim satisfaction ratings and overall customer handling.
- Kemper: Available in all 50 states, Kemper has over 34,000 agents nationwide and is one of the largest insurers in America. Today, Kemper remains popular among teen drivers looking for an extensive range of discounts and a wide range of policy customization options – from full coverage policies to minimum liability plans.
- MetLife: MetLife offers home, auto, life, dental, and vision insurance across the United States, and they’re best known for managing employee benefit plans. MetLife also offers personal car insurance in 44 states, earning solid ratings for teen drivers for its wide range of discount opportunities.
- The Hartford: The Hartford isn’t the cheapest car insurance for teen drivers, but it frequently ranks as one of the best car insurance companies for claims handling. Overall, The Hartford’s customers tend to be more satisfied with the claims process than with virtually any other insurer on this list.
- Mercury: Mercury offers cheaper car insurance premiums than average in the United States, and many teen drivers save hundreds per year with Mercury. Mercury offers car insurance in 11 states, including Arizona, California, Florida, Georgia, Illinois, Nevada, New Jersey, New York, Oklahoma, Texas, and Virginia, with specific teen insurance policies varying between states.
- Amica: Amica is the oldest mutual insurance company in the United States. As a mutual insurance company, Amica is owned entirely by policyholders – not by hedge funds, shareholders, or private individuals. Amica is the best option for teen drivers in select states, and the company is particularly popular in New England and the Northeast.
- Shelter: Shelter may be the best car insurance company for teen drivers in the Southeast and Southern United States. The company frequently scores better than competitors in its covered areas. Shelter is available to teen drivers in Arkansas, Colorado, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Nebraska, Nevada, Ohio, Oklahoma, and Tennessee.
- Farm Bureau: If your state has a Farm Bureau subsidiary – like North Carolina Farm Bureau – it may be the best option as a teen driver. Farm Bureau subsidiaries are known for personalized customer service (often provided by agents in your community), competitive prices, and strong coverage options, among other perks.
- COUNTRY Financial: COUNTRY Financial offers car insurance and other types of insurance coverage, and they’re a strong option for teen drivers in certain states. COUNTRY Financial is available in roughly half of the United States.
Drop Collision and Comprehensive Coverage for Maximum Savings
Above, we mentioned that all teen drivers are required to have liability coverage by law. However, you are not required to have collision coverage and comprehensive coverage. These policies are optional in every state.
If you want the cheapest rates on car insurance, then you can drop premiums by 50% or more by removing collision and comprehensive coverage. Here’s how each coverage option works:
Collision Coverage: Collision coverage covers the cost of repairing damage to your own vehicle after an accident where you were at fault. If you don’t have collision coverage and you cause an accident, then you will need to pay for your own car repairs out of pocket.
Comprehensive Coverage: Comprehensive coverage covers non-accident-related damage to your vehicle, including vandalism, theft, hail damage, storm damage, fallen branch damage, and more. If you don’t have comprehensive coverage, then you will not receive compensation if your car is broken into, vandalized, stolen, or damaged by the environment.
Dropping these coverage options is generally a bad idea for newer, high-value vehicles. If anything happens to your vehicle, then you might have to pay for that damage out of pocket.
However, many teen drivers do not drive new, high-value vehicles. They drive older, used vehicles. If your vehicle isn’t worth much money, then you may be able to safely drop collision and comprehensive coverage to save thousands on teenage driver car insurance.
Drive a Cheaper, Safer Car
If you can find a cheap economy car with a great safety rating, then you can pay the lowest possible rates for car insurance.
Insurance Premiums for Teenage Drivers Vary Widely: Compare Quotes Today
We mentioned the cheapest car insurance companies for teenage drivers above. Yes, USAA and GEICO tend to offer the cheapest car insurance to teenage drivers in many states. However, they don’t offer the cheapest car insurance in every state.
That’s why it’s important for teenage drivers to compare quotes from all major car insurance companies. Sometimes, a small regional insurance company will offer cheaper rates than a nationwide brand like GEICO.
Enter your ZIP code and spend a few minutes comparing car insurance quotes online.
Final Word on Auto Insurance for Teens
If you want the cheapest car insurance as a teenage driver, then you need to get listed under your parent’s policy. This is an option for anyone still living at home with their parents or for college students living away from home.
If you cannot get listed under your parent’s policy, then you will need your own car insurance. As a teenage driver, you will pay high rates for car insurance. However, by dropping collision and comprehensive coverage and taking advantage of discounts, you can pay the cheapest possible price on car insurance as a teenager.