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. Today, we’re explaining everything you need to know about getting the cheapest car insurance as a teenage driver.
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 parents’ car insurance policy. This will significantly increase the cost of your parents’ 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 parents’ 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 Parents’ Policy Versus Getting your Own Insurance
Teenage drivers have a decision to make: you can stay on your parents’ policy or get your own insurance.
In almost every case, staying on your parents’ 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 parents’ policy.
However, you cannot stay on your parents’ policy if you are living away from home unless you’re at college.
Pros and Cons of Staying on your Parents’ 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.
Top Five 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.
- 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 cheap prices for teenage drivers.
- 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.
Drop Collision and Comprehensive Coverage for Maximum Savings
Up 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
The cheapest cars for teenage drivers to insure are low-value cars with lots of safety features.
If you can find a cheap economy car with a great safety rating, then you can pay the lowest possible rates for car insurance.
For comparison, the cheapest cars to insure in 2020 include the Honda Odyssey LX, Jeep Wrangler, Subaru Outback, Mazda CX-3, Honda HR-V, Honda CR-V, and Ford Escape.
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 parents’ 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 parents’ 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.