How can I find cheap car insurance for young drivers?

It can be difficult to find cheap car insurance for young drivers. However, they can take advantage of good student discounts if they're in school, and if you're a parent, you can help them find an affordable used car. Car insurance rates for young drivers average at $551 per month, and your car insurance costs can increase if you have a young driver to your policy. You can always lower the cost if they leave the car at home while they go off to college, and there's always the possibility that there are other discounts available to help mitigate the higher cost.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP® Joel Ohman

UPDATED: Feb 27, 2022

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Here's what you need to know...

  • If your teenager is going to drive they will need insurance
  • Car insurance for young drivers is very expensive because of the heightened risk involved with an inexperienced driver
  • It’s not easy to find cheap car insurance for young drivers, but you can shop around to see who offers the best rate
  • Usually you can find the best deal with your current car insurance company if you have a good history with them

A driver’s license is a turning point in every teenager’s life, but it does not come without a cost. Usually in the form of more expensive car insurance rates for young drivers. But, there are some ways to find cheap young driver insurance rates.

Unfortunately, sometimes finding the cheapest car insurance does not always mean the best in terms of what comes with the policy. Ensuring that you have an affordable coverage should also mean you have a reputable company.

Use independent rating tools to check the stability of insurance companies, and always pay attention to what customers are saying about the auto insurance company you’re questioning. Rather than going with the cheapest option, search for the company that works with young drivers, offering discounts for a clean driving record or good grades.

While you won’t be able to find the lowest average rates for a teenage auto insurance policy, you can at least work with a company who attempts to fit into your budget.

You can also use online tools. We have a free comparison tool that will let you compare quotes from different companies.

Table of Contents

What kind of car insurance does a young driver need?

If you remember back to when you first started driving, there may have been a lot of learning curves. No matter how much education you get in a classroom or a driver’s education course, there is no better teacher than experience.

Unfortunately, that usually means that mistakes are part of the education, and sometimes those mistakes can be quite costly. Experience in this case means that you will see lower costs. You’ve had time to practice safe driving habits. However, if you’re a teen driver, you’ve just started your driving journey, and insurance companies are going to take that into consideration.

No matter what type of car your teenager is going to drive, he needs to carry liability insurance for it. Since young drivers are more prone to be responsible for accidents, it is a good idea to purchase more liability insurance than the state requires as a minimum.

This is more expensive in premiums, but it will pay for itself if there ever is an accident for which your young driver was at fault.

The type of car your young driver is going to be using may or may not warrant comprehensive or collision insurance. If the car is a beater car with little value, you may be able to save the expense of comprehensive and collision insurance.

However, if the car becomes damaged or totaled there will be no insurance payout so the cost of repairs or replacement will have to be out of pocket.

If the car is a newer car or a car that still has market value, then it may be a good idea to add the additional coverage to the insurance policy.

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What are some obstacles young drivers may face?

Since car insurance for young drivers is so expensive, it is tempting to buy the cheapest car insurance you find. However, there could be pitfalls with that method, so be very careful when choosing a car insurance provider.

If car insurance is cheap, but the policy is severely lacking or flawed, you may end up without the coverage you and your young driver need.

Also, if you choose a car insurance company that is not reputable or has a sketchy financial rating then you may end up not being able to collect on a payout.

Another risk factor is choosing a little-known car insurance company that is not legitimate. It could be a fraudulent company taking your premiums and then disappearing when it’s time to pay a claim.

Review every car insurance policy very carefully. Wording can be everything in an insurance policy, and if you have a claim with an insurance company that is questionable at best, you may find yourself fighting for your benefits in a court of law.

Depending on how the policy is written, the judgment may be in favor of the insurance company, which means you will be out-of-pocket for the car damage costs and your court costs as well. So while you should shop around, be careful of the final choices you make.

What should you look for when shopping for car insurance?

To find cheap car insurance for young drivers, secure several quotes for comparable coverage to see who can offer you the most affordable rate. Keep in mind that rates will differ by gender. While this is currently changing, there are still statistics out there that rate drivers by their gender. Finding cheap car insurance for young female drivers will be different than finding cheap car insurance for young male drivers.

There are other factors that go into what any driver will pay. Auto insurance providers usually look at credit scores, marital status, and driving record. There is a wide range of variables for most drivers, but some of these won’t apply to a teenager who has just started driving. Always ask what factors are being used to determine a young driver’s rates.

Make sure you are comparing the same deductibles for the same coverage amounts as well. This will help you get a fair picture of who can truly offer you the cheapest car insurance rates.

Narrow down your choices to two or three selections.

What should you look for in a company?

At this point your next step should then be to review the car insurance company’s history to see the following:

  • How long they have been in the insurance industry
  • What their average financial strength rating is
  • How their customer service is reviewed
  • How many payouts they have on the average
  • What their claims to payout ratio is
  • How fast their claims handling process takes
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What are some ways that a young driver can save money on car insurance?

One great way young drivers can reduce their premiums is to do their best in school. Many insurance companies give discounts to students that have exceptional academic performance. Keep in mind that in some cases this only applies if they are a full-time student, so ask before assuming.

Auto insurance rates can also depend on the vehicle that will be driven. One of the main factors used to determine insurance premiums is the year, make, and model of the vehicle. Newer cars are more expensive to insure, and older cars with a myriad of safety features cost less to insure.

It is not a good idea to purchase a brand new, high-end car as a young driver. This is a surefire way to raise your insurance rates.

A vehicle that is a few years old with some built-in safety features will be your best bet.

This will drastically reduce the amount of money spent on insurance and will also provide a safer driving experience. Additionally, you will have peace of mind knowing that you are in a safe and reliable car.

Safety is extremely important with teenagers since they have the highest fatality rates among drivers.

Vehicles that operate at high speeds and that have a ton of “fun” features can distract young drivers, but insurance companies reward those who make choices based on safety when it comes to purchasing a car.

Are there other ways to save money?

Another way to save money is by signing up for driver’s education courses.

Most students have the opportunity to take these classes at school. However, there are additional courses that can be taken that can help equip the young driver with the proper knowledge needed to operate a vehicle safely.

Driver’s education courses teach drivers the laws for their particular state as well as the importance of driving safety.

Taking these courses prior to obtaining vehicle insurance will help to decrease rates. In fact, substantial discounts are given to teens that complete these courses.

While some states require teen drivers to take driving courses in school, many states do not.

If you do not have any courses in your particular town, you can sign up online.

In addition to driver’s education courses, here are some other ways that you can get cheap car insurance as a young driver:

  • Add yourself to your parents’ car insurance policy
  • Work with insurance agents that cater to new and young drivers
  • Ask about specific discounts you may qualify for
  • Compare rates between companies at least once a year

Online insurance rate comparisons are the best way to shop for cheap insurance for young drivers. You can get rates from a variety of companies right from home without calling around to different agents or insurance providers. With online insurance quote comparisons, you have the ability to research a number of companies.

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What else is there to know about obtaining affordable rates?

Insuring teen drivers is going to cost more than older, experienced drivers. There are ways to keep the premiums for a teen’s insurance lower, including buying an economical car that doesn’t need full coverage. Teens can get discounts on insurance. One of these discounts is for having good grades in high school or college

Parents are well aware that adding their teen drivers to their car insurance policies will significantly raise their rates.

Parents with teenagers who are about to receive their licenses may be asking if it’s possible for them to get affordable car insurance for young drivers. The answer is that it can absolutely be found, it may just take a little bit of careful planning and shopping around.

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Is it better to add a teen to the parent’s policy or purchase a separate policy?

One way to obtain the most affordable car insurance for young drivers is to add them to their parents’ policies. Adding them to an existing policy will result in higher premiums, but a policy only in the name of the young driver would be much more costly.

Drivers who are in their first three years of having their licenses are in a high-risk category. These drivers cause several auto accidents due to their inexperience.

Car insurance companies will charge a very high premium if the new young driver is applying for car insurance on his or her own. The problem will be even worse if the young driver is male.

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What happens when a teenager gets ready to go to college?

When teenagers go away to college, this presents their parents with another chance to obtain more affordable car insurance for young drivers. Not only is there an option for a student discount, but there are also ways to reduce coverage while they’re away at school if they’re leaving their vehicle at home.

If these teens can be convinced to leave their vehicles in their parents’ garages while they are away at school, their rates can decrease as a result.

If teenagers are going away to college and they are taking their vehicles with them, they can still qualify for some of the lower car insurance rates.

Please note that those who are moving to a new state will need to purchase car insurance in that state.

Obtaining lower quotes means stressing the fact that they are low-mileage drivers. College students who are living on campus or close to it can qualify for the low-mileage discount.

While teens are in school (high school or college), parents can coach them to work as hard as they can to earn the best grades and teach them as many safe driving habits as possible.

Car insurance companies will offer a lower quote or a reduction in rates when parents present proof that their teenagers were high achievers in their schools.

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What should you look for when purchasing a vehicle?

Affordable car insurance quotes are due young drivers if they drive the most economical cars. Parents then have the opportunity to purchase a used car for their teens that is safe as well as inexpensive.

Furthermore, used cars often do not need to be covered by collision and comprehensive insurance coverage.

However, don’t let this deter you from buying your young driver a new vehicle if that’s what you want to do. There are a variety of ways to save money, even if you’re a young driver with a brand new vehicle.

You can buy a new car for your teenager, and still qualify for low premiums if it isn’t a sports car, it has several safety features that help prevent accidents, and it has several airbags and automatic seat belts.

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You may need to add collision and comprehensive coverage that will increase your rates, but this doesn’t mean that they’ll become astronomical. Teenagers can qualify for the same discounts that adults can if:

  • Their parents are insuring more than one vehicle with the same car insurance company
  • They purchase a homeowner’s policy and/or a life insurance policy with car insurance
  • They park the car in a garage rather than the driveway or the street
  • They drive the car in a safe area

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When should you shop for car insurance for young drivers?

Car insurance rates for young drivers are 68% higher than rates for adults. Comparison shopping can save you up to 20%. Insurance companies base insurance premiums on age groups and the risks associated with those particular age groups.

Typically, young adults have the highest rates of accidents and are the most unsafe drivers on the road. Even if your teenager is a safe driver, they will be viewed as a high-risk and will have to pay expensive insurance rates

If you have a teenager who is getting ready to get your drivers license, you should probably start looking for car insurance quotes for a young driver right away.

There are many factors that can determine your premium rates, but typically young driver insurance is expensive.

Young drivers are considered the riskiest drivers for an insurance provider to cover, so they also charge a premium price to provide insurance for those drivers.

What discounts should you look for?

As mentioned before, many insurance companies offer numerous discounts to help bring down the price of coverage, even if you have a teenage driver on your policy.

For example, if your child gets good grades, you may qualify for a significant discount. Keep copies of grade reports and submit them regularly to the insurance company to make sure you receive your discount.

Additionally, your child may qualify for a discount if they attended and completed a driver’s education course, either through school or through a private drivers education provider.

Make sure to get a certificate of completion and submit it to your insurance provider. There are plenty of auto insurers out there who will look at grade point averages in order to help you and your young driver save money.

What are some other ways young drivers can save money?

You can limit their driving, which can lead to potential savings. Though that may not make you popular with the driver in question.

You may be able to have an exclusion written for coverage for your most expensive cars, meaning that you do not allow your child to drive the luxury car or the SUV, but you do allow them to drive the older family sedan.

With an exclusion, coverage is not provided if there is an accident involving your teenager as a driver.

As mentioned above, in some cases, an insurance company will also lower rates if your child goes away to college and does not take a car with them. You will have to explain this to your insurance company however, as they won’t know the car isn’t in use unless you tell them.

In a case like this, your insurer may consider that your child will only be driving periodically when they come to visit or they may simply drop coverage requirements for a child if they are not living at home.

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Should you compare insurance quotes online?

Young drivers will see higher insurance premiums than their parents or older siblings. There are many ways young drivers can receive discounts, such as receiving good grades or taking defensive driving courses.

It’s not easy to obtain cheap car insurance for young drivers. However, there are some actions drivers under 25 can take to get the best rates possible.

Young drivers have the benefit of starting with a clean slate since they do not have bad driving records and have not accumulated any points on their licenses.

However, teens and young adult drivers are considered by insurance companies to be high-risk due to their limited experience on the road, which is the reason for the increased insurance rates.

Young drivers are quoted the highest insurance rates of drivers in any age group. The best way to find reduced rates is to shop and compare. By doing so, not only are you able to find different types of insurance, but you’ll be able to find companies who offer a variety of discounts for things such as good grades and driver training courses.

Can parents help their teenagers find affordable coverage?

Car insurance for young people typically costs a lot for the parents who help pay for a policy.

However, parents can gain some control over the situation simply by comparing rates online.

Insurance agents may take advantage of the excitement that comes along with driving for the first time with young people. By taking part of the insurance buying process alongside your young driver, you’ll be able to help them find quality coverage without breaking your own wallet.

If you’re a young driver shopping on your own, don’t be afraid to ask questions, and to compare companies against one another.

References:

  1. https://driversed.com/
  2. https://www.investopedia.com/terms/l/liability_insurance.asp
  3. https://www.kbb.com/
  4. https://www.edmunds.com/auto-insurance/how-to-choose-the-right-insurance-company.html
  5. https://abcnews.go.com/blogs/business/2013/07/car-insurance-hidden-discounts-revealed/

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