Car insurance buying guide - how to shop for car insurance for teens (2024)

Getting your driver’s license is a day you likely won’t forget. After months of studying, driving practice and preparing, achieving this milestone is a moment to be celebrated. Once the afterglow begins to fade, shopping for a car insurance policy begins. Teens typically can’t purchase their policies — unless they are emancipated — so securing coverage will require a co-signing adult or being added to your parent or guardian’s policy.

When thinking about coverage options, it’s important to understand that teens are a high-risk age group for insurance companies because of the high occurrences of accidents and fatalities. According to the National Highway Traffic Safety Administration (NHTSA), traffic crashes are a leading cause of death for teens 15 to 18 years old. In the most recent data, 861 teen drivers died in crashes in 2021, and a total of 2,608 teen drivers were involved in crashes where someone died.

The national average annual premium for teen car insurance is $5,914 or $493 a month. This is significantly higher than the national average annual premium of $1,908 or $159 monthly for adult males aged 25-60. This steep price difference can be attributed to teen driving statistics and assessed risk.

Learn more about how to shop for car insurance for teens, including what coverage options are available, how to get discounts and what to consider when shopping around.

Why do I need car insurance for teenagers?

Car insurance provides safety and protection for incidents a teen may experience behind the wheel. This includes fender benders, property damages, medical expenses and major collisions.

Teenagers generally have little driving experience, increasing their risk for accidents and steeper premiums. Therefore, as new drivers, teens should learn the ins and outs of car insurance and what coverage options are available to them.

Teens who are involved in the insurance buying process, understand costs and what happens when there is an accident and its impact on premiums, are better-informed drivers, according to the Insurance Information Institute,

Additionally, many states have adopted the Graduated Driver Licensing (GDL) system. GDL — recommended by the American Automobile Association (AAA) with varying requirements based on state — has teens earning driving privileges in a three-stage process: a learner’s permit at age 16, a probationary license after six months and an unrestricted driver’s license at age 18.

This program aims to help reduce the number of teen accidents and fatalities, according to the American Academy of Child and Adolescent Psychiatry,

What are the types of car insurance?

Enough coverage must be purchased when shopping for car insurance for a teen. Most teen drivers typically drive to and from school, home, shopping and work, with or without passengers (and in some states, they can’t have passengers until they are 18 years old). Therefore, it’s important to ensure teen drivers are thoroughly protected by their coverage options.

“An auto insurance policy is a package of protections that depend on what you choose and the requirements in the state where you live. For instance, full coverage means that you purchase additional coverage, such as comprehensive and collision insurance, in addition to required liability insurance,” says Laura Adams, MBA, an award-winning author, podcaster, and founder of The Money Stack.

Learn more about types of car insurance coverage options to determine what might be best for your driving needs.

Liability coverage

Adams says liability car insurance pays for damage you cause and is required to legally drive a vehicle. “There are two parts of liability you must purchase: property damage and bodily injury protection,” she says.

• Bodily injury liability car insurance pays the medical bills of people you are found liable for injuring with your car.
• Property damage liability car insurance pays to repair or replace cars or other property you hit with your vehicle.

Bodily injury typically pays up to policy limits for injuries and death you are responsible for, which includes medical and funeral expenses, loss of income, pain and suffering and legal defense.

Property damage liability will be paid up to your policy limit for damages to another person’s property or vehicles during the accident. This does not cover your vehicle. If there is a lawsuit filed against you, this coverage option will provide you with a legal defense.

Comprehensive car insurance

Comprehensive car insurance covers damage to your vehicle not caused in an accident, such as theft, vandalism, broken windshield, fire, floods, hail and other natural disasters and animal collisions. Typically, when these incidents occur, your insurance company will pay for repairs or provide a lump cash payment if your vehicle is a total loss.

If you don’t carry comprehensive car insurance coverage, you won’t be able to make a claim should you experience non-accident-related damages to your vehicle. It will be your responsibility to pay for repairs unless there is another party who is liable for them. Full coverage – including collision and comprehensive car insurance coverage – is mandatory if your vehicle is purchased with a loan.

Collision car insurance

Collision car insurance coverage will pay for repair costs or vehicle replacement regardless of fault if you’re in a car accident with another vehicle or object. Whether it’s a fender bender or a more severe accident, collision coverage can help cover the cost of repairs up to the actual cash value of your vehicle.

If you’re in a car accident, you must file a claim before damages are covered (repaired or replacement). This coverage will also pay out if you’re at fault or if the other driver is uninsured, underinsured or unknown.

GAP or guaranteed asset protection

“This optional auto insurance coverage helps pay your car loan if your vehicle is totaled or stolen and you owe more than its depreciated value. However, it’s typically required when you lease a car,” says Adams.

GAP insurance — coverage for the gap between your vehicle’s actual cash value (ACV) and the amount you still owe on a lease or loan — kicks in if you’re involved in a collision or your vehicle is stolen. If you decide to pass on this coverage, it’s important to know that you’ll need to pay off the balance on your car loan out of pocket, and you typically only have 30 days to opt for it with a new vehicle purchase.

Medical payments coverage

Accidents happen and it’s important to think about what injuries could occur. This is why determining what medical coverage you’d like on your policy is important. Medical payments coverage (MedPay) helps pay for your or your passenger’s medical expenses if you’re injured in a car accident, regardless of fault.

MedPay coverage typically has a wide range of individual coverage. A MedPay policy can protect policyholders, their family members and relatives in the same household and authorized drivers in the insured vehicle (as riders in a vehicle or if they’re struck as a pedestrian).

This add-on coverage provides financial assistance with hospital, surgical and chiropractor expenses, funerals, prosthetics, dental and X-rays. Coverage is typically provided within three years of the incident. This type of coverage can help ensure medical and funeral costs don’t come out of your pocket.

Personal injury protection

Another common medical coverage protection is personal injury protection (PIP) is a “no-fault insurance” that pays for medical expenses should you or your passengers be injured in a car accident, regardless of fault.

While similar to MedPay in covering medical expenses, this coverage also protects against loss of income, disability and survivor’s loss — compensation to an heir(s) if a policyholder dies in an accident.

This type of coverage pays for policyholders’ expenses, which is different from bodily injury liability insurance which only covers the medical bills of other drivers and passengers injured in an at-fault car accident. PIP also has explicit car-related coverage, which can be excluded from health insurance policies. A handful of states require PIP insurance coverage; however, this is often optional.

Roadside assistance

Planning for the inevitable is also important when selecting coverage options. You’re likely to experience a flat tire or drained battery, so determining how you will fix those inconvenient issues is essential. Choosing a roadside assistance coverage option is a way to ensure you have a phone number to dial when you’ve run out of gas.

In general, this coverage protects minor mechanical repairs and assistance to get your vehicle into working order and back onto the road. You can call your plan’s number to dispatch help when an incident occurs. This would include service for flat tires, battery jump-starts, lockouts, fuel delivery, extrication from a ditch (within limits) and in worse-case scenarios, a tow to an auto shop or your home.

How much car insurance should I buy?

As a new driver, ensuring your safety is a good place to start when shopping for teen car insurance. Teen drivers are a higher-risk driving group and may need additional protections added to a coverage plan, including medical payments and collision coverage. It’s also essential to think about how you’re going to replace a vehicle or pay for significant repairs should you be involved in a major road incident when determining your coverage options.

“You need enough auto liability to protect your finances if you were found at fault in a lawsuit. You need enough comprehensive and collision coverage to pay for a vehicle if it gets totaled or stolen. Plus, you may need other coverages required in your state, such as personal injury protection,” Adams says.

Check out our experts’ recommendations for how much car insurance you need

How to shop for car insurance for teens

When shopping for car insurance as a teen, it can help to shop for quotes online and by calling insurance agents to discuss your options. While finding the most affordable rate is typically the first goal in car insurance shopping, you must also choose the right coverage limits and inclusions for your needs.

The following points can help you determine why shopping online and with an agent can help you purchase car insurance.

Pros of buying car insurance for teens online

• It’s convenient – you can compare quotes from multiple insurance companies simultaneously.
• You fill out a short form with an online quote and get quotes quickly.
• It’s flexible so you can shop online for car insurance anytime.
• Avoid sales pressure by shopping online.

Pros of buying car insurance for teens with an agent

• Discuss coverage limits and premiums in detail and answer any questions
• Review personalized factors, such as your living situation, grades and parents’ information for potential discounts
• Share information about safe driver courses and software and pathways to more affordable coverage options over time

“Buying car insurance with a licensed agent may be helpful if you want to discuss your options thoroughly, ensure you receive every potential discount, or receive guidance from a professional, especially as a first-timer,” Adams says.

Compare quotes for car insurance for teens

Part of finding the best car insurance for your wallet and needs is to shop around, do your research and determine what you’re getting with your premium from car insurance companies. While it’s easy to go online and find a couple of cheap quotes and decide to go with the best one, it may not be the best coverage for your long-term needs.

This is where talking to an agent can be especially beneficial. As a new driver, and new to car insurance policies, the more you know about what you’re purchasing, the safer you may be out on the road.

In general, it’s a good rule of thumb to get three to five car insurance quotes. You’ll want to look at your state’s liability requirements (i.e., the minimum amount of coverage you’re required to carry) and full coverage (i.e., comprehensive and collision coverage). Based on the car you drive, you may have to purchase higher premiums especially if your vehicle has been purchased with a car loan.

Once you have a variety of quotes, you can then select the best one for your needs. Remember, once you’ve made your choice, you should consider contacting that car insurance company’s agent to discuss other cost-savings, such as discounts, bundling or being added to another person’s policy.

Compare car insurance quotes from over 25 companies with a rate calculator

Gather required information

Before shopping around, it’s a good idea to compile all the necessary information you may need to review and be asked about. The car insurance company will generally want to know some personal factors about you, such as your age, gender and driving history. They will also ask you for some personal identification information, such as:

• Date of birth
• Driver’s license number
• Driving record
• Insurance history
• Social Security Number (SSN)
• Vehicle Identification Number (VIN)
• Address where the vehicle is stored

If you are joining a policy with others or adding on to a policy, all drivers on the policy’s information will also need to be shared (i.e., driver’s license numbers, driving and insurance history, VINs and SSN).

Choose your coverage

There are various coverage options available to teen drivers; however, premiums do vary quite a bit based on how much coverage you may need.

It’s advisable to get a full coverage policy for teenage drivers, which includes the following coverages:

• $100,000 in liability for injuries to others; $300,000 per accident
• $100,000 for damages to other vehicles and property
• Comprehensive for weather and animal damage or theft
• Collision to cover damages to your vehicle

While it may seem logical that teen drivers need basic coverage, it’s important to note that unless a teen is emancipated or seen as a legal adult, parents and guardians are liable for damages and injuries they may cause during an accident. Those tend to be out-of-pocket expenses and may also extend into deeper assets they may have — investments, house equity, savings accounts and retirement.

Talking to an agent about your vehicle make and model, commute and driving needs and how much you can afford for a monthly premium can help determine the best coverage amount for your needs and budget.

Save on car insurance for teens through discounts and bundling

There are some cost-saving strategies you can look into when you’re shopping around for car insurance. Namely, discounts and bundling. When talking to a car insurance agent, ask what discounts they offer for teens and students.

Some common discounts include:

• Away-from-home student discount: While this discount is available to the policyholder or parents of teens, it’s still good to know about it if you’re sharing a policy with someone. The student away discount is available to full-time students (typically younger than 25) living 100 miles or more from home without a vehicle. Discounts typically average about 15% to 30% and may apply to liability coverages, PIP, medical payments, collision and comprehensive coverage on the student’s vehicle.

• Bundling insurance policies: If you’re on another person’s policy or your parents, bundling multiple insurance policies under the same company can save you money on your premiums. This includes having a home, renters, auto and umbrella insurance policy under one insurer. Discounts typically range from 4% to 13%.
• Defensive driving course: It may pay to complete a defensive driving course, as it helps you stay safe on the road, decreases your chance of an accident and can lower your rates. In general, some drivers see up to 10% off for completing a course.

• Good student discount: If you’re a student who consistently gets good grades, you may be eligible for a deduction in your monthly premium, often on average about 14%. You must maintain a “B” average to qualify for the good student discount. Homeschooled teens are also eligible and likely will need to show proof of standardized exams.

• Low mileage discounts: Savings may be available if you don’t drive that often or don’t need to commute far. On average, drivers who drive less than 7,500 miles annually can get a discount of 9%.

• Payment options: Some insurance companies offer paid-in-full reductions and electronic billing/autopay discounts. If you can afford to pay your premium in full for the year, you may see an average reduction of up to 9%. Additionally, setting up automatic monthly payments can save you up to 4%. Ensure your insurance is paid on time every time.

• Safety features: Got anti-lock brakes (ABS)? Anti-theft devices? A car full of airbags? You may be looking at a premium discount based on these features. In addition to the ones listed, insurance companies also look at vehicles with adaptive cruise control, lane warnings and collision preparation systems, and generally offer about 4% off for these features.

How much does car insurance cost for teens?

Car insurance for teens is pricey. For a full coverage policy through Auto-Owners Insurance, a 16- to 19-year-old male can anticipate paying an average annual premium of $3,750 or $312.50 monthly.

Explore some of the average annual and monthly policy premiums by coverage amounts from the top car insurance companies.

Your first vehicle and driver’s license are such wonderful milestones in life — don’t let car insurance premiums burst your excitement bubble. It’s important to educate yourself on what you could anticipate paying for a policy on your own and how you can save through discounts, being added to another person’s policy or opting for the best coverage options for your budget.

It is advisable to talk to an agent as you’re shopping around to have all your questions answered and learn more about what coverage amounts you may need. It can also help to drive safely, avoid distractions and your cell phone and take advantage of driver’s education courses even after you’ve successfully passed your driving test.

Check out the best and most affordable ways to insure teenage drivers with our car insurance options for teens

Resources & Methodology

Sources

1. American Academy of Child and Adolescent Psychiatry. “Driving and teens.” Accessed February 2024.
2. Insurance Institute Information. “Auto insurance for teen drivers.” Accessed February 2024.
3. National Highway Traffic Safety Administration (NHTSA). “Parents: Talk to your teen driver about safe driving.” Accessed February 2024.
4. Nationwide. “What do I need for an auto insurance quote?” Accessed February 2024.

Methodology

CarInsurance.com editors in 2023 collected rates from Quadrant Information Services for a 16- to 19-year-old male with a good insurance score and no violation on record for a full coverage insurance policy with limits 100/300/100 and $500 comprehensive and collision deductible. We analyzed 53,409,632 records, 34,588 ZIP codes and 170 insurance companies nationwide.