Cheap car insurance” might not seem as though it can be said in the same breath as “new driver.” But if you’re adding a new driver—namely a teen driver—to your car insurance policy, you can find options that won’t break the bank. In fact, including a teen driver on your policy rather than buying a separate policy for them usually turns out to be the cheapest strategy.
We evaluated rates, coverage and complaints to find the best cheap car insurance for new drivers.
When Should You Add a New Driver to Your Car Insurance?
In many cases, you can add a teen who has a learner’s permit to your auto insurance policy at no additional cost. But you’ll be required to pay for a teen driver’s coverage once they obtain their license.
Deciding when to add a new driver to your policy depends on where you live. Rules about putting a teen driver on a policy can vary from state to state and even by insurance company
So that you don’t run into any costly surprises, check with your car insurance company before your new driver receives a learner’s permit and again before they get a driver’s license. While you’re at it, be sure to ask how much it’ll cost to add them to your policy.
Essential Car Insurance for New Drivers
Don’t be tempted to skimp on coverage to offset the high cost of insuring a new driver. Inexperienced drivers are more likely to get into accidents, so it’s wise to buy full coverage car insurance.
Full coverage car insurance includes the liability car insurance your state requires to drive legally, plus insurance protection for your own car with collision and comprehensive coverage.
Expert Tip
Consider buying more liability insurance than your state requires. Even relatively minor accidents can cause enough damage to easily exceed state minimum liability limits.
Consider buying more liability insurance than your state requires. Even relatively minor accidents can cause enough damage to easily exceed state minimum liability limits, which means you’d be on the hook to pay the difference.
Collision and comprehensive insurance pay you the depreciated value of your vehicle if your car is totaled or stolen, minus your deductible. A deductible is an amount deducted from a claims check. Collision and comprehensive coverage are optional, but your lender will likely require you to carry both if you financed your car.
Even the cheapest full coverage car insurance will provide more protection compared to a policy with only the state-required minimum of insurance.
Here are the core types of car insurance new drivers should have:
Liability insurance: This pays for injuries and damages you cause to others when you’re at fault for a car accident. Liability car insurance also pays for your legal fees and for judgments and settlements if you’re sued because of a car accident.
Collision insurance: This pays to repair or replace your car after an accident, regardless of fault. Collision car insurance also pays to fix or replace your vehicle if you hit an object, like a pole or fence.
Comprehensive coverage: Comprehensive car insurance pays to fix or replace your car if it is stolen or damaged by non-crash problems covered by your policy, for example, hail, fire, flooding or animal strikes.
Car Insurance Types to Consider for New Drivers
It’s smart to think about buying additional coverage for your new driver to can help ease the financial sting if they have an accident. Here are three types of car insurance that provide an extra layer of protection for accidents.
Accident forgiveness
Since new drivers are more likely to crash, accident forgiveness insurance can be a financial backstop for those with newly licensed motorists on their policies. Accident forgiveness insurance prevents your rates from increasing after you’ve caused an accident, as long as you meet eligibility requirements, which vary by car insurance company.
Some insurance companies offer accident forgiveness insurance as add-on coverage you buy, others include it automatically, and still others provide it through a combination of both.
Typically, you must maintain a clean driving record for a specified amount of time—such as three years—to qualify for accident forgiveness coverages. Some companies forgive your first accident if you’ve been a customer for a certain period of time.
For instance, you can qualify for accident forgiveness from Erie after you’ve been a customer for at least three years. USAA provides accident forgiveness for free after five years if the drivers in your household have had no at-fault accidents. You can buy accident forgiveness from Auto-Owners if drivers on your policy have been without at-fault claims or major violations for the preceding three-year period.
Gap insurance
If your new driver totals your vehicle, and you owe more on the loan or lease than your car was worth, gap insurance can help. When you file a comprehensive or collision insurance claim for a totaled car, your insurance company will pay you the depreciated value of your car, minus your deductible. Gap insurance pays the difference between your loan or lease balance and the value of the vehicle before it was totaled.
If you don’t have gap insurance and your outstanding loan balance is more than your car’s value, you’ll be responsible for paying off the loan for a car no one can drive.
New car replacement
If your teen is driving your new car or a new car you bought for them, it’s prudent to consider buying new car replacement insurance. Instead of getting the depreciated value of your totaled car after a wreck, you get the money for a brand new car of the same make and model, minus your deductible.
Ask your insurer about its requirements for the car’s age and mileage. Eligibility for new car replacement coverage varies by insurance company.
For example:
Erie’s Auto Security add-on provides money to replace a vehicle that’s less than two years old with the newest model.
Nationwide’s new car replacement insurance pays to replace your car as long as it’s less than three years old.
Farmers’ new car replacement coverage provides money for a new car of the same make and model if your car is totaled within the first two model years and under 24,000 miles.
Tips for Lowering the Cost of Car Insurance for New Drivers
While adding a new driver to your insurance can be a shock to your bank account, you can look for ways to reduce the extra expense.
Add the new driver to your own car insurance policy
Parents looking for the best cheap car insurance for teens should be aware that it’s usually less expensive to add a teenager to a parent’s insurance policy rather than putting the teen on their own policy.
For example, the average cost for a 16-year-old with their own policy is $8,765 a year. That’s about $3,000 more than the cost of a parent policy ($5,697 a year) with a driver age 16 added, based on Forbes Advisor’s analysis.
Ask about car insurance discounts for your new driver
Common discounts relevant to new drivers include good student discounts (typically for a B average or above) and, for college students, a “student away at school” discount. If the student attends school 100 miles or more away from home, without a car, you can often qualify for a price break.
In addition, teen driver insurance programs can provide both a discount and valuable driving skills training. Keeping accidents off a teen’s record will safeguard your future rates.
You can also qualify for a multi-car discount if you buy a car for your teen and insure it on your policy.
Choose a higher deductible
If you buy collision and comprehensive insurance, you’ll choose a deductible. You can usually save money by having a higher deductible—such as $1,000 instead of $500.
Ask your car insurance agent to give you car insurance quotes for various levels of higher deductibles. Then decide if the savings are worth it, keeping in mind that a new driver is more likely than an adult to crash.
Choose an affordable vehicle
Rather than putting your teen behind the wheel of a brand-new sports car, consider letting them drive an older SUV, sedan or minivan. While they’ll lose the cool factor, it will generally cost less to insure a car that’s safe and relatively cheap to fix than it will to insure a sports car.
That’s because insurers take into account a vehicle’s value, repair costs and theft rate when determining insurance costs. They will also consider past claims and payouts as they relate to a specific make and model of vehicle.
Delay the driver’s license
You might be able to save money if your teen waits to obtain a driver’s license. For instance, if they put off getting a license until age 17 or 18, you could pay less for your teen’s coverage.
The average annual cost for a parent’s car insurance policy with a 16-year-old driver included is $5,697, based on our analysis. That drops to $5,323 a year when you include a 17-year-old driver on a parent’s policy, and to $5,065 a year for an 18-year-old driver listed on a parent policy.
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Share a car with your teen as a secondary driver
One way to drive down the cost of car insurance for a new driver is to add them to your existing policy as a secondary driver on the least expensive car you own.
Shop around
This is the time to compare car insurance quotes, especially if you haven’t done so in a few years. Comparing quotes from multiple companies can lead you to a company with good coverage and the cheapest car insurance.
For example, we found that Erie and USAA charge slightly over $4,000 a year for two parents and a 16-year-old for $100,000 bodily injury liability coverage per person and $300,000 per accident. That’s compared to over $7,000 a year at Farmers and over $9,000 at Allstate, on average.
Related: Car Insurance Calculator
Methodology
Forbes Advisor’s ratings of the best cheap car insurance companies for new drivers are based on the following measurements.
Auto insurance rates: 80% score. Because putting a new driver on an auto insurance policy is often shockingly expensive, we gave weight to this category. We used data from Quadrant Information Services.
Average rates are based on a policy with 100/300/100 coverage ($100,000 bodily injury liability per person, $300,000 bodily injury liability coverage per accident, $100,000 for property damage liability), uninsured motorist insurance, and collision and comprehensive coverage. Average rates are for good drivers on the policy with no accidents or tickets.
Complaints (5% of score): We used complaint data from the National Association of Insurance Commissioners (NAIC). Complaint data reflects a company’s number of complaints relative to its size of business. High complaints often indicate unsatisfactory claim settlements and delays in getting claim payments.
Accident forgiveness (5% of score): Car insurance companies earned points for having an accident forgiveness program.
New car replacement (5% of score): Car insurance companies earned points for offering new car replacement coverage.
Collision repair score (5% of score): We used grades provided by CRASH Network. CRASH Network’s Insurer Report Card calculates grades from collision repair professionals that gauge the quality of auto insurance companies’ collision claims service.
Best Cheap Car Insurance for New Drivers FAQs
Why is car insurance for new drivers so expensive?
Car insurance for new drivers is expensive because new drivers are inexperienced behind the wheel and cause more accidents and claims. Even the best car insurance companies charge significantly higher rates for new drivers than for more experienced drivers.
Which insurance is cheapest for new drivers?
Our analysis found that Erie offers the cheapest average cost ($1,594 a year) for insuring a driver age 16 if you are adding a new driver to your car insurance policy. It is much cheaper to add a new driver to a parent’s policy than for them to get coverage on their own. The average cost of car insurance for 16-year-old drivers with their own policy is $8,765 a year.
How do I get my first car insurance cheaper?
Getting your own insurance policy will be far more expensive than being added to a parent’s policy.
But if that isn’t an option, shop around and compare quotes from the best cheap car insurance companies for teens. When comparing quotes, be sure you’re getting all discounts available.
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