Auto insurance costs for teens can be shocking due to the high risk of accidents these inexperienced drivers pose to insurers. We found that parents often see their car insurance bills double after adding a teen to a policy.
Our analysis for February 2024 found that Erie, USAA, American Family and Nationwide are among the best car insurance companies for teens and young drivers.
Cheapest Car Insurance Companies for Teen and Young Drivers
Cheapest Car Insurance After Adding a Teen Driver
USAA is the cheapest overall car insurance company after adding a teen driver, among the companies in our analysis. It costs an average of $3,360 a year with USAA after adding a teen driver between ages 16 and 19 to a parent’s policy.
USAA is only available to military members, veterans and their families, making Erie and Geico good choices for others looking for affordable rates when adding a teen driver to their policy.
Company Average Annual Cost
USAA*
$3,360
Erie
$3,822
Geico
$4,014
Travelers
$4,259
Nationwide
$4,335
*USAA is available only to the military, veterans and their families.
Cheapest Car Insurance for a Teen Driver With Their Own Policy
USAA offers the cheapest car insurance rates for teens ages 16 to 19 who have a military connection and are buying their own policy. Auto-Owners and Geico are the cheapest companies for other teen drivers buying their own policy.
Company Average Annual Cost
USAA*
$4,350
Auto-Owners
$4,621
Geico
$4,761
Erie
$5,277
American Family
$5,346
*USAA is available only to the military, veterans and their families.
Cheapest Car Insurance for Teens by Age
Erie is the cheapest car insurance company for drivers ages 16, 17 or 18 being added to a parent’s policy.
Auto-Owners is the cheapest for teens ages 16, 17 or 18 who are buying their own policies.
Geico is the cheapest company for drivers ages 19 who are either being added to a parent policy or buying their own.
USAA is a bit cheaper for teens and young drivers ages 17, 18 and 19 but is only available if you have a military connection.
Age Cheapest Company When Adding Teen To Parents Policy
16
Erie
17
Erie
18
Erie
19
Geico
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*USAA had the cheapest rates for ages 17, 18 & 19 for both adding a teen and a teen buying their own policy but USAA is open only to those who qualify with a military affiliation so the cheapest companies open to all drivers are shown.
Related: Car insurance for 16 year old
How Much Does Car Insurance Cost for Teen Drivers?
It costs an average of $5,367 a year for a car insurance policy for two parents and a 16-year-old driver, an increase of $2,419 over the average car policy cost for a married couple.
Average car insurance cost after adding a teen driver
Situation Average Cost Per Year
Average cost for married couple
$2,948
Average cost for parents and a 16-year-old
$5,367
Average $ increase for married couple with 16-year-old on policy
$2,419
Average cost for married couple with 17-year-old on policy
$5,011
Average $ increase for married couple with 17-year-old on policy
$2,063
Average cost for parents and an 18-year-old
$4,773
Average $ increase for married couple with 18-year-old on policy
$1,825
Average cost for married couple with 19-year-old on policy
$4,443
Average $ increase for married couple with 19-year-old on policy
$1,495
Average cost of car insurance for teen drivers, by company
Company Average Annual Car Insurance Cost For Parents Plus A 16-Year-Old
Allstate
$8,296
American Family
$5,663
Auto-Owner
$5,412
Erie
$4,059
Farmers
$7,349
Geico
$4,471
Nationwide
$4,502
Progressive
$5,088
State Farm
$5,034
Travelers
$5,065
USAA
$4,103
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State Farm
7%
Travelers
3%
USAA
3%
Right Arrow
How to Find the Best Car Insurance for Teens and Young Drivers
You won’t be able to escape a considerable rate increase when you add a teen driver to your car insurance policy, but there are ways to minimize the hit to your wallet.
Keep your teen on your policy
Parents looking for the cheapest car insurance should be aware that it’s usually less expensive to add a teenager to a parent’s auto insurance policy rather than putting the teen on their own policy. If you’re in doubt, have your insurance agent run quotes for both scenarios or compare quotes online for the total cost of two separate policies. Quotes are free, so there’s no downside to checking which way is the cheapest.
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Make sure you’re getting discounts
Common discounts relevant to teens 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 could qualify for a price break on their rates.
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.
Shop around
Having a teen driver is a good time to compare car insurance quotes, especially if you haven’t done so in a few years. For example, we found that Erie and USAA charge slightly over $4,000 a year for two parents and a 16-year-old. That’s compared to over $7,000 a year at Farmers and over $8,000 at Allstate, on average.
Consider companies that offer accident forgiveness
Car insurance companies increase rates by an average of 40% if you have caused an accident involving an injury and 38% after an accident with property damage.
Some companies offer accident forgiveness insurance. With this feature, the insurer won’t increase rates based on one accident. The crash remains on your driving record and the accident could still affect your rates if you change companies later.
Car insurance companies that offer accident forgiveness don’t allow every driver to take part in the program. Drivers listed on the policy must have a clean driving record for a certain number of years.
Accident forgiveness programs will likely increase your car insurance rates. Our analysis found that the cost varies from about $15 to $60 a year.
Consider companies that offer new car replacement coverage
New car replacement coverage provides reimbursement for a brand-new car of the same make and model (minus your deductible) if your car gets totaled. With this coverage, you won’t have to pay the difference between the value of a brand-new vehicle and the depreciated value of your totaled vehicle.
New car replacement coverage can be beneficial for families with teen drivers, who are more likely to crash cars.
Not everyone is eligible for new car replacement coverage. You’ll typically have to have collision and comprehensive coverage, which pays for damage to your own vehicle. Insurers also usually require that your vehicle is under a certain model age and also under a specific mileage, such as 24,000 miles. Older vehicles and cars with a lot of miles won’t be eligible for new car replacement coverage.
Wait it out
Car insurance rates will generally start dropping around age 25. See Forbes Advisor’s analysis of auto insurance rates by age and gender.
Insurance Programs That Help Teen Drivers
Getting a driver’s license gives teens a sense of freedom, but it can also give parents stress and anxiety. Without parental supervision, inexperienced teen drivers are faced with an assortment of distractions that often result in poor driving and car accidents.
While the only way for a young driver to gain experience on the road is to keep driving, some auto insurance companies have programs to help teens curb bad driving behaviors and improve driving skills. As an added bonus, some insurers offer a discount when a teen successfully completes its program.
Some teen driver programs include:
SmartPath: A Hanover Insurance mobile app tracks a teen’s driving habits and gives a score based on factors, such as distracted driving, hard braking, speeding and the time of day they’re driving. As teens improve their driving scores, they can receive Amazon rewards and you can get a discount on your car insurance.
Steer Clear: This State Farm car insurance program offers five hours of training modules, including driving scenarios, puzzles and videos. To get a certificate of completion, teens must complete five hours of practice driving with at least 10 trips. Upon completion, you can forward the certificate to your insurance agent for a discount.
TeenSmart: TeenSmart was originally developed in partnership with Allstate. The program utilizes interactive learning videos, driving simulations and parent and teen activities to help address some of the top behavioral and social factors that lead to car accidents.
Teen Safe Driver: A free American Family Insurance app that monitors a teen’s risky driving behaviors. Once a teen drives 3,000 miles or completes one year of the program, you’ll get a discount on your premium from American Family. The discount is automatically applied until renewal after your teen turns 21.
Related: Best Car Insurance for High Risk Drivers
Methodology
Forbes Advisor’s ratings of the best car insurance companies for teen drivers are based on the following measurements.
Auto insurance rates: 50% score. Because having a teen driver on an insurance policy is often wildly expensive, we gave weight to this category. We used data from Quadrant Information Services.
Average rates are based on a policy with a new Toyota RAV4 and coverage of:
$100,000 for injuries to one person, $300,000 for injuries per accident, $100,000 for property damage (known as 100/300/100).
Uninsured motorist coverage of 100/300.
Collision and comprehensive coverage with a $500 deductible.
Complaints (20% of score): We used complaint data from the National Association of Insurance Commissioners (NAIC). Most auto insurance complaints center on claims, including unsatisfactory settlements, delays and denials.
Accident forgiveness (10% of score): Car insurance companies earned points for offering an accident forgiveness program, which can be valuable when you have a teen driver.
New car replacement (10% of score): Car insurance companies earned points for offering new car replacement coverage.
Collision repair score (10% of score): We used grades provided by CRASH Network, a weekly newsletter covering the collision repair and auto insurance market segments. CRASH Network’s Insurer Report Card has grades from more than 1,000 collision repair professionals that gauge the quality of auto insurance companies’ collision claims service.
Best Cheap Car Insurance for Teens FAQs
Is it cheaper to put my teen on their own car insurance policy?
No. It’s usually cheaper to keep a teen driver on a parent’s policy. There are some cases where a separate auto insurance policy can be cheaper. For example, if a parent has a sports car on the policy, and the insurance company matches the teen driver with the costliest vehicle (some do), then the combination of the car and novice teen driver could push rates sky high.
Who has the cheapest car insurance for a teenager?
We found the cheapest rates for a family with a teen driver from American Family, Geico, Nationwide, State Farm and USAA. Our rankings also factor in complaints and collision repair.
When do I have to add my teen to my car insurance?
You normally need to add a teen to your insurance when they get a driver’s license. Most insurance companies will cover the teen with your policy while they have a learner’s permit. So if they spend two years learning to drive with a permit—for example, from ages 16 to 18—you can enjoy those two years before high rates kick in.
Some companies, like USAA, ask that you add your teen as soon as they get their permit. With this in mind, don’t assume your teen with a permit is covered. Instead, ask your agent when the young driver must be added (during the permit stage or when fully licensed).
What can I do to help my teen become a better driver?
There are several ways you can reduce parent anxiety about teen driving. For example, you can use smartphone programs to disable texts and notifications. Another good strategy is to go back to the basics. Familiarize yourself with the rules of the road and your car’s safety features. Safe teen driving starts with you being a good role model.
How can I save money when I add my teen driver to my car insurance policy?
You may be able to soften the financial impact of adding a teen driver to your policy by asking your insurance agent if you qualify for any car insurance discounts. While discounts can land you immediate savings, keep an eye on the long term.
As your teen driver gets valuable driving experience and avoids traffic violations and car accidents, your rates may go down. Keeping tickets and accidents off your teen’s record will (eventually) pay off. Rates usually start to drop around age 25.
Related: Car Insurance Calculator
Should my teen participate in a usage-based driving program?
A usage-based insurance (UBI) program is an insurance option that can reduce your car insurance rates based on good driving habits. The better you drive, the less you pay.
This isn’t always a good match for inexperienced drivers. If your teen is eligible for your insurer’s UBI program, you should only consider participating if your insurer won’t raise your rates for poor driving scores.
Some insurance companies will raise your UBI premiums based on poor driving habits, though most don’t increase rates based on the data.
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