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Cost of Car Insurance for Young Drivers

By Ashley Kilroy · September 12, 2022 · 7 minute read

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Cost of Car Insurance for Young Drivers

Parents pay an average of $177 more monthly when they put a teen driver on their auto insurance policy, according to data from Quadrant Information Services. Insurance companies bump up teen driver rates because they represent significantly more risk for claims compared to older drivers. However, parents can help defray insurance costs by practicing safe driving with their teen and looking into the many available discounts.

We’ll do a deep dive into how much car insurance is a month once your teen starts driving. Keep reading to find a breakdown of costs by state and the factors that affect insurance pricing.

Why Auto Insurance Rates Are So High for Young Drivers

Many teens are highly responsible and conscientious behind the wheel. Unfortunately, statistics support the stereotype of young drivers being less safe: Beginner drivers ages 16 to 19 are almost three times more likely to get into a fatal crash than drivers 20 and older. Whether it’s due to recklessness or just lack of confidence and comfort on the road, youth often leads to more insurance claims.

As a result, auto insurance companies charge higher rates for inexperienced drivers. Parents who are doing some personal insurance planning should expect much higher premiums for several years.

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Age at Which Car Insurance Rates Drop Significantly

As teens mature and gain experience on the road, rates drop. So, how much is monthly car insurance for a 16-year-old versus a 20-year-old? That depends on many factors, including their city, state, gender, and vehicle type.

On average, monthly coverage for a 16-year-old costs $534 for female drivers and $599 for male drivers on their own policy. When a driver reaches 20 years old, the rate drops to $258 for female drivers and $295 for male drivers. Once a driver turns 25, their rate will continue to decrease as long as they have few to no claims.

The cost will go on dropping until age 60, at which point prices may start increasing again. Just as younger drivers generate more insurance claims, the oldest drivers do as well.

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Factors Besides Age That Impact Car Insurance Costs

Insurance companies use age as a primary factor in determining risk, but there are additional considerations. Keep these in mind if you’re wondering how to lower car insurance costs for your family:

•   Insurance types and limits. How much coverage you want or need will affect the cost. For example, collision, medical expenses, and gap coverages cost more than the barebones liability coverage required in many states. (If you’re unfamiliar with insurance terminology, this list of car insurance terms can help.)

•   Deductible amount. All types of deductibles in insurance have an inverse relationship with premiums. In other words, if you want a lower rate, you can opt for a higher deductible.

•   Past issues with insurers. For example, if you missed payments with other insurance companies or have gone without car insurance for months at a time, your current auto insurer will assess you as a higher-risk customer.

•   Insured vehicle. The costs to fix luxury and economy cars vary widely. In addition, some cars suffer theft more often. Your insurer will take your vehicle type into account when assigning an insurance rate.

•   Location. Your zip code affects factors such as weather, crime, and repair costs.

•   Personal characteristics. If you’re married and own a home, your insurer will likely charge you a lower rate. In addition, your education level, career, and gender can impact insurance rates.

Recommended: How to Lower Car Insurance

Is Age the Biggest Factor for Car Insurance Rates?

Typically, age will be the most significant factor for car insurance rates, regardless of driving record. Still, age is only one part of the calculation: A driver with a history of accidents and traffic violations will see their rates skyrocket, no matter their age.

Age influences rates more than other considerations partly because of teenage driving habits: Driving at night and on weekends, forgoing seatbelts, texting while driving, and drunk driving all correlate with younger drivers.

Another factor affecting car insurance rates is gender. Although several states have outlawed using gender to set auto insurance rates, insurers in the remaining states base rates on how often men and women get into accidents. For example, recent statistics show women are half as likely as men to die in auto accidents, so they often receive lower rates.

State Insurance Coverage Requirements

Each state has its own laws setting minimum insurance coverage for drivers. That’s one reason why car insurance rates vary significantly from state to state. Idaho, Maine, and Ohio lead the country in least expensive car insurance. At the other end of the spectrum, the most expensive states for car insurance are Delaware, Florida, and Louisiana.

One of the key insurance tips for first time drivers is to only pay for what you need.

Non-Owner State Minimum Liability Only

Not owning a car usually means you don’t need car insurance. But if you regularly rent or borrow vehicles, non-owner liability insurance can cover you in case you inflict property damage or bodily injury through an accident. Average non-owner premiums range from $14 per month in South Dakota to $83 in New Jersey.

State Minimum Liability Only

Every state varies in its stipulations, but usually, you will have to purchase an auto policy covering bodily harm and property damage. The level of coverage is indicated by three numbers.

California’s minimum required coverage, for example, is 15/30/5. That represents $15,000 of bodily injury coverage per person, with a maximum of $30,000 per accident, and another $5,000 for property damage per accident. That’s on the low side. Maine and Alaska have the highest minimum requirements, with 50/100/25.

Drivers in California will pay an average of $49 a month for minimum liability, while in Maine they’ll pay just $35 — despite the better coverage.

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50/100/50 Liability Only

This form of liability insurance covers up to $50,000 of bodily injury for others, with a maximum payout of $100,000 per accident. An additional $50,000 of coverage goes toward property damage for others involved in the accident.

100/300/100 Liability with $500 Comp/Coll Deductible

Also known as full coverage, this policy grants $100,000 for bodily injury with a maximum of $300,000 per accident. Plus, the policy will pay up to $100,000 for damage to other people’s property. Lastly, you’ll receive comprehensive and collision coverage with a $500 deductible.

How Much Is Car Insurance by the Month?

On average, car insurance costs $144 per month for full coverage and $53 per month for minimum liability coverage across the country. However, as noted above, your monthly car insurance premium will depend on a host of factors, including age, driving record, and state.

Average Car Insurance Rates for Young Drivers

When adding a young driver to a family policy, parents should brace themselves for a substantial increase. To give you an idea of what to expect, the table below shows the monthly insurance premiums for a 16-year-old girl in every state (boys pay a bit more). The first figure shows how much she’d pay on her own policy, and the second is the upcharge to add her to the family policy.

State

Teen Policy

Add-on to Parents’ Policy

Alaska$428$135
Alabama$527$134
Arkansas$597$164
Arizona$618$190
California$521$240
Colorado$624$167
Connecticut$806$129
Washington, D.C.$576$139
Delaware$873$128
Florida$906$264
Georgia$554$147
Hawaii$126$5
Iowa$380$93
Idaho$443$104
Illinois$635$162
Indiana$440$128
Kansas$464$124
Kentucky$715$206
Louisiana$1,086$343
Massachusetts$589$164
Maryland$478$181
Maine$363$125
Michigan$683$320
Minnesota$408$139
Missouri$700$235
Mississippi$523$153
Montana$577$147
North Carolina$325$166
North Dakota$551$100
Nebraska$577$135
New Hampshire$452$107
New Jersey$750$200
New Mexico$499$143
Nevada$767$202
New York$512$168
Ohio$395$107
Oklahoma$597$165
Oregon$465$139
Pennsylvania$657$164
Rhode Island$843$210
South Carolina$544$184
South Dakota$479$93
Tennessee$533$142
Texas$670$204
Utah$622$202
Virginia$450$160
Vermont$331$113
Washington$476$165
Wisconsin$543$209
West Virginia$547$166
Wyoming$475$135


Data courtesy of Quadrant Information Services.

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Is it Possible to Lower Car Insurance Rates for Young Drivers?

While putting your teen on your auto policy will inevitably raise your premiums, you can mitigate the rate hike in a few ways:

•   Maintain one family policy. Although adding a young driver to your policy is costly, opening up a separate policy for your teenager costs even more. Generally, having multiple drivers on one policy is cheaper than multiple policies. Ask your insurer for quotes for both scenarios to ensure you’re getting the best deal.

•   Rack up the discounts. Many insurers provide discounts to students who maintain at least a B average. College students can qualify for an additional discount, especially if they don’t have a car and their school is at least 100 miles away from home.

•   Compare policies. Shopping around for a better deal can save you hundreds, if not thousands of dollars.

Are There Discount Insurance Providers?

While there is no dollar store version of an auto insurance company (no, not even online insurance companies) most companies offer discounts to teen drivers:

•   Incident-free driving. Incident-free means no accidents or tickets.

•   Driver tracking. Many insurers have implemented programs that track driving habits through a device installed in your car. Teens who avoid speeding or braking hard can receive a discount.

•   Driver education. Teens who take courses in safe driving can earn money off their parents’ policy.

•   Student discounts. High school and college students can earn discounts for receiving good grades, or for going to school 100 miles away with no car.

The Takeaway

Younger drivers pay considerably more for car insurance than older drivers. For example, the nationwide average cost of insurance for a 16-year-old girl, when added to her parents’ policy, is $345 per month. That isn’t bad compared to what the same girl would pay for her own policy: $565 per month. Car insurance premiums tend to drop at ages 20 and 25, assuming drivers have a clean record. By the way, men generally pay more than women until age 35.

SoFi’s online tool makes looking for the best deal on auto insurance easy. Compare rates among the top insurers in your area, and see quotes in a matter of minutes.

See real rates, with no bait and switch.

FAQ

Does car insurance vary by age?

Yes. Car insurance costs vary by age because younger drivers present more risk for insurance companies. Statistics show that the older the driver, the less chance they have of getting into an accident or filing a claim.

At what age is car insurance cheapest?

Car insurance is cheapest for drivers in their 50s. Insurance costs typically decrease with age. However, upon turning 60, insurance costs start to creep up again.

Is male or female car insurance higher?

Typically, men are charged higher car insurance prices than women. Statistics show that younger men get into more accidents, speed more often, and drive under the influence of alcohol more frequently than women. However, starting at age 35, men and women receive almost identical rates.


Photo credit: iStock/RyanJLane

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