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If you’re the parent of a teenager, you’re probably wondering, how much is car insurance for a 16-year-old? Turning 16 is an exciting time that brings the opportunity to become a licensed driver, so planning ahead and knowing what to expect in terms of auto insurance for your teenage driver can help you feel more prepared.
Average Cost of Car Insurance for a 16-Year-Old
Insurance companies typically charge high rates for newly licensed drivers. The reason for this is that they are riskier to insure, as they have less experience behind the wheel. Age is just one of the factors that impact the cost of auto insurance. Other factors include location, gender, and make and model of your vehicle.
Parents of teenage drivers often add their children to their auto insurance policies to get a lower rate. In most states, only licensed drivers must be included on an auto insurance policy. If your teenager has not yet passed their exam to receive their driver’s license, you don’t need to add them to your insurance policy until they do pass the exam.
Car Insurance Policies for 16-Year-Olds by Category
Understanding the risk factors that go into setting car insurance premiums can help you know why your premiums may go up when you add your teenager to your policy. Below are some of the most common factors that impact insurance rates for teens:
- Age: According to WalletHub , age is a significant factor across most insurance companies. CarInsurance.com reports that teenage drivers tend to take the most risks behind the wheel and have the least amount of driving experience of any age group. As a result, they are more likely to file claims that the insurance company will have to pay.
- Gender: Data from The Zebra shows that gender is another factor insurance companies may use when determining rates. Younger males are more likely to be involved in accidents and/or receive citations than younger females, resulting in higher insurance costs. ValuePenguin reports that 16-year-old male drivers pay an average of $300 more for six months of auto insurance coverage than 16-year-old females. However, some states do not allow insurance companies to use gender as a factor when setting rates.
- Location: According to MoneyGeek, your location is another factor in determining the cost to insure a teenage driver. Insurance rates vary drastically between states and even between zip codes in a particular area. For example, states with no-fault insurance laws in place, such as Florida and Michigan, have higher rates. The number of drivers also plays a role, as areas that are more densely populated have more drivers on the road, which increases the risk of being involved in an accident. Some of the states in the Midwest where the population density is lower, such as Ohio, often have lower insurance premiums than heavily populated states.
- Type of vehicle: The make and model of your teen’s car will also impact the car insurance cost. Insurance companies will look at the cost of the vehicle and its trim level to determine what it would cost to repair or replace it. A vehicle with a higher MSRP, such as a luxury model or performance vehicle, will typically cost more to insure. Additionally, insurers look at the potential risks associated with the type of vehicle the teenager drives. For example, if your teenager has an off-road-ready truck or SUV, they might be more likely to take dangerous risks in the vehicle, resulting in a higher premium. Choosing a low-priced, modest, pre-owned vehicle can help you get the lowest rates.
- Level of coverage: The coverage level of your policy will impact its cost. Choosing a full-coverage policy with comprehensive, collision, uninsured/underinsured motorist coverage, and other add-ons can be expensive, especially for a teenager. However, not having enough coverage could put your financial situation at risk, especially if your teen is involved in an accident that is their fault.
How to Save on the Cost of Auto Insurance for 16-Year-Olds
Although these factors will impact the overall cost of insurance for a teenage driver, you can find ways to reduce the cost of their coverage. When comparing policies, be sure to look for several discounts that may be available:
- Good student: Teenage drivers who get good grades may qualify for a good student discount. Most insurance companies that offer this discount require students to get at least a 3.0 GPA, or a “B” average, although policy requirements vary.
- Clean driving record: Since their age is already a risk factor in the cost of insurance, teenage drivers must use caution and maintain a clear driving record to avoid legal trouble. Being involved in an at-fault accident or receiving a citation for a traffic violation will cause the teen’s insurance premium to go up. When comparing insurance premium increases by state, the costliest citations are DUIs, hit-and-run situations, and racing, which can cause the premiums to go up by 60 percent or more. If your teen maintains a clean driving record and your insurer offers a good driver discount, they may qualify.
- Family insurance policy: A 16-year-old will often pay more than $1600 per year to have their own insurance policy. By adding your child to your auto insurance policy, you can pay up to 50 percent less. Some insurance companies also require people living in the same residence to be on the same policy or be listed as excluded drivers on individual policies, which would mean your teenager would not be legally able to drive your vehicle.
- Compare rates: Another way to save on insurance for a teenage driver is to shop around and compare rates. Every insurance company weighs risk factors differently, which means that the rates can be drastically different. Choosing one insurer over another could save thousands of dollars, especially if you choose a company that doesn’t weigh the driver’s age as heavily as another.
When Should a Parent Add Their Teenager to Their Auto Insurance Policy?
- In some states, including Maryland, Indiana, and Illinois, insurance companies require parents to add their teenagers to their policies when the teen drivers receive their learner’s permits. However, most insurance companies require parents to add their children when they become licensed drivers. If your state does require you to add a teenager when they receive their learner’s permit, the rates will typically be lower because the driver will be under an adult’s supervision.
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