Finding the Best Car Insurance for Teens

Here's how to save money without sacrificing coverage when you add a teen driver.

Sep 1, 2014 at 12:00PM

When parents of a teen first watch their baby take the wheel, they may be too busy seeing the years flash before their eyes to focus on insurance for the family's newest driver. Putting a new teen driver on the road can be scary -- and expensive.

"Aside from the insurance aspects, parents need to appreciate their role as the risk manager for their teens who drive," says Greg Serio, managing director at Park Strategies LLC, who is also a former insurance commissioner of New York.

Limiting a teen's hours of operation, restricting the number of riders in a car, and prohibiting the use of cell phones or texting devices (which can be double-checked through the cell service bills) are all ways a parent can prevent or mitigate risks."

Adding a teen driver to an auto insurance policy

Some auto insurance companies will want you to add your teen when he gets his learner's permit; others will wait until he has his license. It's important to call your agent to check.

Ray Crisci, senior vice president and worldwide automobile manager for Chubb Personal Insurance, warns parents that they may not be covered if their teen gets in an accident before they have been officially added to the policy.

"My best advice is to call your agent or insurance provider when it's time to add a teen driver to your auto insurance policy. This is important because some insurers (but not Chubb) have a drop-down provision in their policies that limits coverage for operators that are not listed on the policy," says Crisci. "You should tell your insurance agent as soon as your teenager gets his/her permit."

Now down to the nitty gritty -- choosing coverage.

Corrin S. Trowbridge, owner and broker at San Francisco-based Farmers-Trowbridge Insurance, who has helped many parents add teens to their policies, says that parents need to think big when deciding how much coverage to buy.

Trowbridge explains that families with teenage drivers need high liability limits because teens are among the riskiest drivers on the road, and if they cause an accident, the injured party can come after the parents' assets. You're not buying higher limits for your teen's assets-you're buying the higher limits for your own protection.

He notes that if parents raise their coverage levels and raise their deductibles, they may not add to their overall premium cost. The deductible is the amount you must pay out of pocket if you have a collision or comprehensive claim. When you raise your deductible, your premium goes down.

Insurance costs for a teenage driver

Many parents are already operating on tight budgets. The initial cost to add a newly licensed teen driver can be as much as three or four times what an adult driver would pay, says Crisci.

The high premiums reflect grim statistics: Drivers ages 16 to 19 are three times more likely than drivers age 20 and older to be in a fatal crash, according to the Centers for Disease Control (CDC).

Their chance for car crash injury is significantly out of proportion. Drivers age 15 to 24 make up 14 percent of the U.S. population but account for 30 percent of the costs of motor vehicle injuries among males and 28 percent of the costs among females.

"The cost will generally steadily decrease as the teen driver ages, gaining additional driving experience and maturity," says Crisci.

Squeaking out auto insurance savings

Causes of teen car crashes

The CDC has identified these eight "danger zones" as the leading causes of teen car crashes.

#1 Driver inexperience

#2 Driving with teen passengers

#3 Nighttime driving

#4 Not using seat belts

#5 Distracted driving

#6 Drowsy driving

#7 Reckless driving

#8 Impaired driving

Ask your agent to review discounts you, and your teen, might be eligible for, such as a loyalty discount, accident-free discount, good student discount and occasional operator discount if your teen goes away to school some part of the year.

Crisci says parents usually have to take the initiative to find out what the discounts are in order to take advantage of them.

Discounts vary considerably by type and amount among insurers. Insure.com has a tool to help you identify car insurance discounts available in your state.

Trowbridge also advises parents to add their teen to the policy on the family's oldest car.

"They should still be able to drive any car in the household, but you want to have them rated driver on the least expensive car in order to save money," says Trowbridge.

Amy Bach, executive director at United Policyholders, a consumer advocacy group, also advises parents to check with their insurance company to see if it is cheaper to have a separate policy for your teenager or to add him or her to your policy.

"A parent's own driving record impacts their auto insurance costs, so comparison shopping to insure your teen should include looking into buying a separate policy for the teen versus adding them to your policy. And especially if your current car insurer isn't giving you a loyalty discount, you can switch the family (or you and your teen) to a different insurer -- if you find one offering quality coverage at an affordable rate," says Bach.

If you're buying a vehicle for your teen, picking the safest vehicle possible is also a must.

"If the teen driver will be getting a vehicle, it's best to pick one that has the latest safety features, including stability control, which has been proven to reduce single-car accidents. Parents should focus on cars that are big, slow and safe," advises Crisci.

Getting started

Chubb has teamed with the Insurance Institute for Highway Safety to offer a video about Young Drivers: The High Risk Years.

Setting rules is important. The CDC offers a parent-teen driving agreement.

This article originally appeared on insure.com.

Bank of America + Apple? This device makes it possible.
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its destined to change everything from banking to health care. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here

You may also enjoy these insurance-related articles:

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers