Teen Drivers Dramatically Increase Insurance Premiums

Posted: Nov 02, 2010 10:29 a.m.

When teens beg their parents to get a driver’s license, few think about the financial toll it will take on their families. In fact, a study from Insurance.com reveals that “the cost of adding a teen to your auto insurance policy will increase your annual insurance premium by an average of 44 percent if you have one car in your household, 58 percent for a two-car household and 62 percent for a three-car household…”

This data means that, on average, a family of two parents and one teen driver pays $2,039 if they own one vehicle, $2,912 if they own two vehicles and $3,707 if they own three. Plus, the more teen drivers per family, the higher the insurance rates get.

Why is insurance so costly, especially for families own more than one car? The New York Times says it’s “because drivers ages 15 to 19 tend to get into more accidents than older drivers and have little driving experience.”

While insurance rates will always be high for families with young drivers, there are ways to decrease these costs. First, Money Watch suggests cross shopping insurance policies, just as you would cross shop vehicles because prices can “vary quite a bit from company to company and some charge less for teen drivers. So it always makes sense to consider comparing rates rather than just adding a child to your existing insurance.”

If your teen takes a driver’s education class and has a 3.0 GPA or higher, insurance companies may decrease premiums even more. Rates can even drop if parents install driving monitors.

But, Insruance.com says “buying a car for the teen and putting him on his own policy” is not a way to decrease auto insurance rates because “[t]he average annual rate quoted for a teen driver is $2,267.” This premium is more than a family of three would pay to insure two parents and a teen.  

Teen driving is more than a matter of cost; it’s a matter of safety. Some youngsters just aren’t ready to sit behind the wheel and face the responsibilities of driving unsupervised. Parents shouldn’t be afraid to wait before giving their child a set of keys. Until your child is ready, look for a car that’s safe for young drivers. Start with our list of best cars for teens.

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