Does your teenager have enough car insurance?

For newly licensed teens, nothing compares to the exhilarating sense of freedom of getting behind the wheel for that first solo drive. For parents, that same milestone hits a bit differently. A new driver in the house can leave your anxiety high and nerves frayed. It can also increase your monthly expenses, with car insurance being an essential part of your teen’s newfound freedom — whether they realize it or not.  Understanding your teen’s car insurance needs can help ease anxiety and provide financial protection to your family.

Teen accidents by the numbers

• Drivers ages 16 to 19 are four times more likely per mile driven to get in a crash than drivers who are 20 years of age or older.¹
• Per mile driven, drivers ages 16 to 19 are three times more likely to be in a fatal crash than drivers who are 20 years of age or older.²
• 75% of teen crashes are caused by critical errors, with other common causes including speeding, distractions and lack of scanning.³
• Motor vehicle crashes are the leading cause of death for U.S. teens.⁴

Age-based risks lead to higher car insurance rates for teen drivers 

The statistics above can leave parents riddled with anxiety as their teens get behind the wheel. They’re also one of the leading reasons why car insurance for teens and young drivers is so expensive. Teens are inexperienced behind the wheel and can be easily distracted. And, as the stats indicate, they are nearly three times as likely to get in a fatal accident than drivers ages 20 or older. 

Insurers base rates on various factors, including age, gender and driving record, with each helping them determine how much risk they’ll take on when they issue a policy. Historically, teen drivers present an increased risk compared to those who have entered their 20s, so they usually see the highest rates. 

Teens added to a parent’s policies enjoy the cheapest car insurance rates when compared to teenagers who purchase auto insurance on their own. 

The average cost to add a teen (16 to 19) to a parent policy is $1,951 per year, with 16 and 17-year-old drivers paying slightly more. Teens on their own policy can expect an average rate of $6,598 per year.  

Have a young driver in the house? Best car insurance for teens

Car insurance for teens coverage

When shopping for car insurance for teens, there are a few key things to keep in mind.  

• State car insurance requirements. 
• Lender requirements, if you have an auto loan. 
• The value of assets you stand to lose in a lawsuit if your teen causes an accident. 

State requirements

Nearly every state requires drivers to carry liability insurance. Several states, including Florida, New Jersey, New York and West Virginia, also require drivers to carry other types of coverage, such as uninsured motorist coverage.

Lender requirements

Once you satisfy state requirements, check your auto loan or lease agreement, if either is applicable. Most lenders and lessors require you to carry full coverage, which typically includes any state-mandated coverage as well as collision and comprehensive car insurance.  

Value of your assets

Meeting state mandates will keep your teen legal behind the wheel, but those minimums may not be enough if your teen is at fault for a serious wreck, especially if it results in significant injuries or fatalities. If accident-related costs exceed the limits of your policy, you may be left with a hefty bill for the excess costs. And if the accident results in a lawsuit, your assets could be at risk. A general rule of thumb is to buy enough liability insurance to cover what you could lose in a lawsuit.

Most experts recommend a 100/300/100 liability insurance policy, which offers $100,000 in bodily injury coverage per person, $300,000 in bodily injury coverage per accident and $100,000 in property damage coverage.

Consider additional car insurance for you teenager

If your teen is at fault for a minor fender bender that results in a small property damage claim, it’s likely your liability insurance will cover it. But if your teenager causes an accident resulting in multiple or serious injuries or fatalities and your limits don’t cover the costs, you may have to pay out of pocket or find yourself on the wrong side of a lawsuit. 

For an extra layer of financial protection, the Insurance Information Institute (Triple-I) recommends that parents of teen drivers consider taking out an umbrella insurance policy. 

Umbrella insurance is a type of personal liability policy that kicks in once you’ve exceeded the liability insurance limits in your home or car insurance policies, typically offering liability coverage for $1 million or more. Triple-I also recommends this type of coverage if you have a pool and throw pool parties, rent out your property or have a dog. 

You might also consider adding optional car insurance coverage types such as comprehensive or collision coverage (to cover damage to your teen’s vehicle if they cause an accident) and MedPay or personal injury protection (to cover their accident-related medical expenses). Liability insurance only covers the cost of bodily injury and damages to others — it won’t cover your teen’s injuries or repairs to their vehicle if they are at fault for an accident.  

6 ways to keep teens safer behind the wheel

Insurance can help you when the worst happens, but ideally, you won’t have to use it. Teen drivers are particularly at risk for crashes, but there are things you can do to reduce that risk.  

Chris Hayes, a spokesperson for Travelers, offers some valuable insights on how parents and guardians can reduce risks for young drivers as they enjoy the freedoms of this important teen milestone. 

Set a good example

“Think about the example you’re setting. Teens will model the behavior of their parents,” said Hayes. He suggests modeling good behaviors while they’re young. That means going the speed limit and following the rules of the road as well as avoiding distractions, like cell phones, while you’re driving. 

Spend time with your teen driver in the vehicle

Hayes recommends that parents spend as much time as possible with their teens in the car, providing loving and respectful feedback and coaching.

Use the “do not disturb” feature

Notification blocking features, such as the “do not disturb” function found on most smartphones, is a great way to reduce distraction among adults and young drivers. And according to the 2023 Travelers Risk Index, teens are more likely to utilize this safety feature. While 76% percent of adults said the notification-blocking features would deter them from using their phone, even more Gen Z drivers (83%) said the same. 

Encourage your teen to be their own advocate

For many teens, the risks of driving aren’t limited to when they’re the ones behind the wheel. They’re also vulnerable as passengers. Teaching your child to speak up if a driver is on their phone or otherwise distracted can help keep them safe as a passenger. 

“Increasingly we’re finding that people are more willing to speak up if they’re in a vehicle where a driver is distracted,” said Hayes. Eighty-five percent of Gen Z drivers polled for the 2023 Travelers Risk Index said that if a passenger asked them to stop using their phone while driving, they would comply.

Be consistent with safety messaging

Smartphones and other forms of technology allow us to stay connected, and that access to constant communication can sometimes pressure us to answer the phone or respond to a text. 

Hayes recommends that parents stress the importance of arriving at a destination safely or waiting until they are safely parked to check messages or return phone calls. He also says that parents have to give their teens the grace to call back and remind them that they shouldn’t pick up if it’s not safe to do so — even if it’s the parent calling. 

Leverage information when available

If your teen is enrolled in a usage-based driving program, use the information collected to speak to your teen about their habits. “Sit down with your child and provide loving and respectful feedback,” said Hayes. “Let them know [you] can see how they are driving,” and use that information to promote safe driving habits. 

Sources:

¹Children’s Hospital of Philadelphia Research Institute. Teen Driver Source. Car accident prevention.

²Insurance Institute for Highway Safety (IIHS). Fatality Facts 2020. Teenagers. 

³Children’s Hospital of Philadelphia Research Institute. Teen Driver Source. Basic facts about teen crashes. 

⁴Centers for Disease Control and Prevention (CDC). WISQARS — Web-based Injury Statistics Query and Reporting System.