The Average Auto Insurance Costs for Teenagers

Teenage drivers stand out as the most high-risk demographic across all age groups, and this is strikingly evident in the steep car insurance rates assigned to them. Even when adding a 16-year-old driver to the insurance policies of well-established, low-risk parents, premiums can easily double. Statistical data shows they are riskier than any other age group, they lack a driving history to provide any assurance, and their inexperience often leads to taking more risks on the road. Consequently, insurance companies do not vigorously compete to capture a share of this market segment that doesn’t help car insurance rates offered to this age group.

The age of the driver carries greater weight during the teenage years, although insurance rates for drivers can still remain high until they reach the age of 25. After that milestone, the variations in premiums between age groups become less significant until the senior years. This is why we have compiled a table below based on this study, comparing the average premiums for teenagers with those of a 25-year-old driver, for both minimum state-required liability-only and full coverage vehicle insurance policies. The table clearly shows the serious gap in costs.

Table: The average liability-only and full coverage car insurance costs for teenage drivers

As observed in the table above, a 16-year-old driver pays nearly four times higher premiums for a minimum liability-only policy and 3.6 times more for a full coverage vehicle insurance policy when compared to a 25-year-old driver. Given that teenagers at this age have minimal driving experience and are often new to operating vehicles, it is unsurprising to witness insurance companies imposing substantially higher rates for 16-year-olds. As per a CDC report, the risk of crashes is particularly elevated during the first months after teen drivers obtain their licenses.

Subsequently, car insurance rates begin to exhibit a noticeable decline, and by the age of 19, premiums have decreased to nearly half of what they were when the driver was 16 years old. This highlights the progression of premiums during the teenage years and how just a few years of driving experience and history can have a positive impact on insurance costs.

The Insurance Institute for Highway Safety (IIHS) report highlights the substantial disparity in driving abilities, accident rates, safety, and insurance risks between teenagers and individuals in their twenties. According to the report, the crash rate for individuals aged 16 to 19 is nearly four times higher than that of drivers aged 20 and older, with the highest level of risk occurring at age 16.

One reassuring observation we can make based on the teenage car insurance rates presented in the table above is that average premiums decrease quite rapidly. The burden of high rates is most pronounced between the ages of 16 and 19, a phenomenon that can be easily understood given that vehicle insurance premiums are calculated based on perceived risks. Young drivers have the opportunity to shed these costly premiums relatively quickly, particularly if they maintain a clean driving history.

It’s important to remember that the above-mentioned average car insurance rates for teenage drivers apply to the US as a whole. Rates in your state can vary significantly, being either lower or higher. Additionally, urban drivers often face higher premiums compared to those in rural areas. Your location plays a substantial role in determining your auto insurance premiums, and sometimes, factors like your age and zip code can have a significant impact on how much you pay, even if you haven’t suffered any negative incidents.

Tips for More Affordable Teenage Car Insurance

Considering how high the average premiums are, here are a few solutions to help teenage drivers get insured at a more reasonable rates:

1. It’s advisable to remain on your parents’ insurance policy for as long as possible. Even though teenagers can sometimes cause their parents’ premiums to double, this remains the most cost-effective choice, especially right after obtaining your driver’s license.
2. If you’re confident in your driving skills compared to others in your age group, you can consider telematics insurance. This type of insurance evaluates your driving behavior to calculate your premiums. Telematics programs can mitigate the impact of factors like age, credit score, recent accidents, or traffic violations, as they primarily affect the base premiums. Instead, a significant portion of your premium is based on your driving habits and mileage tracked through the telematics device installed in your car.
3. Teenage drivers have an advantage in that they typically drive fewer miles on average. A 2022 report from the Federal Highway Administration reveals that drivers aged 16 to 19 travel an average of 7,624 miles per year, while those aged 20 to 34 cover nearly double that distance at 15,098 miles annually on average. Consequently, teenagers are well-suited for pay-per-mile car insurance policies. Insurance companies offering such solutions indicate that individuals driving less than 8,000 miles annually are more likely to benefit from these policies. Additionally, pay-per-mile policies help mitigate the impact of negative factors like youth and poor credit scores, much like usage-based programs. They include a base premium that accounts for these factors but place a significant portion of the premium calculation on the number of miles driven.
4. Starting with a cheap car and buying liability only automobile insurance is a solution to consider. For a 16 year old, the average premium difference between full coverage and minimum liability-only policies is $4,801 (3 times). A little better for 17 year olds as the gap is $3,953 at 17, $3,446 at 18 and $2,640 at 19.
5. When your insurance premiums are notably high, you have the potential to save hundreds of dollars by simply finding a company with rates as little as 10% lower. Keep in mind that vehicle insurance companies can offer significantly different rates, particularly for high-risk drivers. It’s essential to always shop around and seek out the most cost-effective insurer available.
6. Be very careful. The toughest period for you is the first twelve months. If you can manage to complete it without a claim you can get much lower auto insurance rates next year. These large discounts keep coming as long as you don’t make any claim or get a ticket.
7. And get a few car insurance quotes as soon as you celebrate your birthday. Once again, age is a very important factor in teenage years and turning a year older can make a lot of difference to your vehicle insurance costs.

Vehicle insurance companies charge higher premiums for teenagers because they lack driving experience, fall into a statistically high-risk age group, often have limited credit history, and exhibit known risk-taking behaviors. Teen drivers can be unpredictable, either staying claim-free for years or suddenly having a major accident, which makes insurers cautious when assessing the risk of insuring them.