How to save on teen car insurance

Car insurance rates have been on the rise, and parents of teen drivers feel the impact more than most. There’s a lot of advice out there on how to get a better deal on your car insurance, but when you’re facing a big bill, it’s hard to know what to do first. 

We talked to experts and parents of teen drivers to find out what really works to lower car insurance rates for one of the riskiest groups on the road. Here’s what we found.

Shop before the price drops

Getting a better deal on teen car insurance starts before your child passes their road test. The best way to avoid a big bill is to find out what it’s going to cost ahead of time. Contact your current insurance company and find out how much they’re going to charge when your teen is licensed. Then you can shop around and compare teen car insurance rates before you have to pay anything at all and try to find a better price.

“When the time comes, at least a month beforehand, get what the rates will be to be adequately prepared for the cost,” says Zack Pope, agency manager at David Pope Insurance in Union, Missouri.

Shopping around is the No. 1 way to save on car insurance, and it’s the best bet for parents of teens. The difference can be thousands; our data show the average cost of car insurance with a teen male driver is $10,937 at Farmers, while it’s $6,311 at Geico, a difference of $4,626.

Some companies charge a lot more because they don’t want the risk of insuring teen drivers. It’s a good thing to know ahead of time.

“At this time there are only a handful of companies that want to keep a policy with teen drivers on it. So in a lot of cases, the ones [that] really do not want to keep the policy will charge $300+ more a month just to add them to the policy,” says Pope.

Bundle and save: Shop for home insurance, too

While the auto and home bundle isn’t always the cheapest option, for many people, it is. Bundling your car and home insurance earns you a discount on both policies, reducing your overall insurance cost. It worked for Belford, who found her choices limited.

“Since my insurance company was updating their service areas and decided not to cover Minnesota, I started to shop around,” she says.

Putting in the time and effort to shop around for a bundle landed her a much better price on her auto and home insurance.

“It wasn't the easiest process, but I did an internet search, and found that only one company would cover my house and car as a bundle, plus gave me a much better rate for both my teen driver and myself,” Belford says.

Vincent also found the bundling discount to be the best approach. 

“I added her to our existing policy because we were already bundling and getting a discount,” she says.

The average bundling discount is 15%, but depending on the company it can be as much as 25%.

Find all the discounts you can get

Discounts are one of the best ways to get rates down, and the more you can qualify for, the better. The good student discount is one of the most common options for teen drivers; they’ll need a B average (3.0) or better at most insurance companies. 

“She did get a little bit of a discount because of her GPA,” Vincent says.

Often touted as the best way to save for teen drivers, the good student discount may not make a big difference, but it will bring rates down.

“The good student discount wasn't that much of a discount, but it was better than paying full price,” Belford says.

Megan Baxter, an Oregon mom of a female teen driver, didn’t find that the good student discount made much of a dent in her premium, “but every little bit helps,” she says. But she found the driver’s education discount made a bigger difference.

“With driver’s ed, we were told it was basically half, so we made sure she did that,” she says.

Another savings option: Proving that your teen is a good driver. Sign up for a program that monitors their driving habits for a period to earn a big discount. That’s what Belford did.

“The current insurance company we are with had us do a good driver stint, and a thorough background check with my driving history, and found nothing.  We received the good driver and good student discounts,” Belford says.

Pope agrees. “Parents’ best bet to save money is making sure they have at least a 3.0 in school, [and] have a [telematics] device that monitors driving habits via cell phone app or plug-in,” he says.

Pick the right car for your teen driver

The type of car your teen drives has a big impact on what you pay for insurance. First of all, if your teen is driving a new car, you’ll need full coverage, which is more expensive. If they’re driving an older car, you might be able to get away with liability only (assuming you can afford to repair it yourself or absorb the cost of a total loss). Even if you do want full coverage on an older car, it will be cheaper.

“She inherited my husband’s old car when he got a new one,” Baxter says, which kept rates manageable. 

Of course, it’s important to find balance because safer cars are also cheaper to insure. Pope says that parents should “have vehicles with high safety features plus lower performance if possible.”

In other words, no sports cars. 

“When she heads off to college we are considering upgrading her since the current car is pretty old,” says Baxter. “Although we’d never ever get her some sports car or fancy car anyway.”

Look for a late-model sedan with safety features like airbags and anti-lock brakes from a make known for earning top marks for safety. Here are some of the most-awarded car manufacturers for safety:

  • Subaru has earned the most top safety picks of any manufacturer with 71 awards since the awards started in 2013.
  • Honda has multiple models that have repeatedly been chosen as top safety picks. The Accord has earned the distinction 10 times and the Pilot six times.
  • Mazda vehicles earned the most Top Safety Pick+ awards for 2024, and the Mazda 3 has been awarded nine times.

If you can’t add a car for your teen, ask about adding them as a secondary driver rather than as a primary driver.

Have them wait to get licensed

If your budget is really tight, it might be best to wait until your teen is a little older before they get their license. Even a year makes a difference. The average annual rate with a teen driver at 16 is $7,706 a year. At 17, the average annual cost is $7,435, and it goes down from there.

“The main message I have for parents is it's okay to wait for them to get fully licensed,” says Pope.

Waiting to get licensed is a growing trend. In the past 10 years, the percentage of 16-year-olds licensed to drive has gone down, from just over 28% in 2012 to just over 25% in 2022, the most recent available data from the Federal Highway Administration.

At age 17, the percentage of licensed drivers jumped to 43% and to almost 60% by age 18. While there are many reasons teens may wait to get licensed, the cost of insurance is a factor.

Other ways to save on teen car insurance

We’ve outlined the big money-savers, but as Baxter notes, every little bit helps when it comes to reducing car insurance costs. Here are a few more tips:

  • Raise the deductible. A higher deductible means lower rates; just ensure you can afford to pay it if necessary.
  • Skip coverage you don’t need. Trim coverages you might not need; if you have an extra vehicle, skip rental reimbursement. If you have AAA, don’t pay for roadside assistance. And, if the car is older and not worth much, consider dropping it to liability only.
  • Make sure your teen keeps a clean driving record. Reinforce the importance of safe driving, not just to protect your teen, but to protect your wallet.

Having your teen pay at least part of the car insurance bill can also help teens understand the costs involved, which may make them less likely to risk a ticket. And, it will reduce the financial burden on you.

“She has a job and pays for half of her insurance. So that makes it easier,” says Baxter.

Finally, remember to shop around regularly. The best deal now might not be the best deal on renewal.

Methodology

Insurance.com commissioned car insurance rates in 2024 for teen drivers aged 16-19 from Quadrant Information Services. Rates are based on a teen added to a parent’s policy with a full coverage policy including liability limits of 100/300/100 and $500 deductibles. Rates were analyzed in November of 2024 for a 2024 Honda Accord LX and based on good credit and a clean driving record. 2022 rates were analyzed in September of 2022 based on the same limits with a 2021 Honda Accord LX.

Sources

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