Teenagers are the riskiest drivers on the road -- and this is apparent by how much insurers charge them or their parents for auto insurance.
According to Russ Rader, spokesman for the Insurance Institute for Highway Safety (IIHS), crash rates for teens are three times higher than those 20 years of age or older.
What's more, National Highway Traffic Safety Administration (NHTSA) data show that traffic crashes are the leading cause of death for teens, accounting for one-third of all deaths of 16- to 19-year-olds.
What may come as a shock is that adding a teen driver to an existing auto policy can sometimes double the annual premium -- but it all depends on the state where you live.
For the second year in a row, a Quadrant study commissioned by insuranceQuotes.com examined the economic impact of adding a driver between the ages of 16 and 19 to a family's existing car insurance policy
"Teen drivers file more claims than any other age group, so when an adult adds a teen to an existing policy, his insurance company is now taking on considerably more risk," says Mike Barry, spokesman for the nonprofit Insurance Information Institute.
The cost of insuring young drivers in your state
According to the study, U.S. families who add a young driver to their existing auto insurance policy will see an average annual premium increase of 79 percent (down from last year's average increase of 84 percent).
It’s not precisely clear why the percentage dropped, but Barry suggests one reason is that there are fewer teens behind the wheel than in past decades.
According to 2012 study from the University of Michigan, 80 percent of Americans between the ages of 17 and 19 had a driver’s license 30 years ago. Today it’s fewer than 60 percent, a significant drop off that could be making insurance gradually more affordable for teens.
Other reasons may include the high cost of auto insurance and gas.
States with highest and lowest premium increases after adding a teen driver
The following five states showed the greatest average premium increase when adding a teen driver:
1. New Hampshire — 111 percent
2. Rhode Island — 107 percent
3. Maine — 107 percent
4. Wyoming — 106 percent
5. Connecticut — 102 percent
Here are the five states with the lowest premium increase:
1. Hawaii — 17 percent
2. New York — 53 percent
3. Michigan — 57 percent
4. Montana — 61 percent
5. New Mexico — 62 percent
Why are young drivers so expensive to insure?
"It makes a lot of sense that an adult's policy premium would spike if a teen is suddenly being covered as well," says Charlie Schein, a Connecticut-based independent agent who specializes in insuring young adults.
Because teens are immature drivers, Schein says, they do risky things behind the wheel, like speeding. They also don’t respond to hazards as well as adults.
It’s also more costly to add a young male driver than a female driver to an existing policy as insurers consider young males to be riskier, more dangerous drivers.
The insuranceQuotes.com study found that adding a male teen to a married couple's policy results in a national average premium increase of 92 percent.
However, the average increase for adding a female teen is 67 percent.
Age also plays a significant factor in premium increases. For instance, the average premium increase is highest for a 16-year-old male driver (110 percent) and diminishes each year to age 19.
Why do auto insurance premium increases vary by state?
The reasons behind such vast differences in premium increases are more complicated. Adding a teenage driver to an adult's auto policy in New Hampshire will result in an average annual premium increase of 111 percent. In Hawaii, however, the average increase is just 17 percent.
According to Eli Lehrer, president of the nonprofit research group The R Street Institute, there are several reasons behind these differences, including geography, driving culture and how insurance is regulated at the state level.
Gordon Ito, commissioner of the Hawaii Department of Commerce and Consumer Affairs' Insurance Division, says Hawaii's small increase is because of a unique state law.
According to Ito, Hawaii is the only state that doesn't allow insurance providers to consider age, gender or length of driving experience when determining premiums, which means teens really don't pay much more than adults for auto insurance.
And this, some experts say, points to a possible trend in states that have more tightly regulated insurance markets. Lehrer cites Michigan and New York as other states with high insurance regulation.
In states that are less regulated, such as Wyoming, insurers have more freedom to set pricing, which may account for more significant premium spikes when adding a teen driver.
"I think there's a pretty obvious pattern to this data," Lehrer says. "The states with the smaller increases for adding a teen are states that tend to be much more restrictive when it comes to the factors insurers can use when determining rates."
The pros of adding a teen driver to an auto insurance policy
According to Schein, the No. 1 reason a parent might add his or her teen driver to an existing auto insurance policy is simple: It’s less expensive for a parent to add a teen than for the teen to have his or her individual policy.
"My 19-year-old daughter has a clean driving record without any incidents, but she'd be paying at least three times as much for car insurance if she weren't on my policy," Schein says.
When covered by a parents' policy, a teen driver shares savings and discounts, such as having good credit and a clean driving record that have already been applied to the policy.
The cons of adding a teen driver to an auto insurance policy
The downside of adding a teen driver to an existing auto insurance policy, Schein says, is that the parents' premium could spike due to their teen's risky driving behavior.
For instance, if a teen driver gets into an accident while insured under his or her parents' policy, the insurer will most likely raise the parents' premium.
"The good news is that at-fault accident and moving-violation points follow the driver," Schein says. "The moment (your teen) moves off your policy and goes somewhere else, those points will follow them.”
Technology tips to keep teen drivers safe
Here are 3 tips to keep your teen safe behind the wheel.
1. Consider electronic monitoring devices.
Many insurance companies now offer devices that monitor driving and flag risky behavior such as speeding and aggressive driving. Some devices can even pinpoint a vehicle's location and let parents dial directly into the car if an alert sounds.
What's more, an IIHS study indicates that teens in vehicles with monitoring devices took fewer risks while driving than unsupervised teens.
According to Barry, the American Family Insurance Co. has supplied at least 2,000 families with a DriveCam video camera that alerts parents in real time when a teen driver makes a driving error. The program includes discounts for families that use the camera, which is free for the first year.
2. Enroll in a pay-as-you-drive program.
Otherwise known as usage-based insurance (UBI), pay-as-you-drive programs are offered by some of the country's largest insurance providers, including Progressive, Allstate, State Farm, Travelers, the Hartford, Safeco and GMAC.
UBI programs are voluntary, and drivers can earn discounts if you’re considered a safe driver.
In-car devices or on-board communication systems record information such as how hard you brake, the time of day you drive, and how many miles you drive. Insurers then use this data to set your rate.
While most pay-as-you-drive programs aren’t specifically marketed to monitor teen drivers, they can be used to improve their driving habits. For instance, Progressive’s device beeps when the driver brakes too hard.
3. Purchase a safe vehicle for your teen.
Rader says there are three words parents should keep in mind when looking for a safe car for their teen: big, boring and slow.
Larger vehicles are typically safer, and Rader says premiums for collision and comprehensive coverage will be lower if your teen drives a safe car that has little value since it costs less to repair.
insuranceQuotes.com commissioned Quadrant Information Services to calculate rates using data from the largest carriers in each state. The averages are based on a married and employed 45-year-old male and 45-year-old female who each drive 12,000 miles per year with policy limits of $100,000 for injury liability for one person, $300,000 for all injuries and a $500 deductible on collision and comprehensive coverage. The hypothetical drivers have clean driving records and good credit. The rates include uninsured motorist coverage and refer to new business policies.