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The cost of insuring your teen driver? A premium jump of 80%

Teenagers are the riskiest drivers on the road – and consequently, they’re very expensive to insure.

According to the National Highway Traffic Safety Administration (NHTSA), motor vehicle crashes are the leading cause of death for teens, accounting for one-third of all deaths of 16- to 19-year-olds.

And a 2013 Insurance Institute for Highway Safety (IIHS) report found that the 2,524 drivers in that age group who died in auto accidents accounted for 9 percent of all drivers involved in fatal crashes.

teen driving costs For the third year in a row, a Quadrant Information Services study commissioned by examined the economic impact of adding a driver between the ages of 16 and 19 to a family's existing car insurance policy. It found that adding a teen can sometimes double an annual premium – depending on the state you call home.

Jim Whittle, assistant general counsel and chief claims counsel at the American Insurance Association (AIA), says new drivers are riskier as they're inexperienced and are more likely to get in a car crash. "That's what drives up the cost of auto insurance for teens."

How much does it cost to insure a teen driver?

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 80 percent. This is up slightly from last year's average increase of 79 percent.

According to Kathy Bernstein, senior manager of the National Safety Council's Teen Driver Initiative, the relative steadiness of these numbers suggest a potential "leveling off" when it comes to teen driver safety.

In 1978, there were nearly 10,000 teen driver deaths, according to the IIHS. That number has dropped every year since, but Bernstein suggests we may have bottomed out -- at least for a while. 

Teen driver deaths have dropped for many reasons. First, there are fewer teen drivers on the road. A 2012 study from the University of Michigan found that 80 percent of Americans age 17 to 19 had a driver's license 30 years ago. Today it's fewer than 60 percent.

Additionally, a recent CDC survey found that “the proportion of high school seniors with a driver's license fell from 85 percent in 1996 to 73 percent in 2010.” 

What's more, Bernstein points out even licensed teens aren't driving as much because gas is expensive.

However, Bernstein adds, "Teens don't crash because they're bad drivers. They crash because they are inexperienced drivers, and nothing but time can compensate for that."

Teen driving accidents rack up quite a large bill. According to the Centers for Disease Control and Prevention (CDC), drivers between the ages of 15 and 24 make up just 14 percent of the U.S. population, but they account for 30 percent ($19 billion) of the total costs of motor vehicle injuries among male drivers and 28 percent ($7 billion) of the total costs of motor vehicle injuries among female drivers.

How age and gender affect the cost of insuring your teen

The study also found it's more costly to add a young male driver than a female driver to an existing policy. This is typically because insurers consider young men to be riskier and more dangerous behind the wheel.

teen driving costs

The 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 (109 percent) and diminishes each year to age 19.

Why there are premium differences from state to state

The study found that not all states are created equal when it comes to the cost of insuring a teenage driver. 

For instance, adding a teen to a parent’s auto policy in New Hampshire will result in an average annual premium increase of 115 percent. In Hawaii, however, the average increase is just 17 percent.

The reasons behind these differences are a bit complicated and elusive. 

According to Whittle, it's important to first understand that each state regulates insurance differently, which could account for some of the variations.

For instance, Hawaii (which the National Association of Insurance Commissioners ranks as the 27th most expensive state for auto insurance) is the only state that doesn't allow insurance providers to consider age, gender or length of driving experience when determining premiums.

This may also account for lower increases in states like New York, Michigan and North Carolina, where insurance is regulated more strictly and rating factors are more stringent.

"Another thing to consider are weather differences," Whittle says. "Driving during the winter months in New Hampshire is very different than driving during the winter in Hawaii. This could impact how these two very different states price auto insurance."

Sally MacFadden, chief property and casualty actuary with the New Hampshire Insurance Department, agrees with this theory. 

“It was a little surprising to see New Hampshire at the very top of the list, but it’s not that surprising to see us this high on this list in general,” MacFadden says. “Our weather is a significant factor, and when you put a new teen driver behind the wheel in a snow storm, that’s an especially risky situation.”

MacFadden adds that high population density and high cost of living may also be a factor in the high cost of teen driver insurance in her state.

Keeping teens safe behind the wheel

Regardless of where you live or what you pay for your teen's auto insurance, here are our experts’ tips on how to keep your teen driver safe this summer:

1. Beware the “100 Deadliest Days.”

According to the American Safety Council, the stretch between Memorial Day and Labor Day is considered the "100 deadliest days on the road." 

During this period, parents need to be vigilant with their teen drivers, Bernstein says.

She adds that parents should make sure they’re consistent when issuing driving rules to their teen.

“Or maybe,” she says, “you just shouldn’t let them drive at all during those days."

2. Parents have the power.

Parents will always be the most important factor in making sure teens drive as safely and responsibly as possible, says Kyle Donash, spokesman for The Allstate Foundation, which partners with groups like the National Safety Council to focus on improving overall teen driving safety.

"We have a lot of tools and tips, but we're focusing a lot of our energy on the power of parents to influence teens to be better, safer drivers," Donash says. 

For instance, Donash suggests that parents ride with their newly licensed teen at least 30 minutes per week during the first year they're on the road.

"Parents often think that once their teen gets his or her license that their job is done, but it's really just beginning," Donash says. "Being in the car with them greatly helps establish safe habits like buckling the seat belt, slowing down, and limiting distractions like cellphones, the radio, and other passengers in the car."

3. Consider installing monitoring technology in the car.

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.

View the press release here.

Methodology 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.

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