Let’s ride: How much is car insurance for teens?

Getting your driver’s license is an exciting step toward independence. Driving often means more freedom and options. Once you’ve met all the requirements, you can travel to and from work or school or hang out with friends without relying on someone else.

However, earning more freedom also means more responsibility. Before you hit the road, you need to figure out a few basics, like auto insurance and how it works for teen drivers. You can use this guide to help determine how much car insurance is for teens and how to make it as affordable as possible. Start your engines!

What is car insurance?

Car insurance protects you and other people on the road from the financial hardships of car accidents, theft, and other vehicle damages. After a collision or theft, it can help cover the costs of fixing or replacing a car, property damage, medical bills, lost wages, and many other things. 

Typically, auto insurance is separated into different types of coverage you can choose when you buy an insurance policy. Most states require at least a minimum level of auto insurance, especially liability insurance – coverage that helps pay for any damage or injury to others if it’s your fault. 

Major types of coverage include:

Bodily injury liability coverage

If someone’s injured in an accident and you’re at fault, you could be liable – AKA responsible – for compensating them. Bodily injury liability insurance pays for some or all of the injured party’s medical expenses up to the policy limit, such as medical bills or lost wages. 

Liability insurance doesn’t, however, cover any of your personal medical expenses or property damage.

Property damage liability coverage

This provides payments for property damaged or destroyed in an accident where you’re at fault. It could be other vehicles, fences, walls, or other objects affected by the incident. How much coverage you have depends on your policy limit. 

Again, liability insurance helps compensate other involved parties if you’re at fault, but it doesn’t cover damage to your vehicle or property. That’s a separate element of car insurance (see below).

Underinsured/uninsured motorist coverage

This coverage protects you if a driver without insurance coverage injures you or you’re involved in a hit-and-run accident.

Medical payments coverage

Often an optional add-on to basic liability insurance, medical payments coverage helps cover treatment for drivers, passengers, and pedestrians injured in an accident regardless of who’s at fault. It’s also called MedPay, and may also cover things like health insurance deductibles, co-pays, medical appointments, X-rays, surgery, ambulance fees, and funeral expenses.

Personal injury protection (PIP) coverage

Also called “no-fault insurance,” PIP is another type of insurance for medical expenses. It covers injured policyholders and their passengers in an accident. It can also help pay for related expenses even if someone doesn’t have health insurance.

Collision coverage

This optional policy add-on helps cover damage to the policyholder’s car caused by another party. It doesn’t cover all scenarios, but it can help cover damage due to things outside your control like hitting a pothole or an inanimate object.

Comprehensive coverage

If something other than a collision — think major storms, impact from a deer, a break-in or vandalism, or a falling tree — damages your car, comprehensive insurance coverage will pay for those expenses.

Some other handy additions to an auto insurance policy are coverage for roadside assistance, towing, rental car reimbursement, and new car replacement. A full coverage policy combines several add-ons to protect you from many possible scenarios. What you choose for your car insurance policy depends on what your state requires and any additional coverage you want.

Why is it important to have car insurance?

It’s the law

Car insurance is a legal requirement for driving a car in most U.S. states. It's also a crucial part of building and protecting your financial safety.

Teen drivers have more accident risk

Young drivers 16-19 are at the highest risk of being in a vehicle accident. Having insurance helps protect you and your family from serious financial harm. Luckily, only a small number of those with liability insurance need to file a claim. According to the Insurance Services Office in 2022, only 0.7% of people with liability insurance filed bodily injury claims, and just 2.4% had property damage liability claims. 

Insurance is something you buy but hope you’ll never need. If you do need it, you’ll be glad you have it!

How much is car insurance for teens?

The cost of auto insurance for teenage drivers varies based on your state, insurance company, and policy. In general, it costs more for a teen driver to get a separate policy than to join a parent’s policy. Things like gender, location, and car type can also impact rates.

As a teen driver, you won’t have a long history that proves you’re a safe driver with good driving habits. But if your parents or caregivers have an established safe driving record, you may be able to access lower auto insurance rates. So, how much is car insurance for a 16-year-old driver?

According to data from top car insurance companies analyzed by Forbes:

• $8,108: Average annual cost of a separate policy for a 16-year-old female driver

• $9,422: Average annual cost of a separate policy for a 16-year-old male driver

• $5,367: Average annual policy cost for a married couple plus a 16-year-old teen driver

• $2,419: Average cost to add a 16-year-old driver to the average couple’s policy

As you can see, it’s typically much cheaper to join a parent’s policy than go it alone. Savings like that can provide top-notch road trip snacks 🍿— or a healthy emergency fund. Let’s look at some more ways to save on your car insurance.

How to save money on a teen car insurance policy

If you’re looking to save money on car insurance premiums, you can often get a partial vs. full coverage policy. But there are other ways to get lower car insurance rates for teen drivers.

Keep your grades up

Some auto insurance companies will reward good grades with car insurance discounts. Savings vary between companies and states, but you may be eligible for a good student discount if you maintain a B average or better. One more reason to hit the books! 🤓

Pro tip: Talk to an insurance agent to get a clear picture of the driver discount your grades can get you. 

Use a car safety app

Want to fast-track safer driving habits? Car safety apps like Greenlight Infinity monitor driving behavior for signs of car crashes, speeding, and quick stops. You can also get Driving Reports with updates on driving progress and must-know driving tips — like how to avoid hydroplaning or maintain a safe stopping distance. Regular check-ins help lock in learning and build safe driving habits over time.

Plus, all users — passengers and drivers — can switch on crash detection and SOS alerts to dispatch 911 and alert your emergency contacts of your location if an accident occurs.

Stick with the family plan

Teens are one of the most expensive age groups to insure. The good news is that car insurance costs tend to go down as you age. But if you spring for your own policy when you turn 18, you’re likely to pay much higher rates.

Remember that the average rates for a married couple’s car insurance increase by $2,419 when they add a 16-year-old driver to their policy. It’s even less of an increase as you reach 17, 18, and 19 – as long as you maintain a clean driving record and are still eligible to stay on your parent’s plan.

Drive safely and save

Safe driving protects you, other drivers, and pedestrians – and it might be the key to cheaper car insurance rates. Many car insurance companies offer safe driver discounts to reward you when you drive safely and maintain a clean driving record. 

You might also earn a discount if you take a driving course that reinforces safe driving habits – which states often require. Many of the major insurance providers offer car insurance discounts for young drivers who complete an approved driver education program🧑‍🎓 

Some insurance companies also offer teen driving discount programs for drivers under 25 with clean driving records, or family discounts for adding a teen driver to an existing policy. 

Shop around

All insurance companies are different and their policies can change over time. Look for family discounts and programs that reward good grades or early driver education.

Check all the options before you decide. Some features, like accident forgiveness, might only be available to drivers with an established driving history. Speak to an insurance agent to get car insurance quotes and policy information before you choose your plan. 

Save up for your car insurance with Greenlight

Figuring out how much car insurance is for teens depends on what kind of coverage you need and any extras you want in your policy. 

Whether you buy your own car insurance or join your parents’ policy, the Greenlight debit card and banking app* can help you budget and save for your new driver expenses. Set a savings goal to pay your monthly premiums, or share your Paylink to get money in your account in no time. You can also use Greenlight to manage your earning, saving, giving, and spending all in one place. 

Parents – you can stay connected with your kids’ finances and help them build healthy financial habits while they learn how to budget money. Plus, kids can learn to make responsible decisions about spending — and even get some practice saving up for their first car.

Drive smart with Greenlight Infinity’s new driver safety feature!

Hitting the road is super exciting, but staying safe is a top priority. With Greenlight Infinity’s driving reports, you can show off your awesome driving skills and keep your parents in the loop with real-time driving insights. 

Make sure you're the best driver you can be. Sign up for Greenlight Infinity today and take advantage of our feature. With Greenlight Infinity, you’ll even get access to safety features like crash detection and location sharing.

Visit the Greenlight Learning Center for helpful resources on all things family, finance, and fun.

This blog post is provided "as is" and should not be relied upon as a substitute for professional advice. Some content in this post may have been created using artificial intelligence; however, every blog post is reviewed by at least two human editors.