Sweet 16: good for parties, bad for your car insurance
Nearly every factor with in car insurance premiums comes down to one simple question: what’s the risk? Statistically speaking, a 16-year-old teen driver is less experienced and thus more likely to receive a citation or cause an accident. In the eyes of an insurance company, that means more risk and a greater need for financial protection — i.e., higher premiums. In this regard, it shouldn’t come as a surprise that the average 16-year-old in 2016 paid an annual premium of $6,491 for insurance compared to the national average of $1,323.
There are many things an insurance company looks at when determining your rate and the car insurance rate of your new driver. Age, gender, where you live, and what you drive affect how much you pay. And when you’re paying significantly more for your newly-licensed driver, you want to make sure you’re getting the best deal possible. So, let's break it down. Starting first with which company should you choose.
In a survey we completed to find which car insurance company was the cheapest for teens, we discovered that Geico provided the lowest rate with all other metrics and coverage constant with Progressive as number 2. Now, our survey used the profile of a 17-year-old driver on their parent's policy within 5 zip codes across the US. Considering that we are talking about 16-year-olds and you and your driver might not fit the profile we used, you should look at many different companies in order to find the best rate for you. Because your teen's rate changes so much as they age, we recommend shopping for car insurance every 6 months. Do that here with us.
Although the selected profile and policy might be different from your family's, you can still our data as a foundational jumping-off point.
|Location||State Farm||Allstate||Geico||Progressive||Liberty Mutual|
As we stated, your age is a huge rating factor for your teen driver's premium. Out of every age group, drivers between 16-19 pay more than any other driver. It really just comes down to the lack of driving experience combined with the probability a young driver will take more risks, which could lead to a claim pay out and greater cost incurred by your insurance company. This is the average rate per a 6-month policy for a 16-year-old added to a family plan in which the parents are both 50-year-olds, insuring a 2012 Honda Accord and a 2012 Ford Escape prospectively.
Just like the age of your child, gender can affect their insurance premium. Statistically, a young male driver is more likely to receive a citation or be in an accident than a young female driver. As such, they are more expensive to insure. On average, 16-year-old males pay $295 more per 6-month policy period for insurance than their female counterparts. Still, it's worth considering that as you age, the difference between men and women becomes less significant. In fact, some states don't use gender as a metric for determining car insurance rates.
Where you live also plays a big role for you and your young driver’s insurance premium. As insurance as a whole is state regulated and zip-code specific, variations amongst the area you live will cause the cost for car insurance to vary greatly. States with high bodily injury requests or states with no-fault laws such as Michigan or Florida will cost more to get insured. Moreover, the number of drivers in your state can also impact your child’s insurance rate. States with a low population density where there is less bodily injury or overall liability insurance claims, such as Midwestern states like Ohio, tend to have lower premiums than states with more people. Keeping with the idea of risk management, the more drivers your state has, the more likely you are to be near other drivers (with the potential of a collision) and insurance companies have to cover that additional risk.
The type of car your teen drives definitely affects your car insurance rate . . . hence, the name. For example, a teenager with an off-road capable truck is statistically more likely to have a higher insurance rate than a simple car. As a good general rule, any vehicle with a high MSRP will have a high premium because on the expense your insurance company will have to replace it if its totaled. So, if you’re looking for a cheaper rate for your teen driver, you should stick to a simple car like a sedan.
Consider, as well, the type of coverage your teen driver's vehicle has. If your teen has full coverage, including comprehensive and collision coverage as well as uninsured motorist, you can expect to pay more.
Now that we’ve talked about why it is so expensive to insure 16-year-olds, let’s talk about ways to save.
If your driver has the grades, you might want to consider the good student discount. Your insurance company would require proof, such as a transcript. Usually, your insurer will require above a 3.0 GPA, or B average. But this can vary, so you'll want to speak with your insurer specifically for details.
Savings for Good Student and Good Driver Discount
Another option is what’s called a defensive driver discount. Young drivers who have taken a professional driving course are less likely to receive a citation or get into an accident. Like the good student discount, your insurance company will usually require proof of this such as a receipt. Not every insurance company offers this discount, so ask your insurance company beforehand!
Because teens are already more likely to be in an accident or get a citation, it is imperative for low rates to keep them out of any legal trouble. Texting while driving, speeding, or being in an at-fault accident can seriously affect your premium. In a state-by-state breakdown, DUIs, and racing (on average the most expensive citations) raise insurance premiums at least 40%. Moreover, most insurance companies offer a good driver discount which is dependent on a clean driving record.
Average Increase in Annual Premium in 2016
|Speeding 11 - 15 MPH Over Limit||$141|
|Speeding 16 - 20 MPH Over Limit||$153|
|Speeding 21 - 25 MPH Over Limit||$165|
Consider, however, that these numbers are a holistic average of the entire US population. If your teen receives a citation or violation, you can expect the rates to be significantly higher.
Although it's tempting to get your child their own policy, bear in mind our data shows that it will cost much more — about $452 more per 6-month policy period. Moreover, most insurance companies require anyone that lives in your residence, as a 16-year-old would be, that is above legal driving age be either added to your policy or excluded altogether. Meaning, if your teen were to use your vehicle for any reason, they risk not having coverage because they have their own policy and are thus excluded from yours.
There are many things that go into your insurance quote, as we discussed. So, any time there is a change in your location, your age, your car, etc., you should check with other insurance companies to make sure you're getting the best possible rate. For example, because your teen's rates vary so much as they age, any time they have a birthday you should look at as many companies as possible in order to make sure you're getting the best possible rate. Only with us can you examine hundreds of companies at once.
At the end of the day, you should expect the premium for a 16-year-old driver to be higher than any other age group. Insurance companies see their proclivity for accidents and lack of driving experience as major red flags and thus, charge quite high for them. But, considering companies like Geico and Progressive as well as owning a moderate car, being good student, and attending defensive driving classes are some good places to start in order cut costs on car insurance. However, the absolute best way to save on car insurance is to look for rates every 6 months. Only with The Zebra can you shop over 200 car insurance companies at once.
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