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The Ultimate Cheap Car Insurance Guide for Teens & Students

By Nick DiUlio

It should come as no surprise that teens are the most vulnerable population of drivers in the U.S. After all, they are the least experienced behind the wheel, which makes them a bit reckless, a bit risky, and very expensive to insure.

According to the Insurance Institute for Highway Safety (IIHS), teen driver crash rates are three times higher than for drivers over 20 years old per mile driven, and motor vehicle crashes are the leading cause of death among 13- to 19-year-olds. What’s more, in 2013 (the most recent data available), 2,524 drivers in that age group died in auto accidents, accounting for 9 percent of all drivers involved in fatal crashes.

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 also account for 30 percent ($19 billion) of the “total costs of motor vehicle injuries among males” and 28 percent ($7 billion) of the “total costs of motor vehicle injuries among females.”

These facts and statistics come with significant and far-reaching consequences for everything from insurance premiums to new teen driver safety initiatives designed to curb such startling figures. What follows are some of the most important details about the risks and expenses of teens behind the wheel.

Teen Driving Habits


Most experts agree that the root cause of teen driving risk is a lack of experience, and a 2012 study from the National Institutes of Health (NIH) supports this claims.

According to the study’s lead author, Bruce Simons-Morton of the division of epidemiology, statistics, and prevention research at the Eunice Kennedy Shriver National Institute of Child Health and Human Development at the NIH, novice teen drivers are almost four times as likely to end up in a car accident or close-calls as adult drivers. Moreover, compared to older, experienced drivers, risky driving behavior is five times more prevalent among teens newly behind the wheel.

“If you think about driving as a complex physical and psychological task, the crash rates we observed look a lot like the classic learning curve,” says Simons-Morton. “And it’s not just about learning how to drive the vehicle. It’s also about developing safe driving judgment and learning how to process a lot of information at once while you’re behind the wheel.”

According to Simons-Morton, this study is the first “naturalistic assessment” of risky teen driving, meaning that rather than have teens merely respond to a survey, he and his colleagues directly observed their driving habits first through various technologies installed in their vehicles.

For 18 months between 2006 and 2008, the NIH team studied 42 newly licensed teens, comprising 22 females and 20 males who attended high school or home school in Virginia. To provide a comparative backdrop, the study also assessed the driving habits of 55 parents operating the same vehicles. Here are a few of the study’s most interesting findings:

—Over the study period, teens experienced significantly higher rates of crashes or near-crashes compared with parents—37 crashes and 242 near-crashes compared to just two crashes and 32 close-calls among the adults.

—Crash rates rapidly decline after the first six to nine months behind the wheel, even though they remain much higher than experienced adults driving the same vehicles.

—Distractions such as texting, operating an Mp3 player, or talking on a cell phone while driving were the leading causes of crashes.

—Gravitational forces (or g-forces) played a big role. When teens are behind the wheel, g-forces are significantly higher (because they’re going faster), which resulted in teens taking sharper turns 25 to 30 times more often than their parents.

—Risky teen driving behavior is reduced exponentially when an adult accompanies them. “When there’s a parent in the car, they drive like an adult,” says Simons-Morton. “When they’re alone, they drive much more recklessly.”

—According to Simons-Morton, there is “no support for the contention that risky driving declines with experience and that adolescents learn to reduce risky behavior.” His hypothesis is that rather than reducing risky behavior, teens essential get better at managing it.

According to the CDC, here are a few additional driving habits that contribute to the riskiness of teens behind the wheel:

—Teens are more likely than older drivers to underestimate dangerous situations or not be able to recognize hazardous situations.

—Teens are more likely than older drivers to speed. They also don’t allow safe following distances, which leads to more crashes. According to the CDC, 37 percent of male drivers between 15 and 20 years of age who were involved in fatal crashes in 2012 were speeding. “What’s interesting is that teens speed, but they don’t speed the same way adults do,” says Kathy Bernstein, senior manager of the National Safety Council’s Teen Driver Initiative. “Adults speed because they want to get somewhere faster, but teens often speed when they’re learning to driver because they’re just driving too fast for road conditions. They often don’t understand, for instance, that if the road is wet or icy they should probably be going slower than usual.”

—Alcohol use also remains a serious problems for teens. According to the CDC, 25 percent of male drivers between 15 and 20 years of age who were involved in fatal crashes in 2012 had been drinking. What’s more, a national survey conducted in 2013 reported that 22 percent of teens reported that they had, in the previous month, ridden with a driver who had been drinking alcohol.

—Teens also have a problem with wearing seatbelts, as only 55 percent of high school students in 2013 reported that they “always wear seat belts when riding with someone else.” What’s more, 71 percent of drivers between 15 and 20 years old who were killed in motor vehicle crashes after drinking and driving were not wearing a seat belt.

—It also appears that driving during certain days (and certain times of day) is more dangerous than others. In 2012, 49 percent of teen motor vehicle deaths occurred between 3 p.m. and midnight and 53 percent occurred on a Friday, Saturday, or Sunday.

According to the American Safety Council’s 2010 “Deadliest Days On The Road” study, these are the 10 most dangerous days to be on the road (ranked from most dangerous to least):

  1. September 18
  2. October 16
  3. October 2
  4. June 26
  5. August 14
  6. September 25
  7. July 31
  8. September 4
  9. October 10
  10. May 22

The same study also found these five months to be the most dangerous for drivers (ranked from most dangerous to least):

  1. July
  2. October
  3. August
  4. September
  5. May

Finally, these are the five most dangerous times of day for U.S. motorists (from most to least):

  1. Midnight – 3:00 am
  2. Noon – 3:00 pm
  3. 9:00 – Midnight
  4. 6:00 – 9:00 pm
  5. 3:00 – 6:00 pm

“On these so-called deadliest days, parents need to be more vigilant with their teen drivers,” says Bernstein. “Make sure you are being consistent with your driving rules and on those days that are particularly risky and have a long heart to heart before they leave the house. Or maybe just don’t let them drive at all.”

Parent Response To Driving Habits

When it comes to protecting teens from the hazards of driving, parents are far from helpless. According to Simons-Morton, his study should accent the need for parents to be more actively involved in their teens’ new life behind the wheel.

“Our findings suggest parents have a responsibility with their newly licensed teen to set limits and hold their teens highly accountable,” he says. “We don’t give a kid his first bike and say, ‘Okay, go ride across town.’ Why not give limits on auto driving as well?”

Here are five tips for protecting your teen driver:

—Educate them about the dangers of driving and hold them accountable. “Zero tolerance for alcohol is a good start,” says Richard McGrath of McGrath Insurance Group. “Also consider not allowing your teen to drive at night or with other teens in the car until your teen has had sufficient experience and you believe he or she will drive responsibly.”

—Consider installing monitoring technology in the car. Russ Rader, spokesman for the IIHS, says the primary deterrent to risky behavior is a parent riding shotgun. “So why not extend that period of supervision even when you’re not in the car,” says Rader. “Something like DriveCam, which is a video system that captures audio and video of what’s going on in the car, might make teens think twice before driving recklessly.”

—Actively teach your teen how to drive. Dr. Susan Kuczmarski, author of "The Sacred Flight of the Teenager: A Parent’s Guide to Stepping Back and Letting Go," suggests asking your teen to talk out loud as you drive, narrating what a good driver should be seeing and doing to drive safely. “Listen as your teen describes your driving and check for any omitted steps,” says Kuczmarski. “When a teen can describe your good driving habits as you drive, you'll know that he is ready to get behind the wheel.”

—Have your teen sign a contract of safe driving and be prepared to enforce it. “Be willing to take away the car privileges for any infraction of agreed upon rules,” says Susan Tordella, parenting expert and author. “For example, speeding tickets mean a loss of driving privileges for a certain period of time.”

—Parents can also seek out additional online tools such as the National Safety Council’s “Drive It Home” initiative, which is a site designed to help families learn about the issues affecting teen drivers along with tips on how to keep teen drivers safe on the road.

The Power of Graduated Driver Licensing


The IIHS has some good news for parents of teen drivers: Graduated driver's licensing programs are working—and saving lives.

According to Anne McCartt, the highway safety institute's senior vice president for research, an analysis of teen crash deaths shows that fatality rates have plummeted since 1996, the year that states first began enacting graduated driver's licensing (GDL) systems. The greatest decline occurred among 16-year-olds, with fatal crashes dropping by 68 percent between 1996 and 2010. Fatal crashes fell 59 percent for 17-year-olds, 52 percent for 18-year-olds and 47 percent for 19-year-olds.

“When you look at the last 15 years or so, as states have implemented these programs, there has been a lot of success in reducing fatal crashes,” McCartt says. “But there are still improvements to be made.”

The study, which the highway safety institute conducted in conjunction with the Highway Safety and Highway Loss Data Institute, suggests that if every state adopted all five components of the toughest young driver laws in the country, more than 500 lives could be saved and more than 9,500 collisions could be prevented each year. Furthermore, a dozen states could cut traffic death rates by more than half among 15- to 17-year-olds if they adopted the strongest GDL provisions.

“Some states would benefit more than others," McCartt says, "but the bottom line is that everyone would benefit in the end.”

But will declining death rates for teens involved in crashes affect the cost of car insurance for teenagers (which is often 40 to 50 times more expensive than the average adult policy)? According to Mike Barry, spokesman for the nonprofit Insurance Information Institute, probably not.

“While a fatality is certainly the most tragic occurrence in any accident, day-to-day claims are primarily being filed for property damage, bodily injury and liability,” Barry says. “So a decrease in fatality statistics alone isn’t going to significantly change the general trend, which is that if you are between the ages of 18 and 25, you’re going to be paying more for insurance.”

So what makes a good GDL program?

A GDL program has three stages: a supervised learner’s period, an intermediate license (after passing a road test) that limits driving in high-risk situations except under supervision, and a license with full privileges. But not all GDL programs are created equal. McCartt says the five key components to a successful system are:

  1. A permit age of 16—There are currently eight states (and the District of Columbia) with a minimum permit age of 16. Some states, such as Alaska, the age is as low as 14.
  2. Practice hours—In most states teens must undergo a minimum number of supervised practice hours before getting a license. For instance, Pennsylvania requires 65 hours, which is the most rigorous of any state. Conversely, several states such as South Dakota, New Jersey, and Arkansas have no minimum amount of supervised driving hours.
  3. License age—In New Jersey, teens can’t get a license until they turn 17. Conversely, teens in Montana and Idaho can get behind the wheel when they turn 15.
  4. Night driving—Restricted night driving for novice drivers is implemented in most states. For instance, South Carolina teens are only allowed to drive until 6 p.m. Many states also restrict nighttime driving for teens until they turn 18.
  5. Passengers—It has been proven that teen drivers are even less safe when they’ve got passengers riding in the car, which is why 15 states and D.C. do not allow teen passengers at all. Some other states like Florida, Iowa, and Mississippi have no passenger restrictions. Many states allow one teen and that person may have to be at least 21 as is required in New Mexico and in New York.

“The whole idea is to gradually ease teens into more complicated and riskier driving situations as they get more experienced,” McCartt says.

There’s room for improvement.

Since 2000, the highway safety institute has been rating states with the best GDL laws from good to poor. Initially, only six states and D.C. earned good ratings; nine were considered poor. By May 2011, 36 states and D.C. rated good, seven rated fair and seven were marginal; none of the states earned poor ratings.

However, McCartt says state legislators have been sluggish in toughening their state’s GDL laws in recent years, particularly when it comes to raising the age for a permit or license. During the 2010-12 legislative sessions, for instance, nine states strengthened aspects of their laws for young drivers, compared with 20 states during the 2007-09 sessions.

To highlight the benefits of GDL programs, the two institutes developed an online calculator that shows safety gains that states could realize by adopting some of the most effective GDL components. In addition to highlighting best practices, the calculator also shows the estimated fatal-crash and collision-claim reductions that a state might achieve with various combinations of changes in GDL laws.

Take South Dakota for instance. The state, which has the youngest licensing age in the country, currently allows 14-year-olds to obtain a learner’s permit and a license just three months later. According to the study, if South Dakota raised its license age to 17, the benefit would be an estimated 32 percent reduction in fatal crash rates among 15- to 17-year-old drivers and a 13 percent reduction in collision claims among 16- to 17-year-old motorists. Even raising the license age to 15 years and six months could reduce fatal crashes by an estimated 16 percent and collision claims by 6 percent among teen drivers.

“[Raising the driving age] becomes a politically challenging case to make,” says Richard Harkness, CEO of ADEPT Driver, creator of teenSMART, a program aimed at reducing car crashes among teen drivers and lowering teens' car insurance premiums. “Here in California, I suggested raising the age to 21, and the legislature said it couldn’t do that, even though it would allow new drivers to go through the driving learning curve at a much safer age. To me it just makes sense, but it was never going to happen.”

According to the study, even the best states have room for improvement.

For example, Connecticut’s GDL law comes closest to being the best system. The state makes teens wait until age 16 for a permit and restricts all teen passengers during the intermediate stage of licensing. However, if Connecticut also adopted the best provisions for practice hours, license age and nighttime driving, it could see a 17 percent reduction in deadly crashes and a 13 percent drop in collision claims among teen drivers.

“I think this was a very comprehensive and well-executed study that offers some excellent information upon which lawmakers can take future steps to make driving even safer for teens,” says Mike Barry, spokesperson for the nonprofit Insurance Information Institute. “This all falls in line with what people in the insurance industry have seen for many years, which is that a gradual, phased-in approach to full licensure appears to be the best way to promote overall safety.”

According to experts, supporting GDL laws and enforcing them can be one of the most effective ways to reduce teen crashes and motor vehicle accident deaths.

“Parents are the main enforcers of graduated licensing rules, but unfortunately they don’t always enforce them,” says Rader.

To find details about your state’s GDL laws, visit the Governors Highway Safety Association website.

How To Insure Your Teen Driver

Here’s the bottom line: Because they are the riskiest demographic on the road, teen drivers are very expensive to insure.

“Because new drivers are inexperienced they are also riskier, and they don’t have experience to draw on that would enable them to be more confident, successful drivers,” says Jim Whittle, assistant general counsel and chief claims counsel at the American Insurance Association (AIA). “All of this translates into additional accidents, more repairs to vehicles, and a greater potential for injury. That’s what drives up the cost of auto insurance for teens.”

Nonetheless, finding the proper auto insurance policy for your teen can be as important as making sure the seat belts are buckled. So as your teen prepares to get behind the wheel, first consider the following question: Who is the primary driver of the vehicle?

“The answer to this question will greatly impact the premium increase to your insurance,” says Charlie Schein, an insurance independent agent in Connecticut who specializes in insuring young adults.

Schein says a teen who only occasionally drives the family car doesn’t necessarily need to have his or her own policy since, generally speaking, the parents' standard auto policy will cover anyone in the household who drives the car infrequently. Schein’s advice: “If you’re looking to save as much as you can, then do not make your teenager the principal operator of a car.”

If, however, your teen is the primary driver, the best—and most affordable—option is to insure your child on your existing auto policy.

For starters, the policy will be cheaper than an individual policy for the teen. Moreover, adding another vehicle or primary driver to an already existing policy means the teen will most likely have higher limits (i.e. the max amount an insurance provider will pay out following an accident) than he or she would alone.

There are a few downsides to consider. For instance, keep in mind that adding your child to an existing policy means your policy is now responsible for your child’s mistakes. This means that in the event of an accident you could be sued in addition to your child. Moreover, any surcharges incurred by your teen for moving violations or accidents will be applied to your policy.

And by the way, don’t let your teen driver use the family car—or even a teen's own car—for pizza delivery work, Schein adds. Using a vehicle covered by a personal auto policy for commercial delivery can put a policy at risk for non-payment of a claim or even cancellation.

Ron Moore, senior product consultant for MetLife Auto & Home, warns against shopping for insurance based on cost alone. Many times it can be attractive to have lower limits than the parents’ policy and drop some types of coverage as a way to ease the pain of adding a young driver to a policy. If, however, your teen gets in an accident, you will be held financially responsible and you’ll want to make sure your insurance has high enough limits to cover all potential costs.

“That reduced premium may look enticing,” Moore says, “but the results of an auto accident may literally leave you homeless, depending on the liability and severity of the loss.”

Also, Moore says many parents believe that if they provide low liability limits ($100,000 for injuries or $50,000 for property damage, for example) for their teen, there won't be any effect on the household if a teen driver is involved in an accident that seriously injures someone. However, it’s not uncommon for parents to be held responsible for damage and injuries caused by a high school student, even if the student has his or her own auto insurance policy.

“It has happened where the parent's wages are part of a structured settlement or garnished to pay for the accident damages,” Moore says. “Parents shouldn't believe that they won’t be held responsible for the actions of their son or daughter, even if they have their own insurance policy.”

At the end of the day, make sure your teen is properly covered. According to McGrath, the most important part of an auto policy for teens is coverage for bodily injury and property damage. He recommends bodily injury limits of $100,000 per person and $300,000 per incident or $250,000 per person and $500,000 per incident, and property damage limits of $200,000 or $250,000.

“In today’s litigious society, inadequate limits could cause financial hardship for teen drivers and their families,” says McGrath.

Finally, remind your teen that his or her grades could translate into cost savings. Discounts are available for young drivers, including price breaks for maintaining a B average in school. Some companies also provide savings for students who pledge to drive safely or who participate in driver training courses.

Tips for lowering the cost of teen auto insurance


According to several industry experts and analysts, adding a teen driver to existing auto policy will most likely cost anywhere between $500 and $1,000 per year. However, this increase is going to depend largely on where you live, as each state’s unique regulatory environment will play a role in determining rates.

Premium increases will also be affected by a teen’s gender. According to experts it’s 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. Age also plays a significant factor in premium increases (i.e. the younger the driver the more expensive he or she will be to insure).

Regardless of where you live or the age of your teen driver, however, there are several ways to make sure premiums don’t skyrocket. Here are a few tips to help keep teen driver premiums to a minimum:

  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.

    Here’s a list of the safest cars for teens as compiled by the IIHS.

  4. Find out if your teen driver is eligible for discounts.

    According to McGrath, most insurers will discount premiums for teens who maintain at least a B average in school and if they take a recognized advanced driver training course in addition to driver’s education.

    “The real key, though, to keeping premiums low for teen drivers is to drive safely,” McGrath says, adding that if your teen causes a collision, it could increase your overall insurance costs by up to 75 percent. “That’s a heavy hit, no matter what state you live in.”

  5. Keep their records clean

    One of the best ways to keep the cost of insurance to a minimum is to encourage teen drivers to keep his or her driving record free of accidents and moving violations for at least three years. Moving violations and insurance claims will most likely result in a serious premium surcharge. What’s more, many insurance companies grant discounts to "safe drivers."