Becoming a licensed driver at the age of 16 opens up a new level of freedom and excitement. However, that excitement is often dimmed down by the prices of car insurance.
According to Carole Walker, executive director of the Rocky Mountain Insurance Information Association, drivers who’ve just received their licenses are going to pay more, as statistically, they are prone to get into more accidents than drivers with experience. And this is correct, as data from CDC shows, about 2,800 teens aged 13–19 were killed, and around 227,000 suffered from injuries in auto crashes in 2020.
So how much is car insurance for 16-year-olds? How much should the parent pay to ensure their children are protected? What is the average cost to add a teenager to car insurance? What is the cheapest insurance for 16-year-olds to consider?
Read on to find all the answers to these questions and more information about car insurance for a 16-year-old.
Discovering the Cost of Car Insurance for a 16-Year-Old
Source: Visual.ly
Car insurance for a 16-year-old has some of the highest rates. The final premium price depends on several factors, including location, car type, gender, teenager’s grades, and coverage levels. The average price of car insurance for a 16-year-old on the national level is up to $9,000 per year, which is $750 a month.
A big way to bring down the premium rate is to add a 16-year-old to a family plan, which costs cheaper, as opposed to a teen having an individual policy. The premium can also be brought down by student grade discounts, seatbelt use, and driver education.
Source: Moneygeek
There is a big price difference in car insurance for 16-year-olds by state. The most expensive rates can be found in Florida, Louisiana, California, and Delaware. When talking about the cheapest options, these can be found in Ohio, Maine, Idaho, and Vermont.
Finding the Cheapest Car Insurance for a 16-Year-Old
So what is the cheapest car insurance for a 16-year-old? The price of car insurance varies from company to company, from cheap policies with minimum coverage to expensive policies with comprehensive coverage and a low deductible.
The Average Cost To Insure a Teenage Driver
| Average annual premium, male | Average annual premium, female | |
| Nationwide | $974 | $785 |
| Erie | $1704 | $1284 |
| Geico | $1801 | $1518 |
| Farmers | $1489 | $1355 |
The Cost of Adding a Teenager To Car Insurance
| Average annual premium, male | Average annual premium, female | |
| Nationwide | $2357 | $2168 |
| Erie | $3118 | $2835 |
| Geico | $3112 | $2966 |
| Farmers | $3533 | $3271 |
Nationwide
Nationwide offers five coverage options priced at low average rates for 16-year-olds. The company is happy to give good student discounts and has other helpful coverage options such as accident forgiveness, roadside assistance, and gap coverage.
Erie
Erie offers some of the cheapest premium rates, followed by great customer service. According to a recent study, Erie’s minimum coverage rates are 43% cheaper than average. Moreover, the rates for full coverage are 38% cheaper. Erie offers the standard pack of car insurance and several other notable coverages that customers might not find elsewhere.
Geico
Geico premium prices might not seem pocket-friendly at first, however, when you apply good student discounts, driver education, and seatbelt use, you can grab the premium for a great price. The company provides great insurance coverage that corresponds to or even exceeds the price you pay.
Farmers
Farmers is one of the largest companies, providing car insurance in the US. The company has various resources and programs dedicated to helping teen drivers drive safely and gain good driving habits.
Understanding the Effect of Coverage Levels on Rates for 16-Year-Olds
Cheap car insurance for a 16-year-old may sound great, but as studies have shown, drivers between the ages of 16 and 17 are more likely to get into car accidents. In those cases, the financial difference between full coverage insurance and the state minimum seems like nothing compared to the financial costs it will take to cover an accident.
The Average Monthly Cost of Car Insurance for a Teenager
| Coverage | Includes | Monthly Premium |
| Liability | The liability protects you when you cause damage to others or their stuff. It will repair their vehicle and cover their medical bills. But you will have to pay out of pocket for any damage you cause to your car or health. | ~$196 |
| Collision | Collision coverage will help cover the repair cost of your vehicle regardless of fault. Nonetheless, if the accident happens because of bad breaks or if you hit an animal, the collision won’t cover it. | ~$567 |
| Comprehensive | The comprehensive coverage will cover others’ damage (like the liability), and your damage (like the collision), it also covers damage from theft, vandalism, fire, severe weather, etc. | ~$594 |
Unveiling How Gender Affects Car Insurance for a 16-Year-Old
The average insurance rates for a 16-year-old are higher, and one of the factors that influence the price is gender. Studies show that males are riskier drivers than female drivers; they generally get more tickets and cause more accidents.
These stats, combined with the unawareness of a teen male driver, cause insurance companies to raise the average cost of car insurance for 16-year-old males.
Check out this video if you want to learn more about how you can get cheaper car insurance for a 16-year-old boy:
In general, car insurance for a 16-year-old male costs about $100 more per month, which reaches over $1300 annually. Luckily, the price difference does gradually decrease as teens get older. Some states have banned insurance companies to reduce the average car insurance cost for 16-year-old females.
Source: Forbes
How Location Impacts Car Insurance Rates for 16-Year-Olds
Another aspect that influences the cost of car insurance for a 16-year-old is location. Insurance companies pay attention to the weather in each location, whether there are hails or floods, big winds that cause trees to fall, or any other natural disasters. Likewise, they consider where the teen spends the most time (home, school, work, etc) and whether this location is safe or prone to auto theft and vandalism.
One of the biggest factors when deciding how much is car insurance for a 16-year-old is the state. States with higher numbers of other drivers, high rates of bodily injury claims, no-fault laws, and overall state population density have a much higher 16-year-old insurance cost.
On average, the cheapest states for teenage car insurance average cost are Maine, Hawaii, and Tennessee, while the most expensive states were Florida, Louisiana, Nevada, and Michigan.
Source: Policygenius
Identifying the Most Affordable Vehicles Car Insurance for a 16-Year-Old
When picking out the perfect car for teen drivers, parents look into the safety of the car, while the teens themselves try to pick trendy and fast cars. The type of car that you choose to insure for a 16-year-old driver also affects the average insurance cost for a 16-year-old. For example, insurance for a 16-year-old with a Mustang will cost 33% more compared to insuring a Honda CR-V, which is considered one of the cheapest cars to insure.
Overall, any vehicle with a high MSRP will have a correspondingly high premium rate. The explanation for this is logical: in the case of an accident, a luxury vehicle or a high-performing sports car will be pricier to repair.
A study from June 2022 found that the 2010-2014 Toyota Prius, the 2010-2014 Ford Focus, and the 2010-2014 Nissan Versa allow you to have some of the cheapest insurance for 16-year-olds.
Tips for Saving Money on Car Insurance for a 16-Year-Old Driver
There are always ways to save money on car insurance for a 16-year-old. Some of the tips are specifically for teen drivers, while others may be more general and apply to other circumstances as well.
Be aware that these insurance prices won’t stay high permanently. Your insurance premiums will probably decrease as your teen driver gets more driving experience. Your budget, however, might benefit from anticipating rising rates for a few years and understanding how to manage any increases efficiently.
Keeping Up With Good Grades
Teenage drivers who maintain a 3.0 or “B” or a higher average can get up to 16% off premium rates. You need to check with your insurance company representative if they have any offers for students Also, make sure to ask about eligibility criteria. This may vary from provider to provider, but mostly if you demonstrate proof of good grades you can qualify for a discount.
Driving Classes
16-year-old drivers that take certified driving lessons can often get car insurance discounts. For example, in New York, teens with completed driving classes get a 10% discount. You should check in with your car insurance agent to see if there are any relevant discounts for students taking additional driving classes.
Clean Driving Record
Even though this tip won’t be relevant to those who just received their license; you can notice as your premium rates go down each month thanks to good driving. Speeding, car accidents, or reckless driving will increase the price of already expensive teen insurance.
It’s recommended to avoid traffic violations or claims, and focus on driving responsibly, as these things are usually the ones that significantly influence your insurance premiums.
Choose the Right Car
Teen drivers may find the sound of a fancy sports car alluring, but so are the insurance rates for such vehicles. Choosing automobiles with a solid reputation and in good condition (something that won’t break down) is crucial for a low insurance rate.
Your 16-year-old’s car’s kind might have a big influence on how much you pay for auto insurance. If you want to buy your adolescent a car, consider a 4-door sedan rather than a quick and sporty coupe. If you want to save money, you might even consider insuring a car without complete collision protection.
Just be aware that if the inexperienced driver causes an accident, you must pay to replace the vehicle out of pocket. When choosing a car, discussing your insurance options with your agent may help you choose the coverage that fits your budget the best.
Installing additional safety features in your vehicle, such as airbags, anti-lock brakes, and anti-theft systems, especially if they’re missing, can lower your insurance costs. These lower your car’s chance of theft and accidents, which lowers the insurance company’s risk.
Being Added to a Parent’s Policy
Getting on your parent’s car insurance policy as an additional driver may be way cheaper than getting your separate policy. However, it’s important to make sure to check with the insurance company to confirm your car is adequately insured.
Check out this video for more tips on saving money on your car insurance:
Conclusion
Many are awaiting the day that they turn 16 years old and can finally drive, and many of those teens get very disappointed when they see the prices of car insurance. It’s true car insurance rates for 16-year-olds are considerably expensive.
However, the insurance rates have a reasonable explanation for such high prices. And the fees you pay for insurance surely sound better than the ones you’ll have to pay if you get in an accident without having your car insured.
Doing a bit of insurance company research, using student discounts, leveraging the perks of a family insurance policy, and many other small tips and tricks can help 16-year-old drivers find the best rates. This is how you can save some money on insurance and make sure your car is protected in case of an accident to be less worried about that during your next car ride.
FAQ
Why is car insurance so expensive for 16-year-olds?
Car insurance companies usually base the cost of different insurance policies on the chance of a driver getting into an accident. The CDC claimed that 16-year-old car drivers are three times more likely to get into fatal crashes than mature drivers.
The average car insurance cost for 16-year-old females tends to be less than insurance premiums for males, this is because females are more careful drivers statistically. Other factors that insurance companies pay attention to are the location, vehicle, and driving history.
Can my teen have their own car insurance policy?
A teen may have a separate car insurance policy, but there are some reasons why not to do so. In most states, 16-year-olds are considered minors, so they can’t sign legally binding documents themselves.
In such cases, a parent or guardian must co-sign the policy for car insurance for 16-year-olds, making them financially responsible and a legal owner. So while the teen does have their own insurance policy, they don’t have the final word about decision making.
Secondly, it’s a much smarter financial decision to add a 16-year-old to the insurance of their parent’s policy. A study by Carinsurance explained that the average insurance cost for a 16-year-old male buying their policy reached $7,625 annually while adding the teen to the parent’s policy would cost $4,462, which saves $3,163 annually.
Do males pay more for car insurance than females?
As we’ve mentioned already, men are generally paying more for car insurance, as they get more tickets and usually are the ones who caused an accident. Moreover, when we’re talking about 16-year-old inexperienced drivers, insurance will be more expensive.
Besides, women drive 30% less than men, according to the Federal Highway Administration.
If a teen moves to a different state to study, should they stay on their parent’s policy?
This depends on the requirements of the state the teen is moving to for studies. It’s always recommended to talk to an agent from your insurance company and check whether it provides insurance in your chosen state. You should also double-check if you can change your policy and adjust it to the state requirements of your child.
If the teen moving without bringing their car, you may still be willing to have them on your policy. It’s good to do as the car insurance may raise the costs for insurance over time if you want.
Victoria is a Senior Content Writer at American REIA. She helps customers find the right educational material through easily-digestible blog posts and buying guides backing their insurance coverage choice. Victoria covers the latest industry news and various insurance topics, including auto, home, health, and life insurance.
