For many of us, our first vehicle is perhaps the most significant investment we make, as it symbolizes a new stage in life. Along with providing a greater degree of freedom, a car also comes with a host of responsibilities. But before driving, you’ll need auto insurance.
Understanding the minutiae of car insurance can be a daunting task for first-time drivers. Which coverage are you supposed to get? What will it set you back? Are there any easy ways to save on premiums?
This article explores everything a new driver should know about car insurance. From definitions of elementary terms to advanced strategies for lowering your premium, there’s something for everyone.
Why Teen Drivers Need Insurance
Car insurance is obligatory in most dominions. Having it protects you in case of an accident, even a minor one:
- Repairing your vehicle
- Damaging someone else’s property
- Covering medical expenses for injuries
- Covering legal fees in case of a lawsuit
And should you decide not to get car insurance, you risk facing:
- Fines and penalties
- Losing your license
- Towing and impounding fees
- Having to pay much more for insurance down the line
Whether it’s your car or your parents’, the coverage needs to be maintained at all times.
Key Auto Insurance Terms (Made Easy)
First, let us define the terms you need to know that appear in any policy.
- Premium
The monthly, semi-annual, or annual payment you make for your insurance.
- Deductible
The out-of-pocket amount spent before the rest is covered under the insurance.
- Liability Coverage
Required in most states, this covers damages or injuries to other people resulting from the insured accident caused by you.
- Collision Coverage
It pays to repair your automobile for damages resulting from a collision with another automobile, tree, or pole.
- Comprehensive Coverage
This coverage includes damages not resulting from a collision, such as theft, vandalism, fire, hail, or damage caused by falling branches.
- Uninsured & Underinsured Motorist Coverage
This covers you for losses incurred when another driver who does not have insurance or has inadequate insurance hits you.
Teen-Specific Challenges (And Why Insurance Costs More)
Teen drivers tend to pay higher insurance premiums, and here’s why:
- Inexperience: Teens are statistically way more involved in collisions.
- Higher risk: Speeding, distracted driving, and nighttime driving are common among young drivers.
- Costly repairs: Teen-related crashes often result in higher claim costs.
Average cost for teen insurance:
- $2,000–$6,000 per year for a standalone teen driver
- Adding to a parent’s policy can save up to 60%
Coverage Choices for Teenage Drivers
Required (Minimum Liability)
Every state mandates some form of liability insurance. This insurance helps prevent you from suffering losses in the event of an accident you are involved in.
Suggested
- Collision: Especially if you drive a newer or financed car.
- Comprehensive: Covers theft, weather damage, vandalism, and product harm.
- Roadside Assistance: Helpful for first-time drivers who experience lockouts, flat tires, and need battery jump-starts.
- Rental Reimbursement: Covers the cost of rental cars required when the insured’s car is under repair due to a covered claim.
Should You Be on Your Parents’ Policy?
Yes, parents should always try to buy insurance policies for their children. It is cheaper, as bundling attracts discounts, and stress-free.
Pros of joining a parent’s policy:
- Lower premium due to multi-car discounts.
- Family safe-driver or bundling discounts.
- Better billing and management.
Tip: Teens must be listed as “permissive drivers” or “named insureds” with complete protection to ensure they can claim insurance.
Tips to Save Money on Teen Car Insurance
New drivers may find insurance quite expensive, but there are ways to save money:
- Reliable Student Discount
Eligibility for this discount is based on academic performance, with most insurers offering a discount of between 10% and 25% for maintaining a grade of B or higher. Please submit your report card at the end of each semester.
- Driver’s Ed or Defensive Driving Course
Completion of any driver’s safety course demonstrates a commitment to safety and may net a 5-15% discount.
- Choose a Safe, Affordable Car
Avoid high-class and premium vehicles. Instead, focus on:
- Sedans
- Compact SUVs
- Older models with good safety records
Cars that have been proven to be in fewer accidents typically result in lower premiums.
- Increase Deductible
An increase in out-of-pocket costs in the event of an accident will reduce overall premiums.
- Low Mileage Mark-down
Avoiding 7,500-10,000 miles of driving per year? Certain insurers reward drivers for low mileage, offering discounts.
- Consider Usage-Based Insurance (UBI)
Some companies offer discounts to customers who use apps or devices that track their driving. Good habits lead to better rates.
Notable Programs:
- State Farm Drive Safe & Save
- Progressive Snapshot
- GEICO DriveEasy
Understanding What’s Not Covered
Like all policyholders, teen drivers often assume that their policy covers everything, which is far from the truth. Here’re some important things to keep in mind:
- Engaging in street racing or reckless driving: This could void your policy.
- Putting someone else’s car in the driver’s seat: This might not be covered.
- Using your vehicle for work (e.g., Uber Eats, DoorDash) requires a commercial add-on or a separate policy.
How to Get a Quote (Step-by-Step)
Obtaining insurance as a teenager is relatively easy in today’s world. Here’s how you can be smarter when choosing a provider:
Step 1: Quote Comparison
Utilize comparison services such as:
- Policygenius
- The Zebra
- NerdWallet
Step 2: Basic Information Submission
Data needed includes:
- Name, address, and driver’s license number
- Year, make, model, and VIN of vehicle
- Driving history, including accidents and tickets
- GPA and driving school information (for possible discounts)
Step 3: Opt for the proper protection
Go for the most affordable option with adequate protection tailored to your needs.
Step 4: Policy completion
This is crucial to obtain the policy document along with proof of insurance, as they will be required for registration, driving, and encounters with the law.
What to Do After an Accident (Checklist for Teens)
Incidents can occur even if you are a careful driver. If you find yourself in such a situation, follow the steps outlined below.
- Stop your vehicle and assess for any injuries.
- Call 911 if there are any injuries.
- If possible, relocate to a safer location.
- Exchange information with the other driver.
- Capture photographs of the damage as well as the location.
- Inform your Insurance provider.
- Do not accept responsibility for the accident—simply ex.
FAQs
Q1. Is it fine to drive my friend’s car?
Yes, provided their policy permits it. Otherwise, you could be putting your family at risk (financially) if you were to get into an accident, as their insurer may deny the claim.
Q2. What happens if I receive a speeding ticket?
As a teenager, your insurance rates will likely increase. On average, one speeding ticket can increase a policy by $300 to $700 annually.
Q3. Are girls or boys cheaper to insure?
As a whole, teen boys are statistically more likely to get into accidents, so they often pay more. That said, it also varies by state and insurance provider.
Q4. At what age am I likely to receive lower rates?
Most often around age 25, but maintaining a clean record can further reduce costs. Even a few years of driving safely can significantly improve your expenses.
Q5. Should I buy full coverage or liability only?
- Liability only is best for older cars that do not hold much value, as it is more affordable.
- When a car is new, financed, or valued at more than $4000, full coverage is advisable.
Final Advice for Teen Drivers
The joyous moment of getting your first car comes with having a prudent companion by your side to help with your finances and budgeting. Auto insurance serves to protect you from any financial damage while giving you safety as a passenger and a driver. Being informed empowers you and helps you cut back on unnecessary or avoidable expenses related to insurance.
Key Takeaways:
- Join your parents’ policy if possible.
- Encourage asking for every possible teen discount.
- Steer clear of traffic violations is crucial.
- A dependable vehicle makes insurance cheaper.
- Growing requires policies to change, keeping them current makes saving easier.