By Brandon Cornett | © 2014 All rights reserved
How much does car insurance cost for a 16-year-old driver? Do auto insurance companies jack up the rates for teenagers? What can I do to lower the cost of my policy when there are teenage drivers on it? These are some of the questions we will address in this research article.
Let me start with the bad news. There is a 99-percent chance your 16-year-old will pay a higher premium than an older driver, with all other things being equal.
There's actually a legitimate reason for this. According to the Insurance Institute for Highway Safety (IIHS), 16-year-old drivers have the highest rate of auto accidents -- higher than any other age bracket. So they are also the biggest risk for an insurance company. That's why they charge more to insure them. The insurance industry is built around risk-based pricing.
On a side note, teenagers also have the highest rate of hand-held cell phone use while driving. Texting while driving is a growing problem among this particular demographic. So the cost of auto insurance for teen drivers could go up in the near future.
How Much is Coverage for a 16-Year-Old?
Disclaimer: It's difficult to say how much you might pay for car insurance on a 16-year-old driver, because there are so many variables at work. The numbers below are the closest we could come to an "average" cost, based on extensive research.
Important numbers from this article: $800 and $1,600. The first number represents the average cost of an auto insurance policy in the U.S. when considering all types of drivers. The second (and higher) number represents the average annual premium for a 16-year-old driver. Depending on where you live and what type of car your teen is driving, you might pay more than the average.
So how much is car insurance for a 16-year-old driver, on average? Let's start with the baseline and then adjust for teenage drivers. The average cost for an auto insurance policy is around $800 per year. This is according to data collected by the National Association of Insurance Commissioners (NAIC). But you probably won't find a rate that low for a 16-year-old driver. Refer back to my comments about risk-based pricing. This demographic presents a much higher risk profile, so the premiums will go up accordingly.
According to the Insurance Information Institute (III), parents could see a premium increase of 50 to 100 percent, after adding a 16-year-old driver to the policy. For example, if a family's policy currently has three adult drivers (18 and up), and costs around $1,500 per year, it could increase to $2,250 - $3,000 a year with the addition of a teenaged driver.
Note: The average presented above is based on extensive research into insurance trends, as well as anecdotal reports from a variety of web forums. You can learn more about our research methods here. If your teenager is male, and you live in a high-priced area, you could end up paying a lot more than $1,600. (Statistically, males are
riskier than females.) Some parents pay as much as $3,500 in car insurance for their 16-year-old drivers.
Other Factors That Affect the Cost of Car Insurance
Age is not the only factor that influences the cost of car insurance. Here are some other elements that might come into play:
Type of Car -- You'll pay a higher premium for a convertible sports car than you would for a more sensible car (with all other things being equal). The likelihood of theft also affects the cost of insurance. If your 16-year-old is driving one of the most frequently stolen cars, like a Honda Accord, he or she will pay a higher premium.
Your State -- Premiums also vary from one state to another. Washington, D.C. is one of the priciest areas, with coverage averaging more than $1,000 per year (for drivers of all ages). People in the Midwest might pay half that amount. So geography is a big factor. If you really want to know how much car insurance is for a 16-year-old driver, you should conduct local research for your city and state.
Driving Record -- Safe drivers pay less in insurance. Drivers with a history of accidents and/or speeding tickets pay more. A brand-new driver starts out with a "clean slate." They can prevent a premium increase by keeping the slate clean.
Deductible -- You can reduce the cost of your annual premium by raising the deductible on your 16-year-old's car insurance policy. Most policies have a baseline deductible of $250. If you increase it to $500, or even $1,000, you could save 10 - 20 percent on your annual premium.
Get Multiple Quotes to Compare Cost and Coverage
If you want to know how much coverage will cost for your teenaged driver, you need to get some quotes from insurance providers. Statistics and averages are useful, because they show how much others are paying. This gives you a framework for comparison. But nothing takes the place of an actual policy quote. It's best to get two or three quotes at a minimum, so you can compare the cost and coverage.
Comparison-shopping is especially important when it comes to younger drivers in the high-risk demographic. Fill out some online requests for quotes. Ask them how much car insurance will be for your 16-year-old driver. Don't accept the first offer -- get several. Some insurers significantly raise the rates on teenagers, while others impose a more modest markup. You need to shop around.
Fortunately, the Internet makes this process much easier than it used to be. In the past, you would have to make half a dozen phone calls to gather this kind of information. These days, you can use an insurance network like the one below to get quotes from multiple providers.
This article answers the question: How much is car insurance for a 16-year-old driver? If you would like to learn more about this topic, you can use the search tool at the top of this page. It will give you access to our entire research library.