Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: Apr 13, 2022

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Teen drivers can increase the cost of your auto policy dramatically.
Teen drivers can increase the cost of your auto policy dramatically. (image by fuelclinic.com)

Being a parent is an experience that can offer great joys, as well as difficult times. Of course, many of those difficult times relate directly to money, as many things in life do. With each step of life a child takes, there’s usually some sort of cost associated with it, and car insurance is no different. Many parents are in for a case of sticker shock.

In this article, we’ll be looking at different milestones, starting with teenage drivers who have a newly minted learners permit, all the way through graduation from college. Each of the events will impact your policy costs, and we’ll discuss them in detail.

How Much Do New Teenage Drivers Cost You in Insurance?

While most kids will countdown the days until they turn 16 (or younger in some sates) and can finally get their driving permits, parents have a slew of worries to occupy their minds. One of the biggest worries is that teenaged drivers are four times more likely to be in a collision or a crash than a driver outside of the 16-19 years of age range.

Your child may be an excellent driver, and they may have an impeccable and spotless driving record – but you’ll still pay way more for an auto policy once they’re added to it. Unfortunately, new drivers don’t have a driving record to offer insurance companies as proof. Beyond the risk factor mentioned above, consider that a large portion of new teen drivers will likely be in some sort of accident within the first year of getting their license.

As we get more practice driving, a lot of safety tips become second nature. We learn to watch the road and everything around us, and it gets easier. As new drivers, many things can go wrong. When you add in friends, texting while driving, and other common distractions for teens, the odds get worse.

Auto insurance for kids starts out higher. Generally, it doesn’t drop significantly for a few years. If your teen gets a ticket or is in an accident, the premiums can increase. Depending on the insurer, they may also dump your policy.

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What Auto Insurance Discounts Do Teens Qualify For?

Not all is lost. They won’t be teens forever and while they are you can see if your insurance company offers any teen specific discounts. Good student discounts alone can instantly translate into policy savings from 10 to 25 percent, depending upon the insurer. These may not be the only discounts available to lower policy costs. Make sure you discuss this with your insurer to obtain every discount you are eligible for.

Should You Include Your Child on Your Auto Policy?

If your child is still a dependent, meaning they’re either in college or still live at home, a parent can continue to list them on their policy as a named driver. That’s even if you’ve helped to purchase a car of their own. Only in this case, the important part of “own” means you hold either primary or joint ownership of the automobile of the child.

As long as the child meets the student guidelines, they’re insurable under your policy. Some parents choose to keep their child’s insurance separate by buying them their own policy. This way, your insurance does not go up, and your teen is building their own history with an auto insurer. This can give them loyalty discounts early on. If you want additional coverage for your teen, you also don’t have to pay to apply it to your coverage as well. The cost of insurance will vary between drivers and families. So it’s important to compare insurance quotes and see where you’ll get the best monthly premium.

Where things begin to get somewhat cloudy is once a child is no longer dependent, or buys a car of their own that you have no material interest or ownership of.

What If Your Child Buys A Car of Their Own?

In some cases, a child will have saved up for their own car, and may wish to purchase one for themselves. That’s fine, and as long as the child is younger than 18 years old, it may be possible for the parents to insure the child and their fully paid for automobile under the policy. Once the child turns 18, they’ll need to obtain their own policy for a car bought in such a manner, unless of course, the parent is listed as a co-owner of the automobile on the title. In either instance, you can buy your child a separate policy you pay for.

Financing a car can be a bit different, however. While any lien holder is prohibited from entering into a contract with someone who hasn’t reached the age of 18, if a child 18 or older manages to finance a car by themselves, they’ll need their own policy. This is assuming parents are not cosigning since the parents have no insurable interest in the car purchased by their children. Just like you would have to, your child would be required to sustain a certain coverage level to meet the lender’s requirements. However, if this is a car that the parents have co-signed on the note for the loan and the child still lives at home, it probably can be insured on the parent’s auto policy.

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When Does A Young Person Need Their Own Auto Insurance Policy?

If your child isn’t in school, owns their own car, and has reached 21 years of age, it’s time for them to have their own auto policy. While they won’t be paying the extremely high premiums associated with being teenagers anymore, they’ll still pay more than older people do. They’re also on the cusp of another milestone – meaning in just a few years, their cost for insurance will drop again, and they’ll no longer be in the highest risk group.

Your college-age or young adult child should choose a car insurance company that has a good app. Your college student is used to having everything they need easily accessible on their smartphone, and they’ll be able to keep all their relevant car insurance information at hand with a good app.

If you’re looking for peace of mind with a young driver, a solid auto insurance plan is the first step. You can get your teen signed up with a company you trust early on. Even if you think you’re getting the best rates, always run quotes and check out different policy types. You might be surprised at who is actually offering the best rates. To get started, just enter your zip code in our auto insurance quote calculator.