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Adding A Teen Driver Can Send Parents’ Auto Policy Rates Soaring


Teen driver

Teen driver

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With summer almost here and teens eager to get behind the wheel, parents may be weighing the prospect of adding their son or daughter to their existing auto policy. This could prove very costly to the family budget.

Based on a new study from InsuranceQuotes.com, families adding a teen driver will see an average annual premium increase of 84 percent (or $2,000).

The rate increases vary widely among states, depending on a number of factors, according to the study authors. Age plays a significant factor. The average increase is higher for 16-year-olds (99 percent) and decreases slightly each year thereafter.

Nationally, 96 percent increases are attributed to male teen drivers and 72 percent for female teen drivers, on average.

Other factors impacting premium increases include state geography, local driving patterns, and how insurance is regulated in states. Take Hawaii, for example, the only state that doesn’t permit insurance providers to consider age, gender or length of driving experience when determining premiums. As a result, the average premium increase for parents adding a teen to their policy is just 18 percent.

Wyoming doesn’t ‘have an insurance rating authority, meaning insurers can decide on their own how much to charge for teen drivers. This results in a 112 percent average premium increase to add a teen driver to the parents’ policy in the state.

States with the highest average premium increase when adding a teen driver

  • Arkansas – 116 percent
  • Utah – 115 percent
  • Wyoming – 112 percent
  • Alabama – 111 percent
  • Idaho – 107 percent

States with the lowest average premium increase when adding a teen driver

  • Hawaii – 18 percent
  • North Carolina – 59 percent
  • New York – 62 percent
  • Massachusetts – 66 percent
  • Montana – 66 percent

What can parents do?

Laura Adams, senior insurance analyst for InsuranceQuotes.com has some advice for parents who are considering adding their teen to the family auto policy.

Adams suggests parent be aggressive in shopping around for the best auto policy that can meet all the family’s needs, including the addition of a teen driver.

Second, “look into discounts to cut the cost, including discounts for good students and drivers who have passed an advanced driver training course.”

Here are two more ideas that may be of merit.

Since the average increases are highest for 16-year-olds, if at all possible, delay a teen’s getting his or her license and getting added to the parents’ policy until they are 17 or 18.

If it’s still necessary to put your teen on the family policy, a final consideration is to ask the teen to help pay a portion of the insurance increase. This may not be a popular idea, but it does help lessen the huge increase and it tends to teach teens responsibility.

To read more about the InsuranceQuotes.com study, including a state-by-state breakdown of premium increase for adding a teen driver, click here.

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Comment (1)
  1. We need to change this Monopolistic Insurance Cabal. Lets the Insurance Industry, put a group bid for all license drivers in the states and quit this creating so many loopholes for them to raise your premium.
    There is NO REASON to lower your rates when you operate a Monopoly. Look at the power companies and Oil companies.
    Or lets put a few pennies tax on gas and let each state have their own mandatory policy for their state liability limits. The all license drivers will have liability coverage for their registered autos in that state.
     
    Post Reply
    +1
    Bad stuff?

 

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