An Underwriters Guide to Locating the Best Car Insurance for Teen Drivers

Insurance companies are in the market to turn a profit where possible. One of the ways they do this is to reduce what they refer to as their loss ratio. The loss ratio is the ratio of one dollar of premium earned and how much of that ends up as loss payments. The loss ratio for teen drivers is high, thus to cover those losses, premium dollars need to be high as well.

You want to enter the car insurance market with knowledge. Know the basics of car insurance discounts for students, in which insurance companies typically provide the cheapest car insurance for teens. The more your knowledge base, the easier the shopping experience will be.

You want to obtain several car insurance quotes to get the best teen auto insurance policy. Obtain a combination of quotes from major national insurance companies, as well as more local and niche carriers. Compare each of the premiums and their related coverages to weigh the differences across the companies. A great tool would be something like QuoteWizard.com or Insurance.com, which lets you search for policies and receive multiple quotes at once across many insurance carriers.

There may be certain car insurance discounts based on your school or job. Nationwide, for example, offers a 10% discount when your teen completed an approved driver safety course. Safeco offers a Teen Safety Rewards program which offers a discount a B average, discounts for taking driver safety courses, and discounts if you retaitn Safeco as a carrier for more than two-years.

You are going to do two things when you sign on for short-term car insurance for teens policy. A short-term policy will allow you to get a lower premium price point, and also let you rely on positive driving habits to further reduce your premium at each renewal. A six-month teen car insurance policy is typically the best choice.

USAA – USAA is limited to military members and their immediate family, so availability is a bit more difficult. If you do qualify, though, their average teen auto insurance premium comes in at just $2,520. Discounts of note include 10% off if other family members have USAA, and a percentage off for maintaining good grades of a “B” average or better.

State Farm – The average teen auto insurance premium from State Farm is $2,724. State Farm also offers a 15% discount for completing their Steer Clear Safe Driver Education course, as well as an impressive 25% off for good grades, the highest in the industry.

One of the ways to save money on the teenage car insurance average cost is to add the driver to a family policy. The average cost of a teen auto insurance policy is approximately $2,600. If you were to simply add that teen and his or her car to your existing family insurance policy, the premium would likely only go up around $600 or $700. That is a massive saving versus buying a separate mono line auto insurance policy.

You may be a responsible teenager, but an insurance carrier does not know that. New technology is allowing insurance carriers who care to track your driving habits, your history, and provide discounts in exchange for these good habits. Find an insurance carrier like Liberty Mutual with their RightTrack platform who cares about these details so you can break the mold of what they think of you as a teen driver and risk. Having RightTrack typically saves 5% off your policy right away and up to 15% off after depending on your tracked driving habits. Although this list is not exhaustive, other popular telematics offerings from insurance carriers include:

Unbeknownst to most shoppers, you want to stick to a short-term auto insurance policy to help keep premium costs down. When your policy renews as a teen every six-months versus a year, you will see your premium begin to lower pending you have no loss history. This allows you to continue to showcase positive driving habits, elapsed time with no losses, and enjoy premium reductions as a result.

A brand new teen driver who is blasting around in a convertible is going to carry a higher premium price tag than a driver with a more reasonable sedan. Have your teen drive something in-between a junk box and a brand new vehicle.

A junk box carries an increased risk of accidents, while a new car carries much higher repair bills. A responsible vehicle helps to keep premium costs as low as possible and your teen driver safe. Other variables with your car include how likely it is to be stolen, its cost for repairs, the size of the engine, and safety technology.

According to analysis of national insurance filing data (although you should always price shop to be sure), among 25 of the most popular cars today, annual average premiums lows and highs include:

• Subarus and even Jeeps are surprisingly less expensive to insure at around the $1400 – $1500 range;
• Value cars such as Toyota Corolla, Camry, Nissan Sentra and Altima run a surprisingly $1600 – $1700 a year.