The High Cost of Insuring a Teen Driver

June 15, 2015

Parents pay an average of 80 percent more for car insurance after adding a teen driver to their policy.

The highest jump in premiums—96 percent—comes from placing a 16-year-old driver on a policy while the average impact decreases to 60 percent at age 19, according to an insuranceQuotes.com report.

Premiums in New Hampshire jump 115 percent the most of any state when adding a teen driver. Teen drivers cause premiums to more than double in four other states: Wyoming (104%), Illinois (104%), Maine (103%) and Rhode Island (102%).

Six states prohibit insurers from using gender in their rate calculations: Hawaii, Massachusetts, Michigan, Montana, North Carolina and Pennsylvania.

In Hawaii, which is the only state that does not allow age and length of driving experience to factor into car insurance costs,  adding teen drivers only costs 17 percent more, the lowest increase among states by far.

New York has the second-lowest increase (53%), followed by Michigan (57%) and North Carolina (60%).

Teenage males are much more expensive to insure than teenage females (average increases of 92 percent and 67 percent, respectively).

“It’s really expensive to insure a teen driver, but good student discounts can take some of the sting out of these bills,” said Laura Adams, senior analyst, insuranceQuotes.com. She said some discounts are as high as 25 percent for students who maintain at least a B average in high school or college.

 Teen Accidents

Why are teen drivers so costly to insure?

Although teenagers in the U.S. drive less than all but the oldest people, they are involved in disproportionately high numbers of crashes and crash deaths, according to the Insurance Institute for Highway Safety (IIHS). IIHS has reported that the fatal crash rate per mile driven for 16-19 year-olds is nearly three times the rate for drivers ages 20 and over. Risk is highest at ages 16-17. In fact, the fatal crash rate per mile driven is nearly twice as high for 16-17 year-olds as it is for 18-19 year-olds.

In 2013, motor vehicle crashes were the leading cause of death among 13-19 year-old males and females in the U.S. A total of 2,524 teenagers ages 13-19 died in motor vehicle crashes in 2013. This is 71 percent fewer than in 1975 and 11 percent fewer than in 2012.

But the costs for teens may be moderating. According to insuranceQuotes.com, the cost to insure a teen driver has actually fallen a bit since 2013, when the average annual increase was 85 percent.

Beginning in the mid 1990s, states began adopting graduated licensing systems that phase-in full driving privileges and restrict night driving and teen passengers. Studies have credited these systems with lowering fatal crash rates and insurance claim rates among young teen drivers covered by the laws.

At the same time, teens and new drivers may be more prone to distracted driving — using cell phones, talking with passengers or doing other tasks while driving— than other age groups,  raising their risk.

Drop in Number

Several studies have documented a drop in the percentage of teens who obtain driver’s licenses. One from the Centers for Disease Control (CDC) recorded a drop from 85 percent in 1996 to 73 percent in 2010.

A University of Michigan study in 2012 reported that in 1983, about 87 percent of 19-year-olds, 80 percent of 18-year-olds and 69 percent of 17-year-olds owned a driver’s license. Twenty-five years later in 2008, the percentages were 75, 65 and 50, respectively. That study also noted a drop in licenses for all other age groups, except 25-29 year-olds.

A third study, from the Highway Loss Data Institute (HLDI), confirmed the drop in teen driving. Analysts looked at changes in the number of rated drivers ages 14-19 under collision insurance policies in 49 states and the District of Columbia. From 2006 to 2012, the number of rated drivers ages 14-19 declined 12 percent. During that same period, the population of teens of these ages declined by only 3 percent.

The Michigan researchers said the decline in teen drivers is consistent with the continued rise in Internet usage, which they suggest reduces the need for actual contact.

But the HLDI said the drop in licenses has more to do with economy.

“Young people today may want to drive just as much as they did a generation ago but simply can’t afford it,” the HLDI said in its report.

Quadrant Information Services calculated rates using data from the largest carriers in each state for the insuranceQutes.com report. The averages are based on a married and employed 45-year-old male and 45-year-old female who each drive 12,000 miles per year with policy limits of $100,000 for injury liability for one person, $300,000 for all injuries and a $500 deductible on collision and comprehensive coverage. The hypothetical drivers have clean driving records and good credit. The rates include uninsured motorist coverage and refer to new business policies.

InsuranceQuotes.com offers a web tool that gives the average premium increases for adding a teen driver in all states.

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Latest Comments

  • June 17, 2015 at 1:39 pm
    Questionning says:
    I did not allow my son or daughter to be licensed until they were 18. We did a full two years of driver training. I agreed to any discussion/argument for earlier licensing p... read more
  • June 17, 2015 at 9:37 am
    Agent says:
    One could get the impression that Liberty Mutual doesn't like young drivers. By the way, how did you get an appointment with Liberty Mutual? In our area, they only write dir... read more
  • June 16, 2015 at 7:53 pm
    Check back in a year says:
    Have your client check back in a year or so to tell you what GEICO's premiums are after a ticket or accident. Don't really know what the answer will be, just curious.
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