Best auto insurance companies for teens and young drivers

For young drivers and teenagers, getting car insurance can be really expensive, often up to three times more than what older drivers pay. Companies like State Farm, Erie Insurance, and Geico are popular choices because they offer good rates for new drivers.

Watching a teenager start driving can be both exciting and nerve-wracking. But when you find out how much it costs to insure them, it’s usually more stress-inducing. So, why is it so expensive to insure young drivers?

In this guide, our MarketWatch team looks into what it takes to insure teens and young drivers. We’ll talk about the things that make insurance prices high for them and recommend some good insurance companies and coverage options.

What Does Car Insurance Cover for Teens and youth?

Even though you might hear about things like “teen driver insurance” or “youth car insurance,” there isn’t a special insurance just for teenagers. Whether you’re 16 or 96, you need to have the minimum amount of insurance required by your state. And if you’re still paying off your car, the lender will probably ask for collision and comprehensive coverage too.

Which Insurance Coverage is Ideal for Teen and Young Adult Drivers?

When picking insurance for young drivers, it’s important to know the basic types of coverage in car insurance. Below, we’ll explain the main types of coverage you can choose from:

Liability Coverage for Young Drivers

Whether you’re getting insurance for a teen driver or you’re a new driver yourself, knowing about different types of insurance is really important. Almost every state says you have to have liability car insurance. This kind of insurance pays for other people’s stuff if you cause an accident. Here’s what it includes:

– Bodily Injury (BI) Liability: This pays for other people’s medical bills and lost wages if you hurt them in an accident.
– Property Damage (PD) Liability: This pays to fix other people’s stuff, like their car, if you damage it in an accident.

Each state has its own rules about how much liability coverage you need. For example, in North Carolina, you have to have at least 30/60/25 coverage. That means your insurance would pay up to $30,000 per person for injuries, $60,000 per accident for injuries, and $25,000 per accident for property damage.

Collision Insurance for Teen and New Drivers

Collision insurance protects your car if it gets damaged in a crash, no matter whose fault it is. Even though states don’t usually make you get collision coverage, if you’re still paying off your car, the lender will probably make you get it to keep their investment safe.

If your car gets wrecked, collision coverage pays to fix it, up to the car’s actual cash value (ACV) if it’s totally wrecked. But, if your car gets damaged while it’s not moving, like if it gets hit while parked, collision insurance won’t cover it.

You’d use collision insurance to pay for things like hitting a guardrail, crashing into another car, or damage from things on the road like potholes.

Comprehensive Insurance for Teen and Young Adult Drivers

Comprehensive insurance is usually needed if you’re still paying for your car. It’s different from collision insurance because it covers things that aren’t crashes.

Comprehensive coverage pays for damages from stuff like:

– Hitting animals
– Damage from things like floods, hail, fire, or tree sap
– Stuff falling on your car
– Theft or vandalism

Other Car Insurance Options for Young Drivers

Other types of insurance you might want to think about are:

Gap Insurance: This pays off the rest of your car loan if the insurance payout isn’t enough to cover what you owe.
Medical Payments (MedPay): This covers medical bills for you and your passengers if you get hurt in a car accident.
Uninsured/Underinsured Motorist (UM/UIM) Coverage: This helps you out if you get in a crash with someone who doesn’t have insurance or doesn’t have enough to pay for the damage.

What’s the Cost of Car Insurance for Teens and Young Drivers?

According to our calculations for full coverage, teenage drivers typically pay about $5,298 each year for car insurance, which is around $467 per month. Insurance costs for teens are usually higher compared to other age groups, and we’ll explain why in the following section.

What Affects Car Insurance Costs for New Drivers?

As we’ve talked about before, how old you are and your driving history affect how much you pay for insurance. But there are lots of other things that insurance companies look at too. Local laws about insurance and details like the gender listed on your driver’s license can make a difference in what you pay.

Here are the things insurance companies think about when they decide how much to charge you for insurance. These might change depending on where you live:

– What kind of car you drive
– How many miles you drive
– How old you are
– Where you live
– Your driving record
– Your credit score
– How much coverage you want
– How much you’re willing to pay out of your own pocket before insurance kicks in

Car Insurance companies for Teens and Young Drivers: Top Providers

After looking at more than 100 car insurance companies, our team found the top five that offer car insurance specifically for teenagers and young drivers:

1. State Farm: Best for Customer Experience

Our top pick for new drivers, no matter their age, is State Farm. They offer great coverage, lots of discounts, and really good customer service. State Farm also has plans where you pay based on how much you drive and gives big discounts to students with good grades. Plus, they have a top-rated mobile app and they’re available almost everywhere in the country. That’s why State Farm is the biggest auto insurance company in the U.S. as of 2023.

Why We Recommend State Farm:

State Farm has been in the insurance business for over 100 years, so they really know their stuff. People are usually really happy with their service, and they have special rates and programs for new drivers.

If you want to know more about what State Farm offers, like how much it costs and what kind of coverage you can get, check out our detailed review of State Farm insurance.

2. USAA: Ideal for Military Members

USAA is really good at giving insurance to people who are currently serving in the military, veterans, and their families. They’re the fifth biggest insurance company in the country, and the seventh biggest overall. USAA usually has cheaper rates than other companies, and they offer lots of different kinds of coverage. Plus, people say they’re really great to deal with.

Why We Recommend USAA:

USAA offers insurance at good prices and gives you options to add extra coverage. They have special insurance plans for people in the military, veterans, and their families.

If you want to know more about what kind of discounts you can get by bundling different types of insurance together, or about their SafePilotĀ® program where you can save money based on how you drive, you can check out our detailed review of USAA insurance.

3. Geico: Ideal for Budget-Conscious Drivers

Geico is the third biggest insurance company in the U.S. They have really good deals for new drivers. They offer almost 20 different ways to get discounts, so most drivers, especially young ones, can pay less for their insurance. Geico also has something called DriveEasy, which is an extra insurance option. It helps new drivers save money on their insurance by driving safely.

Why We Recommend Geico:

Geico has an easy-to-use mobile app that makes managing your insurance simple. Their rates are lower than what most people pay nationwide. Plus, they offer lots of discounts and have a program where you can save money based on how you drive.

If you want to know more about what Geico offers, like how much it costs and what discounts you can get, you can check out our detailed review of Geico insurance.

4. Erie Insurance: Top Choice for Basic Insurance Coverage

Even though Erie Insurance is only in 12 states and Washington, D.C., it’s still a big deal. It’s the 13th biggest car insurance company in the U.S., and 19th biggest overall. We think it’s the best choice if you’re looking for basic insurance because their prices are really good. Their minimum coverage costs about $390 a year or $33 a month, which is almost 40% less than what most people pay. Erie also gives discounts to young drivers, cars with safety features, and if you don’t drive much. So, if you’re a new driver in one of the places they cover, Erie could be a good choice for you.

Why We Recommend Erie Insurance:

Erie Insurance offers affordable basic coverage that won’t break the bank. They have something called Erie Rate LockĀ® that keeps your rates from going up. They also have a program where your deductible gets smaller over time, and they offer lots of different discounts.

If you want to know what people think about Erie Insurance, what kind of coverage they offer, and other important details, you can check out our detailed review of Erie insurance.

5. Liberty Mutual: Best Programs for Young Drivers

At number five on our list is Liberty Mutual. They have lots of discounts specially for young drivers, like:

– Teen Driving Program Discount: If you’re under 21 and finish an approved driving course, you get a discount.
– Good Student Discount: Students under 25 with good grades can save money.
– New Teen Driver Discount: When you add a teen to your policy, you get a discount.
– Distant Student Discount: If your child lives away at school but sometimes drives your car, you can get a discount.

Liberty Mutual also has programs where young drivers can save money by driving safely. And they offer different types of coverage to make sure your car repairs are covered.

Why We Recommend Liberty Mutual:

Liberty Mutual offers a wide range of services to help you out when you need it. They have lots of different kinds of coverage you can choose from, and you can add extra coverage if you want. They also give good discounts to young or new drivers.

If you want to know what people think about Liberty Mutual, what kind of coverage they offer, and more, you can read our detailed review of Liberty Mutual insurance.

How much does car insurance for teens cost?

Our research shows that adding a teen driver to a parent’s car insurance policy costs about $4,457 a year on average. But if the teen gets their own policy, it’s much higher, at around $5,232 a year.

So, it’s usually cheaper to put a teen on their parent’s policy than for them to get their own.

The actual price you or your teen pays can depend on a few things, like:

– Which insurance company you use: Different companies charge different amounts, so it’s a good idea to shop around.
– Age: Younger drivers usually pay more because they don’t have as much experience.
– Gender: Some companies charge more for guys.
– Type of car: Sports cars usually cost more to insure.
– Driving record: If you or your teen has a clean record, you’ll pay less. But if there have been accidents or tickets, it’ll cost more.
– Where you live: If you live in a city, you might pay more because there’s more chance of accidents happening there.

Car Insurance Discounts for Teens and young drivers

Lots of insurance companies have discounts specifically for teens and young drivers. Here are a few discounts you might be able to get to lower your insurance bill:

– Good Student Discount: If you’re in school and get good grades, you could get a discount. Usually, you need to be enrolled full-time and have at least a B average or a 3.0 GPA, but the requirements can vary.
– Away-at-School Discount: If you’re away at college and don’t bring your car with you, you might qualify for a discount. Usually, they’ll look at how far your school is from your home, with a common cutoff being 100 miles.
– Driving Education Program Discount: If you take a driver safety course, you could get a discount. Learning good driving habits early on can also save you money in the long run, because insurance companies like drivers with a clean record.
– Multi-Vehicle Discount: If you have more than one car on your policy, you could get a discount.

How to Secure Affordable Car Insurance for Teens and youths

Shop Around

It’s a good idea to get quotes from at least three different car insurance companies before you make your choice, whether you’re a teenager or an adult. Make sure each quote is for the same kind of coverage so you can compare them properly. And don’t forget to get a quote from your current insurance company, if you already have one.

Check for Discounts

Getting discounts can make your insurance cheaper by a lot. Most insurance companies have discounts just for teens, but they also have other discounts you can get. You can save money by bundling your car insurance with your home insurance, putting all your cars on one policy, and seeing if there are other discounts you qualify for because there are more drivers in your household.

Purchase Only Necessary Coverage

Make sure you get enough insurance to follow the rules in your state. If your teen drives a car that’s on loan or lease, you’ll need to follow any insurance rules in the agreement. Once you’ve done that, you can think about getting more types of coverage.

For instance, if you have a newer car, it might be worth getting collision and comprehensive coverage. That way, you’re protected if the car gets damaged in an accident or stolen. But if you have an older car that’s not worth a lot, you might decide it’s not worth paying extra for these kinds of coverage.

Choose the Right Vehicle

The cost of insurance changes depending on the car you have. So, if you’re thinking about getting a new car, it’s a good idea to get insurance quotes for each type of car you’re considering. That way, you can see which one will cost you less to insure.

Also, if you have a really expensive or risky car, like a luxury car or a sports car that your teen won’t be driving, you might save money by not including your teen on the insurance for that car.

Do Teen Drivers Need Car Insurance?

All drivers, including teens, need to make sure they have enough insurance to cover them financially. Since teens are more likely to get into accidents, it’s a good idea to have higher coverage limits to protect yourself better.

The Importance of Adequate Liability Coverage

Getting just the minimum liability coverage that the state requires might not give you enough protection if you’re in an accident, according to the Insurance Information Institute (III).

For example, let’s say the state requires $50,000 in bodily injury coverage for each accident. If you get into an accident and the medical bills add up to $70,000, you’d have to pay the extra $20,000 yourself. Depending on how much you own, it might be a good idea to get more coverage, like $100,000 or more, to make sure you’re better protected, especially when your teen is driving.

Consideration for Accident Forgiveness

Accident forgiveness means your insurance won’t go up after your first accident where you’re at fault. But it depends on where you live and what insurance company you have. Usually, you need to have a clean record for a few years or pay extra to get this feature added to your policy.

Some insurance companies offer accident forgiveness for free, while others charge a bit more for it. It could end up saving you money if your teen has an accident where they’re at fault. But not every insurance company offers this kind of coverage.

If you’re still paying off a loan for your car, you usually have to have comprehensive and collision coverage, even if your teen is the one driving.

Amy Danise

Amy Danise is the managing editor for and Forbes Advisor's insurance section, covering auto, home, renters, life, pet, travel, health, and small business insurance. With over 30 years in the insurance sector, she specializes in simplifying complex insurance topics into actionable information. Amy collaborates with her team to translate insurance jargon into clear language for consumers, helping them understand insurance costs and find top-rated companies. Leveraging her extensive industry contacts, she develops Forbes Advisor's insurance content and analyzes state regulatory filings for insights. Amy's expertise has earned her features in major news outlets like The New York Times and The Wall Street Journal. She holds a Bachelor's degree in American Studies from Wesleyan University.

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