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Jul 15 2017

Average Cost of Car Insurance for a Teenager #signature #loans


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Average Cost of Car Insurance for a Teenager

Any parent of a teen will tell you that the average cost of car insurance for a teenager can be shocking. While the actual cost of car insurance itself is one major part of the total cost, there are also a number of other factors to take into consideration when you want to know how hard your teen driver is going to hit your pocketbook.

Calculating The Average Cost of Car Insurance For a Teenager

It is difficult to narrow down the average cost of car insurance for a teenager because so many factors can influence the total.

Factors That Influence the Cost of Teen Car Insurance

The following factors are the most important things your insurance company considers when calculating your rates.

  • Gender: While it seems unfair, even if your male teenager is responsible and a very safe driver, he starts out at a disadvantage compared to his female counterparts when it comes to car insurance rates. Auto insurers quote driving statistics that show young males have a higher rate of costly accidents, and because of this you’ll see a somewhat higher insurance cost if your teenager is male. Hint: Reduce your costs for your male teen by taking advantage of the factors listed below!
  • Vehicle: The safer the vehicle, the lower the cost; it’s as simple as that. If you buy your teen driver a Mustang with a 3.0 liter engine that can hit 60 miles per hour in under 5 seconds, you should know that the insurance costs will be substantial. Auto insurers prefer teens to drive low-powered vehicles (typically 4 cylinder) that are loaded with safety devices (anti-lock brakes, airbags, etc) and ones that rate very well in crash tests.
  • Location: If you live in a rural area where there are typically fewer accidents, you can expect rates to be lower than if you live in or near a city.
  • Grades: Many times, a young male driver can overcome his gender disadvantage by outperforming classmates academically. Statistics show that smart kids are smart drivers, and auto insurers reward such teens accordingly, saving parents up to 25 percent on car insurance. It goes without saying that teenage girls who are academic achievers will cost the least to insure.
  • One Vehicle: Check with your insurance company about the option to insure your teen for only one vehicle, and choose the vehicle that costs the least to insure due to safety and other factors. This will allow your teen to drive the car, but it could also significantly reduce your average cost for that teen car insurance.
  • Deductibles and Coverage: Another factor that can significantly reduce your premiums is by buying your teen a very inexpensive used vehicle and only pay for liability insurance (the lowest allowable by law). Additionally, increase the deductibles to the maximum amount. This technique is usually chosen by parents with a teen who is very difficult to insure. It’s a gamble, because if the teen has an accident then the car needs to be replaced at full cost, but it could also save thousands of dollars on the premium.
  • Driving Classes: Not all states require teens to participate in safety driving courses. However, most insurance companies offer a discount if your teen has taken such a class, so it’s a very good investment.
  • Safe Driving: One of the fastest methods a teen can use to reduce his or her future insurance cost is to drive safe. A record clean of speeding tickets or accidents will lead to a future of very low insurance premiums.

Average Insurance Cost Examples

Considering all the factors that go into the cost of teen car insurance, your own situation may be unique compared to other parents of teen drivers. The following examples offer a few snapshots of the difference between how much insurance costs with and without a teen driver. You can use these differences to estimate the impact your own teen driver will have on your premium.

  • Example #1: A 7 year old SUV fully insured with liability, comprehensive and collision and a $500 deductible.
    • The cost of insuring this vehicle without a teen driver would cost from $400 to $600 a year.
    • The premium cost for a teen that has good grades would range from $1200 to $1600 a year.
    • The premium cost for a teen with poor grades can range from $1600 up to $2200 a year.
  • Example #2: A couple owns a 3 year old VW Jetta with a turbo engine and a 6 year old minivan, both fully insured with liability, comprehensive and collision and a $500 deductible.
    • The cost of insuring these vehicles without a teen driver would cost from $2000 to $2500 a year.
    • The premium cost for a male teen with average grades would range from $3500 to $4500 a year.
    • The premium cost for a male teen after a single traffic accident would range from $4500 up to $5500 a year.

Plan Carefully Before You Insure a Teen

The examples above demonstrate that before you decide to insure your teen, it’s critical that you carefully analyze all the factors that insurance companies use to calculate your premium increase, and do everything you can to reduce the “risk factor” in the eyes of the insurance company. Taking the time to do this could cut your auto insurance costs by 50 percent or more.


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