Car Insurance Facts for 16-Year-Olds

African American teen learning to drive with mom
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Car insurance for 16-year-olds can be scary to think about. Most people immediately think of the cost. Making the right choices early on is important. Determining the right vehicle and selecting the right insurance coverage can be overwhelming. Learn how to get a newly licensed driver insured, how much it might cost, and how to save on the cost of insurance.

Transitioning From Permit to Driver's License

Car insurance can be very tricky to explain because it varies not only by state but also by car insurance carrier. Generally speaking, car insurance often automatically extends to young drivers. What does this mean? It means if a young driver is in a car accident then the vehicle's owner's policy (the owners are usually the parents) will provide the selected coverage and the young driver will need to be added onto the policy at the time of the loss.

Some insurance carriers are stricter. They want the permitted driver to be listed on the policy and the licensed driver to be listed in order to be protected. How do you know what your insurance carrier wants? Call and speak with your car insurance agent. The earlier you speak with them about the process, the better you can prepare.

Knowingly trying to conceal a 16-year-old driver to avoid paying higher rates is definitely not a good idea. In the end, the only person you are hurting is yourself. Imagine paying for car insurance for years only to have your 16-year-old driver get in an accident and not be covered.

Typically, a car insurance carrier will discover the new driver when your car insurance policy renews. When they run the CLUE report on the household, the newly licensed driver's name and birth date will appear in the system. You will then most likely be contacted by mail telling you it is time to add the driver to the policy. If you ignore the notices, it is possible the insurance carrier will non-renew your policy or require you to exclude the driver from the policy.

How Much It Costs to Insure a 16-Year-Old

Determining the cost of car insurance for any one person is extremely tough to do. Variables which can change a rate drastically include what insurance carrier you are with, what state you live in, qualified discounts, and whether or not the teen has their own vehicle. To put a number on it, you could be looking at a $15 to $20 monthly increase when just adding the driver to a parent's policy. Add a 16-year-old plus a vehicle, and numbers could easily soar as high as $200 a month. The fastest way to get the numbers you need to properly budget for a 16-year-old driver would be to call your insurance agent.

Why 16-Year-Olds Pay More for Car Insurance

Ratings for car insurance have many factors. Naturally, a driver's experience is a big one. Driving a vehicle well takes most people years of practice. When it comes to a young driver, there is no history showing the driver is a safe driver. Teens are considered to be at high risk for filing a claim. Good driver status can only be earned with time. Rates can come down incrementally over time depending on your insurance carrier, but 25 is the magic age at which insurance rates tend to go down noticeably. 

Most Common Driving Mistakes of Teens According to AAA

  • Tunnel Vision: A nervous driver may focus way too much on the vehicle in front of them. It is important always to be scanning for possible dangers when driving. The ability to scan is a skill learned over time. It was found that teens tend to have tunnel vision and continuously stare straight ahead missing other possible dangers like pedestrians and animals.
  • Distracted DrivingDistracted driving is so dangerous it is said to be worse than impaired driving. There is no shortage of distractions for young drivers nowadays. Cell phones and friends are the biggest culprits. 
  • SpeedingSpeeding is not reserved only for 16-year-olds. However, statistics show that when it comes to teens in deadly car accidents, speeding is often a factor. Sometimes it can be attributed to the tunnel vision young drivers experience. It can be tough to figure out where you are going, what the posted speed limit is, and how fast your vehicle is moving. It may not always be intentional, but it's dangerous all the same.

Ways to Save Money on Car Insurance for a 16-Year-Old

  • Go on Parent's Policy: A 16-year-old would traditionally go on their parent's policy. There is a good reason for going on a parent's policy. The cost can be up to 30 percent cheaper than a teen going it alone. Major discounts that a teen usually cannot get on their own include a multi-policy and a multi-car discount. 
  • Share a Car: Having fewer cars than drivers is a huge money saver. Many car insurance carriers will allow the teen driver to be added as a secondary driver. Someone who does not have primary access to a vehicle typically pays a lower rate when compared with being rated as the primary driver. 
  • Good Student DiscountThe good student discount is not a myth. Many insurance carriers offer it and it is usually worthwhile. Insurance carriers use a lot of rating factors and statistics show students proving to be responsible when it comes to school are also responsible behind the wheel.

Best Cars for Young Drivers

The best car for a 16-year-old to drive is their parent's on an occasional basis. However, many teens need their own vehicle for getting to school, extracurricular activities, and possibly work. The best ways to keep car insurance costs affordable are to select a somewhat older vehicle with good safety features. A four-door sedan or sports utility vehicle with multiple airbags is the best way to go. Pick one affordable enough to skip physical damage coverage. Selecting a liability only policy will keep costs down when compared to purchasing a full coverage policy for such a young driver.

Getting a driver's license at age 16 is a huge milestone. However, many people delay getting a license. Getting a license at age 17 or 18 might not make your car insurance much cheaper, but you do have that year or two to save. Many teens are just too busy. Regardless of your situation, once you are licensed, car insurance is very important. Contact a licensed insurance agent before you take to the road.