Kudos has partnered with CardRatings and Red Ventures for our coverage of credit card products. Kudos, CardRatings, and Red Ventures may receive a commission from card issuers. Kudos may receive commission from card issuers. Some of the card offers that appear on Kudos are from advertisers and may impact how and where card products appear on the site. Kudos tries to include as many card companies and offers as we are aware of, including offers from issuers that don't pay us, but we may not cover all card companies or all available card offers. You don't have to use our links, but we're grateful when you do!
Car Insurance for Teens and Young Drivers – How to Get Cheap Rates in 2025
February 6, 2025
For teenagers and young drivers, getting car insurance at a reasonable price can be a major challenge. It’s well known that insurance for drivers under 25 is significantly more expensive due to their limited driving experience. In fact, adding a teenager to a parent’s auto policy can increase the premium by an average of $3,800+ per year – often more than double the original rate. Ouch! The good news is, there are concrete ways to save money on car insurance for teens and students. This guide will explain why rates are high for young drivers and share tips, discounts, and strategies to make coverage more affordable. If you’re a teen driver (or the parent of one), read on to learn how to get the coverage you need without breaking the bank.
Why Is Car Insurance So Expensive for Young Drivers?
Young drivers (generally ages 16-24) pay the highest insurance premiums of any age group. The reasons come down to risk:
Lack of experience:
New drivers simply haven’t had time to develop the skills and habits that more experienced drivers have. In an insurer’s eyes, that inexperience translates to a higher chance of accidents.
Higher accident rates:
Statistically, teen drivers have more accidents per miles driven than older adults. They’re also more prone to risky behaviors (speeding, distracted driving). Insurance claims data bear this out, so insurers charge higher rates to offset the expected costs.
More likely to file claims:
Even minor fender benders or mistakes (like parking lot scrapes) are more common with young drivers who are still learning. More claims mean higher premiums.
Liability concerns:
When a teen is driving, there’s a higher liability risk for the insurance company. Severe crashes involving young drivers can lead to expensive claims or lawsuits, which get factored into premiums.
All of this causes premiums to soar for young people. For example, one report found that adding a 16-year-old to a policy more than doubles the family’s premium on average. The good news is that rates usually start dropping every year a young driver maintains a clean record – with a substantial decrease by age 25 in many cases (insurers consider you a safer driver after 25, with more experience under your belt).
Cheapest Car Insurance Options for Teens in 2025
Despite the high costs, some insurance companies offer comparatively cheaper rates for teen and student drivers. Based on industry data and analysis:
Geico
Geico tends to be one of the most affordable choices for young drivers. For instance, a NerdWallet study showed Geico’s average rate for an 18-year-old driver was about $81 per month (around $966 per year) – lower than most competitors. The Zebra’s analysis likewise found Geico had the cheapest increase for adding a teen, at roughly $987 per 6-month policy, far cheaper than Progressive or State Farm for that scenario. Geico also offers a robust Good Student discount (for teens with a B average or better) and a Driver’s Education discount, which help lower costs.
State Farm
State Farm is another top pick for families with young drivers. State Farm’s rates for teens are often second to Geico’s. Importantly, State Farm has programs tailored to young drivers: the Steer Clear® program is an app-based driver training course for under-25 drivers that can earn a hefty discount upon completion. They also offer a good student discount and a student away at school discount (if the student attends school far from home without a car). These can cut premiums significantly. Many families find State Farm, with its local agents and teen-focused resources, to be a great balance of price and service for young driver coverage.
Nationwide and Travelers
Nationwide and Travelers are mid-tier for teen rates but sometimes have competitive offers, especially if bundled with homeowners insurance. Nationwide’s SmartRide program (usage-based telematics) could benefit careful teen drivers by rewarding safe driving behavior with discounts. Travelers has a Good Student discount and might offer better rates in certain states for youth drivers.
Allstate
Allstate typically has higher base rates for teens, but they offer unique programs like Allstate’s TeenSMART driver education program discount and Drivewise® (telematics). If a teen completes a certified driver training like TeenSMART, Allstate can provide a substantial discount. So, while the sticker price might be high, you can bring it down with those add-ons.
USAA
USAA (if eligible) often has the lowest rates for military families’ teens. USAA’s youth premiums are still high in absolute dollars (all companies charge a lot for teens), but relative to others, USAA can save hundreds per year. They also have a good student discount and a safe driver program.
Remember, the cheapest insurer can vary by state and individual. It’s crucial to compare quotes. For example, one company might be cheapest for a 17-year-old male in California, but a different insurer is cheapest for a 20-year-old female in Texas. However, Geico and State Farm emerge frequently as top contenders for lessening the cost burden on young drivers.
7 Tips to Lower Car Insurance Costs for Teens and Young Drivers
If you’re facing steep premiums for a young driver, use these strategies to bring the cost down:
1. Stay on the Parent’s Policy if Possible
It’s almost always cheaper for a teen to be added to a parent or guardian’s existing auto policy than for the teen to buy their own policy. When you share a policy, the insurer considers the household’s overall risk and the cost is distributed. If a teen gets their own standalone policy, it’s priced as if they’re the only driver – a very high risk (and thus very expensive). Unless there’s a specific reason a young driver needs an independent policy, keep them on the family plan. It can save thousands. Later, once they’re mid-20s or financially independent, they can get their own.
2. Make Use of Good Student Discounts
Virtually all major insurers offer a Good Student discount for young drivers who maintain strong grades (typically a “B” average or higher, or Dean’s List status in college). This discount can be significant – often 10-15% off the liability and collision premiums. The reasoning: responsible behavior in school is correlated with responsible driving. If you’re a student or the parent of one, be sure to submit proof of grades to your insurer. This is one of the easiest discounts a teen can get. For example, State Farm and Geico both have good student discounts that can knock a nice chunk off the premium.
3. Take a Defensive Driving or Driver’s Ed Course
Apart from the standard driver’s education required to get a license, additional courses can help. Some insurers give discounts if a young driver completes an approved defensive driving course or a specialized teen driver education program (like the aforementioned Allstate TeenSMART or State Farm’s Steer Clear). These courses reinforce safe driving practices and can typically earn a 5-10% discount. Plus, the extra training can help the young driver avoid accidents – preventing rate hikes. It’s a win-win: improved skills and lower rates.
4. Choose the Right Car
The type of car a teen drives affects the insurance cost. Generally, for young drivers you want to insure a safe, moderately powered, used vehicle. Sports cars, high-horsepower vehicles, or very expensive cars will send the premium through the roof. Instead, think along the lines of a mid-size sedan or an older model with good safety ratings. Cars with modern safety features (airbags, ABS, stability control) often get discounts too. By driving a sensible car, a teen’s insurance can be hundreds cheaper per year compared to a flashy new car.
5. Consider Increasing the Deductibles
If you carry comprehensive and collision coverage on the teen’s car, selecting a higher deductible (e.g. $1,000 instead of $250 or $500) can lower the premium. This does mean you’ll pay more out of pocket if there’s a claim, so weigh it carefully – but for a young driver who you trust to be careful, a higher deductible can make insurance more affordable in the interim. Just ensure you or the teen have savings to cover that deductible if an accident happens.
6. Utilize Telematics Programs
Many insurers have telematics programs (usage-based insurance) where they monitor driving behavior via a smartphone app or plug-in device. Examples: Progressive’s Snapshot, Geico’s DriveEasy, Allstate’s Drivewise, State Farm’s Drive Safe & Save. If your teen is a conscientious driver, enrolling in one of these programs can lead to personalized discounts. The device/app will track things like speeding, hard braking, and driving times. Safe driving habits could result in a significant discount (sometimes up to 20-30% off). However, caution: if the young driver drives poorly, it could fail to generate a discount (or in some programs, potentially increase the rate), so use this if you’re confident in their driving behavior.
7. Compare Insurance Quotes Regularly
Don’t assume your current insurer will always be the cheapest for your teen. Rates for young drivers are high, but some companies target this market with special pricing. Each year, shop around and get quotes from other insurers. You might find a much better rate as your teen gets a little older or if their circumstances change (e.g., turning 18 or 21 could shift which company is cheapest). Even if you prefer staying with your insurer, having competing quotes can be leverage to ask your agent for any additional discounts. Kudos simplifies comparing auto insurance rates, quickly finding the best rate tailored for you. It’s easy and completely free. Using a tool like that can ensure you’re not missing out on a lower offer somewhere else.
Additional Considerations for Young Drivers
Student Away Discount:
If a student is attending college far from home (typically 100+ miles) and doesn’t have a car with them on campus, many insurers lower the rate since the student isn’t regularly driving the family car. Ask your insurer about this if applicable.
Graduating to Adult Rates:
Insurers usually remove the “young driver surcharge” gradually. Significant drops often occur at ages 21 and 25 (assuming a clean record). So, keeping a clean record is crucial – rates should steadily improve each year without incidents.
Don’t Skimp on Liability Coverage:
Even though teens are expensive to insure, resist the urge to carry only bare minimum liability limits. Ironically, this is when you might need higher liability coverage because teens are more likely to cause accidents. Make sure you have sufficient liability insurance to protect your family’s finances. You can save money with the methods above without having to dangerously lower liability coverage.
Encourage Safe Driving Habits:
Ultimately, the biggest cost saver is avoiding accidents and tickets. Emphasize to the young driver how their driving will impact their wallet (and yours). Some families even have agreements – like the teen pays any ticket costs and resulting insurance increases – to instill personal responsibility. One accident can spike an already high premium by 50% or more, so prevention is key.
FAQs: Teen and Student Car Insurance
What’s the average cost of car insurance for a teenager?
It’s quite high. On average, parents can expect their insurance premium to increase by about $1,900 per six months (roughly $3,800 per year) after adding a 16-year-old driver. If a teen gets their own policy, it could be even more. For example, a standalone policy for an 18-year-old might easily be $250–$400 per month. These are broad averages – actual costs vary by state, insurer, the teen’s gender (males typically higher), and the car. The key is that teen insurance is expensive everywhere. The good news: these costs will drop significantly as the driver reaches their 20s, provided they keep a clean record.
Should a teen get their own car insurance policy or stay on their parents’
Almost always, it’s cheaper for the teen to stay on the family’s policy. Separate policies for teens are very pricey because you lose the multi-car and multi-driver spreading of risk. On a family policy, the insurer calculates one overall rate for all drivers and cars, which softens the impact of a risky teen. On their own, the teen is rated like a high-risk standalone. The only times a teen might need their own policy is if they own a car titled in their name only (and the insurance must match the registrant), or if they don’t have parents/guardians to join. Otherwise, stick with a combined policy as long as possible.
Can teens get car insurance discounts?
Yes, absolutely. Teens should take advantage of every discount available. The main ones for young drivers are the Good Student discount (for high school/college students with typically a GPA of 3.0 or higher) and Driver training discounts (for completing defensive driving or specific teen safety programs). Additionally, if the car has safety features or if the teen drives under a certain mileage per year, those could help. Some insurers also have “youthful driver” discounts if the teen goes a certain period accident-free after getting licensed. Always ask the insurer which discounts young drivers can qualify for – it can make a big difference.
At what age do car insurance rates go down for young drivers?
You will usually see rates steadily decline from age 18 onward, with big milestones around age 21 and 25. By age 25, if the driver has a clean record, their rates should be much closer to what an “adult” driver pays. In fact, many insurers consider drivers 25 and older with good experience to be a lower risk category. It’s not a cliff that drops on your birthday, but you’ll notice the premiums easing. Some companies also lower rates at 19, or 21, etc., so it varies. The key is building that safe driving history over those first crucial years.
Is it worth getting full coverage for a teen’s car, or just liability?
This depends on the value of the car and your financial situation. If the teen’s car is older and not worth a lot (say only a few thousand dollars), you might opt for liability only, because the cost of full coverage could approach what the car is worth yearly. However, if the car is newer or you couldn’t easily replace it out-of-pocket, you’ll want to have collision and comprehensive (full coverage). Keep in mind, if a teen is likely to have an accident, having full coverage ensures the car can be fixed. One strategy is to carry full coverage initially (when the chance of an accident is highest during the learning period) and then reassess after a couple of years of claim-free driving — especially if the car’s value drops. Always at least maintain liability coverage that adequately protects your assets.
Final Thoughts
Insurance for teens and young drivers will never be cheap, but by being proactive you can significantly reduce the cost. Focus on the controllable factors: choose a safe vehicle, capitalize on every discount (good student, driver training, etc.), and encourage safe driving habits to avoid surcharges. Shopping around each renewal is also critical – the difference between insurers can be huge for youthful drivers, so use tools like Kudos to compare quotes and find any opportunities to save. While that first insurance bill for your teen might be a shock, remember that if they keep a clean record, you’ll likely see relief year by year. By age 25, things improve a lot. Until then, use this guide to navigate the high-cost years and keep premiums as manageable as possible, all while keeping your young driver properly protected.
Supercharge Your Credit Cards
Experience smarter spending with Kudos and unlock more from your credit cards. Earn $20.00 when you sign up for Kudos with "GET20" and make an eligible Kudos Boost purchase.
Editorial Disclosure: Opinions expressed here are those of Kudos alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.
.webp)
