Now that your teen is driving, you need to purchase auto insurance for him or her. That means deciding whether the family's newest driver will have an individual policy or be added to the family policy. Use the pros and cons below to help make this important decision.
For a brief overview of common coverage options, see Personal Auto Insurance.
Pros
- Teens reduce their future insurance costs when they get an individual policy. By proving that they're responsible and safe drivers, teens build a track record that can lead to more favorable rates on auto, renters and other insurance policies in the future.
- Building credit is possible with a teen auto insurance policy. Teens must pay premiums on time to earn this benefit, but that payment history can help when they rent an apartment or open credit accounts later.
- Teens have access to several unique insurance discounts. Taking a safe driving course, maintaining good grades, holding a steady job and paying premiums on time are discounts some companies offer to teen drivers.
Cons
- Many insurers won't issue an individual policy to high-risk teen drivers. Statistically, teens are among the most vulnerable drivers because they are inexperienced and more easily distracted, so staying on a parent's policy may be the only option.
- Teen policies are often expensive. Insurers typically charge higher rates to drivers under 25, and teens may not qualify for multi-car or multi-policy discounts, which raises costs.
- Adding a teen can raise parental premiums significantly. Adding another driver and vehicle increases the policy premium, and any claims involving the teen can further raise rates.
If your teen really wants his or her own policy, shop around for the best rates and coverage. In some cases, the higher premium for an individual teen policy can provide benefits that make it a good trade-off for both teens and parents.
You can compare general policy options at Auto Insurance and, if you prefer, talk to an agent to review your specific situation.
Frequently Asked Questions
When should I add my teen to our family policy?
Add your teen when they begin driving regularly or before they use a vehicle often; maintaining coverage is required and protects both the teen and your household.
Can a teen get discounts on their insurance?
Yes. Insurers often offer discounts for good students, completion of approved driver safety courses, and for safe driving records.
Will adding a teen always raise our rates?
Most of the time adding an inexperienced driver does increase premiums, but the amount depends on the insurer, the teen's driving record, and the vehicle insured.
Is it better for a teen to have their own policy or stay on a parent's policy?
There is no one-size-fits-all answer; staying on a parent's policy can be cheaper now, while an individual policy may help build a separate insurance and payment history for the teen.