Adding a young driver to an existing car insurance policy costs much less than purchasing a separate policy or insuring a vehicle for which they’re the primary driver.
However, even the cost of adding a young driver to a policy can be a heavy financial burden. Families should think carefully about their financial situation and long-term budget when planning for a new — and young — driver.
ValuePenguin’s analysis of rate data shows that the cost of adding a 16- to 19-year-old driver with high academic marks to a family’s auto insurance policy — even as the third operator of a vehicle — equals $4,799 a year on average. Without a discount for good grades, insuring a teen can cost an average of $5,109 annually, but the expenses vary by location.
Depending on the state, the cost of adding a teen — even with a discount — can represent more than 10% of a family’s income. Additionally, data suggests families in the poorest neighborhoods in the largest cities can face insurance costs that are thousands of dollars more expensive yearly than what the cities’ wealthiest residents would pay to add a young driver to a policy.
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Key findings
- Adding a teen to a family’s car insurance policy costs $4,799 a year on average, even with a good student discount. Without a discount, insuring a teen driver can cost $5,109 annually on average.
- By waiting until age 22 — the age of a four-year college graduate who entered school at 18 — young drivers can save their families 37% on potential car insurance premiums. The average combined cost of insurance from 16 to 22 amounts to $33,091.
- Good student discounts don’t lower the cost of insurance for young drivers enough to impact most families. Insurance costs represented nearly the same percentage of a family’s income whether they qualified for the discount from ages 16 to 22.
- In America’s largest cities, data suggests that families in the poorest neighborhoods can face high insurance costs when adding young drivers to existing policies. In New York, the lowest-earning residents pay $3,929 more for car insurance than the wealthiest, and the trend is the same in Los Angeles ($441) and Chicago ($2,242).
Image Credit: DepositPhotos.com.
Adding a teen to your policy
The annual cost of insurance decreases by 37% for families that add a 22-year-old driver compared to those who add a 16-year-old driver.
It’s highly expensive to add a teen to an existing car insurance plan. Designating a 16-year-old as a driver of an insured vehicle carries an average cost of $5,380 a year. The cost of insuring a young driver falls as the individual ages. If the young driver waits until they’re 22 years old before getting their license and being included on an insurance policy, the cost to cover them drops by 37% to $3,931 a year.
Cumulatively, the cost of adding and keeping a driver on a policy from age 16 to 22 is $33,091 over six years.
On average, adding a 16-year-old driver to a car insurance policy takes up 6% of a family’s budget per year until before the driver turns 23. While on the surface this isn’t a huge sum, expenses can be drastically higher depending on location.
In six states, it takes up more than 10% of a family’s budget to insure a 16-year-old, at a rate of $10,623 a year. For auto insurance in Michigan, where coverage is notoriously expensive, the typical family could devote more than 20% of their income to insurance coverage.
But it’s not uniformly expensive to carry a teen or young-adult driver on an existing car insurance policy. In the five least expensive states for 18-year-old car insurance by the percentage of income, the average cost of adding another driver is $2,867 a year.
In the most expensive states, the stand-alone cost of adding an 18-year-old driver to an existing policy is often cheaper than it would be to purchase stand-alone coverage for them and their own car, for which they’d be classified as the primary user.
Note: Rates for North Carolina not featured due to unavailable data.
Image Credit: Lending Tree and Value Penguin.
49. Hawaii
Cost to add an 18-year-old: $1,877
Percentage of median income: 2.00%
Image Credit: Art Wager.
48. Washington
Cost to add an 18-year-old: $3,064
Percentage of median income: 3.10%
Image Credit: 4nadia.
47. Maine
Cost to add an 18-year-old: $2,557
Percentage of median income: 3.10%
Image Credit: traveler1116.
46. Vermont
Cost to add an 18-year-old: $3,143
Percentage of median income: 3.60%
Image Credit: DenisTangneyJr.
45. Alaska
Cost to add an 18-year-old: $3,694
Percentage of median income: 3.60%
Image Credit: Chilkoot.
44. Nebraska
Cost to add an 18-year-old: $3,162
Percentage of median income: 3.70%
Image Credit: marekuliasz.
43. Wisconsin
Cost to add an 18-year-old: $3,229
Percentage of median income: 3.70%
Image Credit: DepositPhotos.com.
42. New Hampshire
Cost to add an 18-year-old: $4,403
Percentage of median income: 4.10%
Image Credit: DenisTangneyJr.
41. Pennsylvania
Cost to add an 18-year-old: $3,639
Percentage of median income: 4.20%
Image Credit: AppalachianViews.
40. Idaho
Cost to add an 18-year-old: $3,103
Percentage of median income: 4.30%
Image Credit: knowlesgallery.
39. Missouri
Cost to add an 18-year-old: $3,285
Percentage of median income: 4.40%
Image Credit: eyecrave.
38. Virginia
Cost to add an 18-year-old: $4,243
Percentage of median income: 4.40%
Image Credit: DenisTangneyJr.
37. Iowa
Cost to add an 18-year-old: $3,540
Percentage of median income: 4.40%
Image Credit: JoeChristensen.
36. Kansas
Cost to add an 18-year-old: $3,675
Percentage of median income: 4.40%
Image Credit: Zillow.
35. Wyoming
Cost to add an 18-year-old: $3,841
Percentage of median income: 4.60%
Image Credit: dschreiber29.
34. Indiana
Cost to add an 18-year-old: $3,644
Percentage of median income: 4.70%
Image Credit: f11photo.
33. Montana
Cost to add an 18-year-old: $3,557
Percentage of median income: 4.70%
Image Credit: YinYang.
32. Massachusetts
Cost to add an 18-year-old: $5,312
Percentage of median income: 4.80%
Image Credit: Rolf_52.
31. South Dakota
Cost to add an 18-year-old: $4,025
Percentage of median income: 4.90%
Image Credit: Rex_Wholster.
30. Maryland
Cost to add an 18-year-old: $5,254
Percentage of median income: 4.90%
Image Credit: James_Lane.
29. Ohio
Cost to add an 18-year-old: $3,832
Percentage of median income: 4.90%
Image Credit: dypics.
28. Delaware
Cost to add an 18-year-old: $4,494
Percentage of median income: 4.90%
Image Credit: mdgmorris.
27. New Jersey
Cost to add an 18-year-old: $5,471
Percentage of median income: 4.90%
Image Credit: aimintang.
26. Colorado
Cost to add an 18-year-old: $4,698
Percentage of median income: 4.90%
Image Credit: Jacob Boomsma / iStock.
25. California
Cost to add an 18-year-old: $4,579
Percentage of median income: 5.00%
Image Credit: mlauffen.
24. Georgia
Cost to add an 18-year-old: $3,781
Percentage of median income: 5.00%
Image Credit: SeanPavonePhoto.
23. North Dakota
Cost to add an 18-year-old: $4,581
Percentage of median income: 5.10%
Image Credit: sequential5.
22. Oregon
Cost to add an 18-year-old: $4,617
Percentage of median income: 5.20%
Image Credit: HaizhanZheng.
21. Tennessee
Cost to add an 18-year-old: $3,743
Percentage of median income: 5.30%
Image Credit: Swarmcatcher.
20. Utah
Cost to add an 18-year-old: $4,675
Percentage of median income: 5.50%
Image Credit: ” 4kodiak”.
19. Arkansas
Cost to add an 18-year-old: $3,735
Percentage of median income: 5.60%
Image Credit: Rdlamkin.
18. New Mexico
Cost to add an 18-year-old: $3,740
Percentage of median income: 6.00%
Image Credit: Davel5957.
17. Minnesota
Cost to add an 18-year-old: $6,022
Percentage of median income: 6.00%
Image Credit: JoeChristensen.
16. Connecticut
Cost to add an 18-year-old: $6,359
Percentage of median income: 6.20%
Image Credit: traveler1116.
15. Oklahoma
Cost to add an 18-year-old: $4,273
Percentage of median income: 6.30%
Image Credit: DepositPhotos.com.
14. New York
Cost to add an 18-year-old: $6,066
Percentage of median income: 6.60%
Image Credit: Boogich.
13. Illinois
Cost to add an 18-year-old: $6,253
Percentage of median income: 6.80%
Image Credit: ibsky.
12. West Virginia
Cost to add an 18-year-old: $4,699
Percentage of median income: 6.90%
Image Credit: hkim39 // iStock.
11. Alabama
Cost to add an 18-year-old: $4,658
Percentage of median income: 7.00%
Image Credit: Sean Pavone.
10. South Carolina
Cost to add an 18-year-old: $5,094
Percentage of median income: 7.20%
Image Credit: SeanPavonePhoto.
9. Nevada
Cost to add an 18-year-old: $6,298
Percentage of median income: 8.20%
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8. Texas
Cost to add an 18-year-old: $6,614
Percentage of median income: 8.70%
Image Credit: DenisTangneyJr.
7. Mississippi
Cost to add an 18-year-old: $5,088
Percentage of median income: 8.80%
Image Credit: DepositPhotos.com.
6. Rhode Island
Cost to add an 18-year-old: $9,633
Percentage of median income: 10.10%
Image Credit: danlogan.
5. Florida
Cost to add an 18-year-old: $7,824
Percentage of median income: 11.00%
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4. Arizona
Cost to add an 18-year-old: $8,978
Percentage of median income: 12.00%
Image Credit: reisegraf.
3. Kentucky
Cost to add an 18-year-old: $8,525
Percentage of median income: 12.60%
Image Credit: Thomas Kelley.
2. Louisiana
Cost to add an 18-year-old: $11,026
Percentage of median income: 16.40%
Image Credit: DenisTangneyJr.
1. Michigan
Cost to add an 18-year-old: $15,308
Percentage of median income: 19.30%
Image Credit: csterken.
Good student discounts
Good student discounts can result in 6% cheaper rates, but they don’t affect the expenses a typical family allots to car insurance.
The cost to add a teen or young-adult driver who qualifies for a good student discount to an existing policy results in 6% savings a year, on average, from ages 16 to 22. Families of 16- and 17-year-old drivers whose grades are high enough to qualify for the discount can save the most, as there’s a 7% difference between the cost of insurance with and without the savings.
These savings shouldn’t solely lead most families to purchase coverage for their young or teen drivers. The financial burden still looms large, as the combined cost of auto insurance when including a 16- to 22-year-old driver with a good student discount on one’s family’s policy is $31,331.
In other terms, the expenses a family can expect to incur on coverage for a young-adult driver equal 6% of the typical budget with a good student discount and 6% without. Therefore, the potential savings for a family don’t actually improve over the course of time it takes a teen to age to 22 years old.
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Teen drivers and your income
As with the young drivers who weren’t students or didn’t qualify for a good student discount, the overall cost of insuring a good student driver can take up a significant portion of a family’s budget. While the average cost of adding a young driver to an insurance policy equates to 6% of a family’s budget per year, the cost can be exponentially higher in some states.
In five states, the cost of car insurance for 18-year-old drivers exceeds 10% of a typical family’s budget. In Michigan, again, insurance can take up 19% of a family’s budget — even with a good student discount. Moreover, in the most expensive states, the good student discount only reduced overall annual expenses by less than 2%. In Florida, the largest insurance providers showed no change with the discount applied.
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Your neighborhood and teen auto insurance rates
The discrepancy between car insurance quotes for poor and wealthy families means that those earning smaller incomes will be less able to afford an extra driver. It also reveals a deeper issue of inequality. Since the base premium is higher for families with lower incomes, it’s harder for those people to afford to drive legally, which restricts their ability to move around for work or pleasure.
ValuePenguin compared the cost of car insurance in the wealthiest and poorest sections of the three largest cities in the country — New York, Los Angeles and Chicago. The Federal Highway Administration estimates that there are more than 101,000 miles across these three metropolitan areas. Still, despite the prevalence of roadways, access to affordable car insurance isn’t guaranteed.
In New York City’s five poorest ZIP codes, insurers quoted an average rate for families adding one driver — aged 16 to 22 — to an existing policy that was $3,929 greater a year than for a similar consumer in the city’s five wealthiest. Indeed, in the lowest-income area, which spans the neighborhood of Hunt’s Point in South Bronx, drivers were charged $4,856 more to add a 16-year-old driver to an existing policy than a comparable shopper hailing from Lower Manhattan’s Tribeca.
The stories in Los Angeles and Chicago are similar. In Los Angeles, drivers in the poorest neighborhoods are charged $441 more a year on average than those in the wealthiest parts. However, unlike in Chicago and New York, it actually costs slightly more for coverage in parts of the luxurious Bel Air than it does in Downtown Los Angeles. The state of California, unlike New York and Illinois, has more rigid insurance ratings laws that restrict insurers from using non-driving characteristics to determine costs.
In Chicago, those living in the poorest neighborhoods could pay $2,242 more a year than those in the highest-earning areas. In North Cook County, the cost of car insurance is $2,329 more expensive than it is in Chicago’s Englewood neighborhood.
Image Credit: DepositPhotos.com.
Methodology
We analyzed the data for 16- through 22-year-old drivers who did and didn’t qualify for good student discounts. We found the cost of adding these drivers to an existing policy as the third driver of a vehicle in every state. The young driver’s 45-year-old parents were primary drivers of the insured vehicle.
For our city analysis, we gathered rates from the ZIP codes comprising the nation’s largest cities by population and their suburbs, as designated by the borders of their respective counties. Our data is from the following counties:
- New York
- Kings
- Queens
- Richmond
- Bronx
- Cook
- Los Angeles
ValuePenguin’s analysis used insurance rate data from Quadrant Information Services. These rates were publicly sourced from insurer filings and should be used for comparative purposes only, as your quotes may be different.
This article originally appeared on ValuePenguin.com and was syndicated by MediaFeed.org.
Image Credit: kali9.
