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How much is Car Insurance for a 17 year old?
As your 17-year old backs out of the driveway for their first solo driving trip, the last thing you want to worry about is insurance. Unfortunately, the process of finding, evaluating, and purchasing car insurance for your 17-year old driver can be troublesome.
It need not be that way. There are many things to think about ahead of that first trip taking place. This overview will hit on all the pieces of the puzzle you need to be able to wave goodbye with confidence as your teen heads out on their own.
I do want to start with some brutal honesty: insuring a teen of any age is an expensive proposition. Given that a 17-year old is typically within the first year of being legal to license, car insurance companies are leery. Let me pepper this bad news with some good – as your young driver ages (read: matures), the cost of insuring her or him will go down.
The Factors that Impact Your Cost
You may be clamoring to yourself saying, “My 17-year old is a very good driver. Why should we be punished with high rates?” The truth is, insurance companies have to play the odds and cannot tailor every policy to specific drivers. Statistics strongly suggest that 17-year old drivers are much more likely to be involved in an accident than other drivers.
Driver age is not the only data-driven risk assessment used to determine the cost you end up paying each month, six months, or year for your 17-year old to be on your car insurance. These factors also play an important role in your auto insurance premium:
- Insurance Company
There is not much you can do about the gender of your 17-year old. Insurance companies view males as being a higher risk than females. Why? The numbers, again. Statistics argue that males are more likely to exhibit dangerous driving behaviors than their female counterparts. It costs about $300 more per year, on average, to insure a teenage male.
In most cases, you will be adding your teen to your insurance. It is a cheaper method than purchasing a standalone policy for your teenage driver. The downside of this is minimal but it does exist. Adding your teen to your established policy can seemingly limit your ability to shop around for the best deal. This does not have to be the case.
It can be beneficial to consider taking your business to an insurance company that is willing to offer you lower rates than the one you are currently with. Shopping for a new provider could help mitigate some of the added costs you will incur for adding your teen.
Location, like gender, is virtually impossible to change for the sake of saving on your annual car insurance premium. Location impacts all drivers, as insurance companies evaluate geographic risks like the likelihood of theft or more accidents relative to other areas. Some states have regulations that drive up the cost of premiums, as well.
One important consideration is what vehicle your 17-year old will be driving. If their primary vehicle is a 2008 Honda Civic, your premium may not go up as much as if you buy him a brand new Chevy Camaro. Insurance companies weigh several factors when it comes to vehicles: risk of theft, vehicle safety, vehicle value, and the likelihood of dangerous driving (read: sports cars).
These factors all combine with the young age of your driver to spit out a premium cost from your insurance company’s algorithms. Some can be intentionally manipulated, while others are out of your control.
Controlling the Controllable
We have detailed the list of common factors auto insurance companies use to set premiums for any given driver. In the case of a 17-year old, there are several aspects that are out of your control – age, gender, and location (moving is unlikely to be in the realm of possibility).
More good news! There are ways to “control” some pieces of the insurance cost puzzle. Cost savings are not necessarily rampant in the world of auto insurance but they do exist. It is pertinent to take a little time and examine ways to save money on what may seem like a significant spike in your premium upon adding a teen.
- Vehicle Choice
- Driver’s Education
- School Performance
- Savvy Shopping
Not every family will purchase their 17-year old her own car for everyday use. Many families have multiple vehicles that are used based on availability. However, if your teen driver will have a dedicated vehicle, consider these things before making the purchase:
- Do not purchase a vehicle that has the need for speed. Insurance companies may not inherently charge a higher premium for these cars but the odds are your teen will give in to the temptation to test out the horsepower. This can lead to costly traffic infractions or serious accidents.
- Make Electronic Stability Control a non-negotiable. The ESC system helps the driver maintain safe operating control of the vehicle in less than ideal conditions like curvy roads that are wet.
- Take advantage of independent reviews like those from the Insurance Institute for Highway Safety. These ratings indicate the overall safety of a vehicle, which insurance companies take into account.
- Keep costs down. Most families purchase a used, budget-friendly vehicle for their new drivers. This is good for both the household wallet and the cost of your insurance premium. A brand new vehicle costs far more to insure than one with some “character.”
Some states require taking Driver’s Ed in high school while others allow for independent contractors to educate young drivers. In any case, Driver’s Ed is a must for most insurance companies. Some combination of classroom and driving hours combine to provide teenage drivers the knowledge they need to venture on to public roadways.
Many insurance companies will offer a discount for those who go above and beyond local regulations. Taking special classes can give drivers more experience behind the wheel under the supervision of an instructor. This leads to safer driving behaviors and a positive view from insurance providers.
Safe driving, in general, is a boon for lowering insurance premiums. Remember the conversation about premiums going down with age? This remains true unless your teen driver encounters legal trouble while driving. Traffic tickets, accidents, or other violations can lead to a rapid ballooning of your premium. Once this occurs, it often takes years for insurance companies to be willing to lower your cost again.
Some auto insurance companies offer a discount for “parent contracts” between guardians and 17-year old drivers. In any case, having a serious conversation about the dangers of speeding, distracted driving, and generally unsafe decisions behind the wheel is imperative. Explain how some poor choices can be life-altering while others could raise the cost of insurance greatly.
Many industries have been providing perks and discounts to students who achieve what are generally considered to be “good grades” (As and Bs or a 3.0 GPA). While this may be unfair to students who struggle for reasons outside of bad choices, auto insurance companies tend to award good grades with a discount.
The primary (possibly misguided) reason for this is the perception that earning high marks in school equates to some level of maturity. Insurance companies value maturity as evidenced by the lowering of rates for older drivers.
Consumers are often guided to certain brands because of loyalty. Brands take advantage of this tendency by offering savings for extended relationships. For instance, a bank might offer a better mortgage rate to someone who has held an account for decades than to someone just walking in the door for the first time.
Auto insurers are no different. Their goal is to make money and keeping customers is vital to revenue. They will try to lull you in with discounts related to your history with them. In reality, this may end up costing you.
Do not be afraid to shop around for better prices! Some insurers cost more to cover a 17-year old than others. The lower costs at a new provider might outweigh the savings you are being offered to stay put. Take the time to look around rather than assuming your current insurance company is giving you the best rate.
The Right Coverage
Deciding on the appropriate coverage seem complicated because of all the industry jargon auto insurance companies use. Terms like liability, comprehensive, collision coverage, and deductible can make you dread the entire process.
The important thing to remember is that states set regulatory minimum coverages that are just that – minimum. Avoid a plan that only meets those standards, as even a minor accident could lead to significant out-of-pocket costs.
If your car is still financed by a lending institution, they will usually dictate your coverage. Comprehensive and collision is typically required. This covers almost anything that could happen to your vehicle, including theft.
For those who own their vehicles, the option to carry simple liability is available. This usually covers other drivers involved in the accident if your teen is deemed at-fault. It is important to select a policy that would cover significant medical expenses in the event of an accident with injuries.
The upfront savings of excluding comprehensive and collision coverages might be a temptation but it is not recommended for young drivers. A $500 deductible payment is certainly better than a $5,000 repair bill. In this example you would need to save over $4,500 a year on your premium to make this risk worth it. Pay up for better coverage while a young driver is behind the wheel.
The one instance that we would be confident excluding C & C insurance is when the value of the vehicle is lower than the cost of the additional coverage premium. If you have gone the traditional route and assigned your teen a family heirloom vehicle that is worth $2,000, it might be excessive to pay for the extra coverage.
Purchasing an Individual Policy
Parents commonly inquire whether purchasing a separate policy for their teen is a good idea. The simplest answer for most cases is a resounding, “No.”
The average annual premium cost increase to add a 17-year old to an existing policy is $4,994. Purchasing a 17-year old their own policy would more than double that amount to a whopping $10,992. As you can see, it would be a rare case that would behoove a teen to get their insurance individually.
There are some instances where parents or guardians might consider an individual policy for a 17-year old driver the best decision. If the teen is financially independent or has an irresponsible driving record, it might make sense to remove their impact from the family policy.
On Learners’ Permits and Vehicle Ownership
There are two more areas we must touch on before concluding this comprehensive guide to auto insurance for your 17-year old. Many drivers are still operating with a learner’s permit at 17. This can lead to a unique insurance situation.
In most states, simply getting behind the wheel of a car triggers the mandate for minimum liability coverage. Your insurance company will be able to tell you if this is the case. Some insurers will allow the vehicle owner’s policy to cover the car, while the young driver’s liability coverage will pay for damages and medical costs for other drivers involved in an accident.
Some 17-year olds are independent and seek ownership of a vehicle in their own name. Most states disallow solo ownership by anyone under 18, due to the complications of signing a contract as a minor. Some of those states will allow co-ownership with a parent or guardian co-signing for the title and insurance policy.
The Good, the Bad, and the Reality
We have covered everything from the great news that insurance premiums will go down as your teen gains experience and age to the harsh, ugly reality that coverage for a 17-year old is going to be expensive for a while.
The point is, having a teen driver is a reality that cannot be ignored. Selecting a policy that offers good coverage in the event of an accident is a must. Shop around for the best rate and ignore the guilt of leaving a long-term relationship if another insurance company gives you a better deal!
Most importantly, encourage your 17-year old to practice responsible driving habits and avoid temptations that could lead to years of high premiums and out-of-pocket costs. A clean driving record is the true money saver in the long run.