(InvestigateTV) — Adding a teen driver to an auto insurance can come with a major price jump. New data from Bankrate shows just how much premiums can rise for families.
The average rate for full coverage insurance for a 16 year old on their parents’ policy is $5,740 a year, a nearly $700 increase from the same time period in 2023.
Shannon Martin with Bankrate said that means parents have to find almost an extra $270 each month so their teen can drive one of the cars on the policy.
“It used to be of course you get a license when you’re 16, but maybe we should stop and think about it and have those financial conversations with our children when they’re 13. What does it mean to have a car? How can we pay for a car? What if you get a ticket? If you put that in their minds at a young age, as you get closer to those conversations of maybe you don’t get your own car. Maybe you have to wait to get your license those become easier because they’re aware of the finances around the responsibility of driving,” Martin said.
Martin said insurance companies also use driving behavior to help set rates. As an adult they have a lot of data to pull from, but a teen is a blank slate.
“They don’t have any data to understand what kind of driver your teenager will be, so they have to look at crash test data, that’s broken up over age categories that groups teens into categories with other teens. And that data shows teenagers are more likely to have accidents and the accidents that they have are going to be more severe which is why they cost so much to be added to a policy,” Martin said.
Martin said a new teen driver costs about $450 more per year than an average adult driver with a DUI on their record.
She said shopping around for a new insurance policy can help cut these costs.
Adding a teen driver to auto insurance comes with major price jump
