How Much Is Car Insurance for a 16 Year Old? Estimating the Total Cost

Have you frantically googled how much is car insurance for a 16-year-old and panicked after finding out that it is heavy on the wallet? Follow this article to understand everything you need to know about how much car insurance is for 16-year-olds.

Sixteen is the age when one officially enters the time when you can help but desire to be the ultimate cool teenager. From flaunting a new style vibe to wanting independence, the first step teenagers take towards adulting is learning to drive. Once you have earned a driver’s license process, the excitement skyrockets.

Now that the exhilarating process of the license is complete, next comes the car insurance phase. If you’re a teenager who recently got your consent or a parent of a soon-to-be licensed driver, this article will guide you on what car insurance is and how much it will cost to a 16-year-old.

It is human nature that we feel guilty after spending money, and while paying out the insurance, people scrutinize the contract and go for the most affordable insurance. Teenagers are always short on cash, and hence they try their best not to overspend. But availing of car insurance is inevitable, and needless to say, insuring a 16-year-old driver can be costly.

The teen drivers lack experience, and insurance companies consider their inexperience and immaturity a risk and higher prices. The newly-found sense of freedom is heavy on the wallet. However, it is essential to consider car insurance options to stay financially protected while on the road.

Answering the burgeoning list of questions and concerns, the following article will cover all the aspects of car insurance for teenagers. There will be a lot of legal and financial terms you would want to know before stepping into the jargon of car insurance, so follow this detailed guide on how much is car insurance?

What is car insurance?

Before we indulge in details about car insurance, it is essential to know that having car insurance is required by law in most states. What is car insurance? It is defined as financial protection if you cause an accident with your car. Moreover, it works as a safety net if your vehicle is damaged or stolen.

The car insurance pays a certain amount of coverage, and as long as your policy is active, your insurance will kick in if needed. It also helps pay your legal fees if you have been taken to court over any unpleasant accident. Furthermore, it provides collision coverage and comprehensive coverage by helping pay for repairs or replacement if your car is stolen or damaged. That’s not all. Car insurance also helps protect the passengers by paying medical payments coverage, and personal injury protection may help pay for your medical bills if you’re injured in an accident.

How much is car insurance for a 16-Year-Old?

Now that you know what car insurance is and why it is important let’s delve into details about how the process will pan out for a 16-year-old teenager. Risk is one of the essential parameters that need to be evaluated since the higher the risk, the higher the premium.

Since 16-year old drivers have less experience behind the wheel than older drivers, they are more likely to violate any rules. The inexperience further validates that young drivers need to protect themselves financially. The premiums for young drivers are higher. Apart from age, gender also plays a crucial part in determining the

According to the statistics, a 16-year old male driver is more likely to receive a citation or get into an accident than a 16-year old female driver. So the male teenager is bound to pay over $440 more per six-month policy period for insurance than females.

Why are teen car insurance rates higher?

The insurance company has a standard protocol and working mechanism that calculates its rates based on future risks. Assume that we are computing the premium amount. Then one has to consider the insured’s driving experience. Evaluating the background to deduce results is essential. Hence, information like location, where they drive, how far they drive to work or school, the type of vehicle, and their claim history must be recorded.

According to the National Highway Traffic Safety Administration (NHTSA), in 2016, one out of five teen drivers involved in a fatal crash had alcohol in their system. The following stats put the 16-year-old at a disadvantage because their recklessness and limited experience combined put them at a higher risk. The NHTSA also indicates that 1830 drivers between the ages of 15 and 20 died in motor vehicle accidents in 2017, an alarmingly high rate.

Moreover, motor vehicle crashes are still one of the leading causes of death for people between the ages of 15 and 20, according to the National Center for Health Statistics, The factors that contribute to the increase in fatal accidents according to the Centers for Disease Control include:

  1. A low percentage of teens wear their seat belts.
  2. Teens are more likely to speed.
  3. Teens are more likely to allow shorter headways.
  4. Teens are more likely to drive late at night and on weekend nights

How much does it cost to add a teenager to car insurance?

Theoretically, we have deduced that car insurance for a 16-year-old is quite expensive. Now, let us delve deep into the financial point of view. The average cost increase to add a 16-year-old to their parent’s policy is $2,531 per year. Apart from this hefty amount, there is the premium that parents are already paying for two drivers and one vehicle.

The additional cost excludes purchasing a vehicle for your 16-year-old to drive. It also does not play any favor or positive role in case of any tickets or accidents whilst the teenage driver is driving. The factors will just boost the price tag of the premium. So, we can safely conclude that adding an inexperienced driver to a car insurance policy will cause the annual premiums to increase significantly.

Moreover, Car insurance rates are determined based on risk. So statistically, the teen drivers fall under the category of riskiest drivers to insure. In fact, teen drivers are more likely to get into accidents than any other age group, according to the Centers for Disease Control.

Factors that influence the cost of car insurance for a 16-Year-Old

Car insurance for 16-year-olds is costly and heavy on the wallet, and despite paying a considerable amount, the newly licensed teenage drivers are considered high risk because of their inexperience. The notion that has been observed is due to several factors that further solidify the case that 16-year-olds are too young to resume responsibility.

Below we list down the points that play a crucial role while the insurance company evaluates the cost of car insurance for 16-year-old drivers:  Age is one of many factors that influence the cost of car insurance for 16-year-old drivers.

  • Type of car
  • Gender
  • Location
  • Marital status
  • Credit score

What are the cheapest vehicles for 16-year-olds?

As a teenager, it is understandable that you are always low on cash so it makes perfect sense that you opt to choose affordable and reasonably priced vehicles. Buying a cheaper car will not only be budget-friendly but will also help in saving money on car insurance. This is because the lesser the car’s price, the easier it will be to find the parts. Higher-end vehicles are more expensive to insure because of the cost to repair them.

Best types of car insurance for a 16-Year-Old

The research phase has been completed as you have weighed a plethora of pros and cons to evaluate the car insurance and how you will be managing the additional expenses. The next step is fishing out the best type of car insurance that is best suited to your needs and encloses a teenager’s financial estimate.

With the addition of your teenage child, the type of protection you need while driving or on the road will change drastically. While wondering how much car insurance is for a 16-year-old, one should be careful to include the cost of the additional coverages that one might be required to buy. Some of the most common car insurance requirements include:

Bodily injury liability (BI) – The Body Injury liability coverage protects the driver from paying for the other party’s injuries out-of-pocket in an accident you cause.

Property damage liability (PD) –  Property Damage Liability protects you from having to pay for another party’s damages to their vehicle due to an accident that might have occurred.

Medical payments (MedPay) – MedPay is one of the most commonly used coverages that help in paying the medical bills after a covered accident, regardless of who was at fault. (in this case; the drivers)

Personal injury protection (PIP) – Personal injury protection is the type of coverage that helps to pay for medical bills, lost wages, and death benefits in a no-fault state.

Uninsured/underinsured motorist (UM/UIM) – The following type of protection aids in payment of property damages or injuries to your own person in the event that the at-fault driver has insufficient limits to cover you.

Cost of car insurance for 16-year-olds compared to other ages.

For a better understanding of how much car insurance costs for a 16-year-old, there are a few things to consider, apart from factors like determining rates for various drivers, age, gender, location, and the type of car matter. Insuring a 16-year-old driver can be very expensive. For the analysis, the 16-year-old driver pays more than double the average cost to insure a 25-year-old. Teenagers can expect the insurance cost to decrease by 9% when they turn 17.

How do rates differ between a 16-year-old male and female drivers?

We have discussed that gender also plays a salient role in determining the car insurance rate in the aforementioned paragraphs. The insurance for a 16-year-old male is more expensive than for a 16-year-old female. Why do the rates differ between males and females despite belonging to the same age group? There was a significant difference in the premiums for each of the insurance companies. Some offer similar premium amounts ranging from $4195 to $4309 while others have much higher premiums, with an average cost of $9327 for male or female teen drivers.

Premiums for 16-year-old girls are often slightly less than for boys. Statistically, male 16-year-olds are more likely to get into an accident or get a speeding ticket than a 16-year old female driver, the premium for females is an average of 16 percent less. However, one should be careful as a survey of three of the largest insurers found that both boys and girls who just received their licenses can expect to pay an average of a whopping $5944 every six months.

Best discounts for 16-year-old drivers

Everyone loves discounts and in cases when you are a teenager and studying, the young adults stepping into the world of adulthood love to avail discounts. There are some exceptional cases where concession can be availed on the expensive car insurance like every other insurance.

Various insurance companies offer many discounts to offset the high cost of insurance for young drivers, especially the 16-year-olds who are excited to drive. Below we list down some factors that can accommodate the applicants to use the discount luxury. Here are some standard deductions to look out for :

Good grades – The full-time high school and college student with a certain GPA can avail of the reduction in rates. The excellent student category includes students who have a GPA of 3+ and have been recommended by their education institute. However, the students have to be mindful that discounts are available.

Driving tracker –  Insurance companies also provide teenage drivers with a telematics driving tracker, which reduces the rates after showcasing responsibility and demonstrating that you drive safely. Let’s take an example to explain this better. If you have a driving tracker discount, they will display your action while you are behind the wheel, for example suddenly starting or stopping, or swerving on the road. These plug into your car’s diagnostic port or use a mobile app to track your habits.

Driving class –  Driving class discount is quite beneficial for sixteen-year-old drivers who are likely to have taken driver’s education. Moreover, many states allow you to take a driver’s education course to reduce your car insurance rates automatically.

Student away from home – The following privilege is availed by the geographically distant students from their homes. College students or 16-year-old high schoolers who are more than 100 miles away from home for school qualify to have their insurance rates reduced.

Pay-in-full – The teenage driver can get a discount on their car insurance from most insurers by paying for the entire plan in full, rather than breaking the cost up by month.

Despite the burgeoning list of discounts, keeping a 16-year-old driver on the family insurance plan is advisable. If the teen drivers wish to own their own policy, it can lead to them paying as much as $1600 per year. If teen drivers live at home, the liabilities are another reason to consider keeping more of them on the policy.

Filing a driving insurance claim as a 16-year-old

Why is car insurance so necessary? It works as a safety net to safeguard the car driver even in cases when the policyholder might be at fault. Hence, the process of filing an insurance claim can lead to a significant increase in rates.

Nevertheless, it is always good to consider how a claim will impact your rates. Some insurance firms increase the annual rate by a whopping amount of $670 per year if you are at fault for an accident. The insurance process is rigorous and complex, and it can be helpful to calculate the cost. So by adding the price, including the repairing of the vehicle, it will have the average increase of filing a claim to your insurance rates.

Cheapest car insurance for a 16-Year-Old

Here we have compiled a list of the cheapest car insurance that can be availed by a 16-year-old who wishes to buy car insurance. While evaluating which insurance one desires to buy, we must calculate which insurance company provides the affordable premium amounts.

  1. American National –  $1193 six-month premium or $199 per month.
  2. Erie – $1402 six-month premium or $234 per month.
  3. Auto-Owners – $2139 six-month premium or $357 per month.
  4. USAA –  $2401 six-month premium or $400 per month.
  5. American Family –  $2528 six-month premium or $421 per month.

It is pertinent to mention that the insurance rates above are for minimum coverage. Initially, one must consider how much coverage they may need and the deductible they are willing to pay without any financial crisis. Further, teen drivers tend to pay higher rates for buying auto insurance by staying on the family insurance plan or shopping around.

How to get the best car insurance for 16-year-old drivers

Getting the best car insurance for a 16-year-old is vital since it ensures safety and financial security. Even though car insurance for teens can be expensive, you can often find options to fit your budget without sacrificing coverage. However, one of the best ways to do this is to shop around and get quotes from multiple insurance companies. This can help you determine the average rate in your area for adding a 16-year-old to your policy and will allow you to compare coverage options and discounts.

So, while looking for a car insurance policy, one must be interested in considering available coverage types, discounts, customer satisfaction scores, and financial strength. Comparing these factors, in addition to price, might help you find coverage that fits your needs.

Traffic statistics for 16-Year-Old drivers

Teenage drivers tend to cost more to insure because they are more likely to get into accidents and have a reason to use their insurance. So as per the statistics, the younger the driver, the more likely he is to be involved in a car crash and use the insurance.

According to data for police-reported crashes, drivers aged 16–17 were involved in almost double the number of fatal crashes than 18- and 19-year-olds for every 100 million miles driven. So the young drivers behind the wheel are at a higher risk for accidents. And there are fewer deaths per capita for teens than for older drivers. There are more deaths per mile driven for those younger drivers. Because of immaturity, recklessness, and inexperience, teens are a riskier bet for accidents. Limiting the number of miles a teenager drives could help cut costs and keep them safe.

Cost of car insurance for 17-year-olds

Moving towards the conclusion, let’s clarify that 16-year-olds have to pay a lot if they wish to receive car insurance. One can wait for some time before getting one since the older the driver is, the lesser the cost. At the age of 17, the insurance is not as costly as it is for a 16-year-old, but still, it is a hefty amount.

The national annual average rate for a 17-year-old is just over $5,370 for full coverage and $2,206 for minimum coverage. Besides Hawaii, North Carolina has the lowest average yearly rate for a full-coverage policy for a 17-year-old at just under $2,660. Furthermore, the cheapest minimum coverage rate for a teenager aged 17 is just over an average of $930. Louisiana has the highest average total coverage rates for 17-year-olds

Can teenagers have their car insurance policy?

Teenagers are minors, and due to the fact they are underage, they generally are not allowed to have their car insurance policy. But, they will be listed as drivers on their parent or guardian’s policy. But when the insurance driver reaches 18 years old, they can purchase their insurance policy. However, it can be financially beneficial to stay on a parent or guardian’s policy until they move out and establish their household.

Conclusion

The bottom line of the debate is that the price of your car insurance will depend on where you live and whether you get your policy or have your name added to a parent’s policy. So while the insurance for a 16-year-old, no matter their gender, is relatively inexpensive, it is advisable to wait for some years so that you gain experience and maturity. If the teenage driver does not want to wait, they can get added to their parent’s insurance policy.

Sandra Johnson

Sandra Johnson

Sandra Johnson was a few years out of school and took a job as a life insurance agent in California, selling coverage door-to-door for Prudential. The experience taught her about the technical components of insurance and its benefits for individuals and society, as well as the misunderstandings people often have about insurance. She has over ten years’ experience in the insurance industry, having worked as both a Broker and Underwriter, assisting clients across a broad range of industries. At Insurance Noon, Sarah diligently gathers all the required information and curates up pieces to provide meaningful insurance solutions. Her personal value proposition is to demonstrate a genuine interest in always adding value for clients.Her determined approach to guiding clients has turned her into a platinum adviser to multiple insurers.