How Much Is Insurance for a 16-Year-Old? Is It Worth It?

Are you a teenager’s parent or an anxious 16-year-old who has frantically surfaced the web to get an accurate idea regarding the pricing of insurance? This article is your complete guide to understanding how much insurance is for a 16-year-old.

Calculating insurance and estimating premiums is a tricky business. Contemplating if it is worth it and how much you have to pay is another matter entirely. Sixteen is the ultimate age when one officially enters the time when you can help but desire to be the 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, the article will guide you on what car insurance is and how much it will cost to a 16-year-old.

In general, humans feel guilty after spending money. But paying insurance is not an expenditure; rather, it is guaranteeing a safety net for yourself. But can everyone afford this luxury? Teenagers are always short on cash, and hence they try their best not to overspend.

However, purchasing car insurance is inevitable and needless to say, ensuring a 16-year-old driver can get quite heavy on the pocket, aka 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 insurance for a 16-year-old?

What is car insurance?

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. Before we indulge in details about car insurance, it is essential to know that having car insurance is required by law in most states.

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.

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.

How much is car insurance for a 16-year-old female per month

Car insurance is much more expensive for 16-year-old drivers because they are more likely to get in accidents than older drivers. According to the Centers for Disease Control and Prevention (CDC), teen drivers are three times more likely than other drivers to get in a fatal crash.

Rates for 16-year-olds are also higher because insurance companies don’t have existing data to base their models on. Car insurance rates are partly based on your driving history. However, a shocking detail has resurfaced that car insurance for a 16-year-old female is less than for a 16-year-old male.

Now, there are a plethora of reasons for the following difference. The major reason attributed for the difference is dubbed as the young male drivers being rash and overconfident during driving while the female drivers are far more careful and considerate on the road.

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It is pertinent to mention that the teens have had their driver’s licenses for a year or less, hence there are a handful of instances that further confirm the teen drivers eligibility to drive safely on the road. Moreover, there is a lesser amount of data present for insurance companies to base their decision on. So, the companies set higher costs for every teenage driver, no matter how careful they are.

What is the cheapest insurance for a 16-year-old?

The cheapest car insurance for a 16-year-old is not always easy to find. But remember the golden word whenever you are stuck in a hoard of financial trouble – where there is a will, there is a way.

So, by the comparison of various quotes, the young teenager or their parents can easily opt for the cheapest option available and can also avail of the luxury to use discounts. This will ensure that the coverage is done at an affordable price.

The car insurance rates for 16-year-olds vary from state to state. But 16-year-olds tend to pay the highest rates. 16 to 19 years drivers pay more than drivers in any other age range. This payment level is due to the minimum driving experience. The lack of experience makes younger drivers more at risk of accident involvement.

It is pertinent to mention, that the average annual rate will usually decrease with each year:

16 years – Average annual rate of $2733 (minimum coverage) and $6613 (full coverage).

17 years – Average annual rate of $2206 (minimum coverage) and $5373 (full coverage).

18 years – Average annual rate of $1938 (minimum coverage) and $4837 (full coverage).

19 years – Average annual rate of $1451 (minimum coverage) and $3716 (full coverage).

Next up, let’s glimpse the cheapest insurance providers for 16-year-old drivers, Namely, the most affordable options are Geico, Allstate, Progressive, and State Farm. Tip for potential policyholders – car insurance for a teen driver has sky-high prices so an easier alternative is for parents seeking cheaper rates.

Buying coverage under an existing policy with your parents is the best way to get affordable insurance as a 16-year-old. Alternatively, you can obtain insurance quotes from multiple providers to save money.

Furthermore, the insurance laws vary from state to state, many states do not require drivers to have full coverage. However, if you drive a new car with a loan or a lease, you may be required to carry full coverage based on your buyer agreement. The minimum level of coverage will usually cover the damages to another driver’s vehicle.

Depending on where you live, you may have to follow certain laws as a new driver. Some states restrict 16-year-old drivers to the locations or times in which they can drive. New drivers must follow these laws until they are 18 or have their Graduated Drivers License.

The cheapest car insurance for a 16-year-old tends to be with the following insurance providers. Note the premium amounts per provider.

  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.
  6. ALFA: $2580 six-month premium or $430 per month.
  7. Nationwide: $2702 six-month premium or $450 per month.

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.

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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

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. How much is insurance for a 16-year-old?

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.

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  • 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.

Comparing car insurance with respect to age

For a better understanding of how much is insurance 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.

Top discounts for teenage 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.

How to file a driving insurance claim?

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.

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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.

Teenagers and 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 expensive and costly, 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 but that still is heavy on the pocket.

John Otero

John Otero

John Otero is an industry practitioner with more than 15 years of experience in the insurance industry. He has held various senior management roles both in the insurance companies and insurance brokers during this span of time. He began his insurance career in 2004 as an office assistant at an agency in her hometown of Duluth, MN. He got licensed as a producer while working at that agency and progressed to serve as an office manager. Working in the agency is how he fell in love with the industry. He saw firsthand the good that insurance consumers experienced by having the proper protection. John has diverse experience in corporate & consumer insurance services, across a range of vocations. His specialties include Major Corporate risk management and insurance programs, and Financial Lines He has been instrumental in making his firm as one of the leading organizations in the country in generating sustainable rapid growth of the company while maintaining service excellence to clients.

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