When Your Teen Does (and Doesn't) Need to be on Your Insurance Policy

Peace of mind is worth the increase in insurance costs with a teen driver at home.

Teen driving with parentShutterstock

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When you start talking to parents who recently added teens to their insurance, you may feel apprehensive about the higher premiums. Given that you already pay for car insurance, you may even ask, "Does my teenager need insurance to drive my car?"

It's true that teen drivers usually pay more than older or more experienced drivers for their insurance, even when they're on their parents' policy. But, how do you know if you need to add a teen to your insurance? Let's look at when such a move might be necessary, and how to make the transition less costly for your family.

When Does My Teen Need to be on My Insurance?

In some states, your teen will need to be on your insurance as soon as they're driving with a learner's permit. In other states, these teen drivers are being chaperoned by a licensed, insured driver whenever they drive, so they don't have to be on insurance yet. Everywhere, however, you'll need to have your teen on your insurance by the time they have their own driver's license.

When Can I Leave My Teen off My Insurance?

Provided they have their driver's license already, there are two situations when you can skip putting your teen on your insurance; both are fairly intuitive.

  • First: If your teen isn't driving (not even on a learner's permit), they do not need to be on your insurance. Some families choose to delay having their children learn to drive and get their licenses. This can give them time to save for a car if that's part of the plan
  • Second: You can leave your teen off your insurance policy if you choose to secure them a separate policy. In most cases, adding your teen to your own policy will be less costly than shopping for their own, but if you have a reason to keep their policy separate, there are insurance providers that will cover teen drivers.

How Much Does Adding a Teen Driver Increase My Premiums?

Many factors impact how a teen driver will change your premiums. For instance, the kind of car they're driving, the average prices for insurance in your state, and the particular incentives and discounts offered by your insurer can all shift your rates. For comparison purposes, check out the average rates in Alameda, California in 2022 for full coverage for a married couple vs. a married couple with a teen, factoring in their vehicle details and driving records (using the same three anonymized insurers). This data also assumes 40 plus years of licensing, 12,000-20,000 miles driven each year in a mid-size sedan, and no history of violations. These rates may seem unusually high because discounts have not yet been applied, but the differences show how substantial the change in cost can be.

Married coupleMarried couple with teen
Company 1$4,373$7,226
Company 2$2,676$5,372
Company 3$3,151$6,073


How Can I Save Money With a Teen on My Policy?

Many insurers have found ways to reward responsible teens through discounts. For instance, a teen driver who maintains strong grades in school could qualify for a discount from certain carriers. Also, if your teen participates in an approved driving education course, that might further drive down those high rates.

Teens as well as drivers from other age groups may additionally benefit from a telematics program. These monitoring devices note whether a driver stops suddenly, speeds, or participates in other defensive driving strategies. When the device registers enough positive driving habits (and few enough negative ones), your family may qualify for reduced-cost insurance.

Finally, teen drivers often spend the last couple of teenage years away at college, where they may not have access to a car or have any use for driving. If this is the case, look for a car insurance company that offers a discount for students away at college without a car. These insurers calculate the reduced risk of the teen rarely driving and pass savings along to you.

Realistically, one of the biggest "discounts" on teen car insurance is time. Rates tend to come down every year after 16 years old, seeing as older drivers tend to gain more experience and get into fewer accidents on average.

Key Takeaway: Make Sure Your Teen Driver Is Covered

With this information, you can carefully consider your answer to the common question: "Does my teenager need insurance to drive my car?" While everyone wants their teen to get through their early driving years with no accidents, this is a particularly important time to protect them as they gain valuable experience.

Make sure that your teen has your state's legally required amount of insurance — if you aren't prepared for a hike in premiums, consider delaying their driving until you feel financially ready. Let teen drivers know that driving involves increased responsibility. Asking them to pitch in for the increased premiums can be a way to defray some of the costs and help them realize the importance of careful driving.

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Laura Leavitt
I love a good spreadsheet and will happily calculate compound interest all day, but my biggest focus is helping people achieve their financial goals. That could be saving up for a dream car or calculating the right car payment for your budget so you can get a reliable daily driver. I research and write about personal finance so that making great financial choices becomes easier for us all.