Teen Auto Insurance

Teens can't wait to get behind the wheel. But it's a costly milestone—young, inexperienced drivers face some of the biggest auto insurance premiums.

Since teenagers have little experience behind the wheel, insurers view them as high-risk drivers.

J. Robert Hunter remembers quite clearly how auto insurance for his teenage son became a big family issue. Hunter, former Texas insurance commissioner, wanted his son to only drive the family's older car, which would save hundreds of dollars a year in insurance premiums. But Hunter's wife fretted that the boy would be better off driving the family's newer, more up-to-date car. "My wife and I had a big argument over it," Hunter, now the director of insurance for the Consumer Federation of America, told MSN Autos.

In the end, however, Hunter won out. "I let my son drive only the older car," he said, adding, "It was worth it." With basic insurance of $700 a year on the newer car vs. $300 a year on the older car, adding the teen as a driver to the older car was much cheaper than the alternative.

Welcome to the stresses of the teen years.
Not only do parents worry about putting a teen behind the wheel of a car—any car—they have to weigh a number of options about teen auto insurance. And, as Hunter attests, there are tradeoffs, particularly about money.

Expect Higher Premiums
For nearly all families, the biggest issue is the money. Almost without fail, a teenage driver will add significant cost to the family auto insurance.

The reason? Insurers base their auto rates on how likely a driver will get into a crash, and statistics show that young, inexperienced drivers account for a disproportionate share of crashes. When fatal crashes alone are examined, drivers between the ages of 16 and 17 are three times more likely to be killed in a traffic crash than people between the ages of 25 and 64, according to the National Safety Council.