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Adding a new teen driver to your car insurance policy might cause some sticker shock, but it’s crucial to protecting your family’s finances. Luckily, there’s a couple of things you can do to help with the jump in premium. Here’s everything you need to know about adding a newly licensed driver in your household to your car insurance policy.
- 16-year-old drivers add an average of between $2,000 and $2,300 to their parents’ full coverage policy annually.
- Car insurance premiums tend to decrease with more years’ of experience, based on Bankrate’s study of average premiums.
- You may be able to insure your child on your policy until they move out, buy their own vehicle or become financially independent.
Do I have to add my child to my car insurance?
If your child has a driver’s license, lives in your household and drives a car that is registered to your home, they will need to be added to your car insurance policy. This will be the case regardless of their age, as anyone living in your household with access to your cars will need to be a listed driver on your car insurance.
However, if your child has their driver’s license but doesn’t plan on driving for the foreseeable future, you can opt to formally exclude them from your car insurance policy. You may need to sign a form with your insurance company confirming that your child will not drive any of your cars. If they do get behind the well — and get into an accident — your car insurance company will not cover the damages. Once you and your child decide that they will start driving again, you can contact your insurance company to include your child again as a driver in your policy.
Benefits of adding your child to your car insurance policy
Although you will probably see a premium increase when you add your child to your policy, there are benefits as well. Some common advantages to adding your child as a driver on your auto insurance policy are:
- Lower premiums for your child: If your teen is 18 or older, they could purchase a policy in their name (assuming they own, lease or finance their own car). However, car insurance for 18-year-olds on their own is generally pretty expensive. If your teen lives with you and if your name is also on their vehicle, they’ll likely save money by staying on your policy.
- Qualifying for new discounts: There are plenty of car insurance discounts available for teen drivers. You might be able to offset some of the cost of adding your teen driver by taking advantage of good student discounts, distant student discounts and teen driving programs.
- Simplified policy management: Having your entire household on one policy could make it easier for you to make changes, pay bills and keep track of your insurance documents.
- Gaining coverage for your teen: Adding your teen driver helps to provide coverage if an accident occurs. If your child is not listed as a driver on your policy but still drives one of your vehicles regularly, coverage could be denied after an accident.
Additionally, adding your teen to your car insurance policy could present a learning opportunity. You could teach your child about car insurance, explain why it is an important purchase and teach them how to pay bills.
Costs of adding a young driver to your car insurance
Adding a teen driver to your car insurance policy will likely increase your rate. A recent Bankrate study on cheap car insurance for teens found that 16-year-old drivers faced some of the most expensive car insurance premiums of all age groups. When added to their parents’ policy, the overall premium cost increased by between $2,000 to $2,300 per year for a full coverage policy, on average.
Part of the higher cost for insuring teen drivers is attributed to their lack of driving experience, but other factors may be in play too. In most cases, teens don’t have a credit history or credit score, which is used in some states to determine car insurance rates. They also aren’t able to get discounts like loyalty, bundling or multiple vehicle discounts. However, teens can access special car insurance discounts for students to help offset some of the premium increase.
When do you add your teenager or young adult to your car insurance?
Generally, you should add your teen or young adult child to your policy as soon as they get their driver’s license. To be safe, though, you may want to contact your insurance provider before your child starts driving.
Some states, such as Florida, provide insurance carriers with “risk alert” reports. These reports advise them of any licensed operators that possess the insured’s address on their driver’s license. After receiving risk alert reports, carriers usually reach out to policyholders and request one of the following:
- That the unlisted operator be added to the policy.
- Proof that the unlisted operator is insured elsewhere.
- Proof that the unlisted operator resides elsewhere.
Official documents such as a utility bill, rental agreement or deed are typically the types of official documents accepted to show proof of residence. Failure to prove that the unlisted operator is insured elsewhere or they reside elsewhere requires that they be added onto the policy. In addition, failure to provide the appropriate information to allow the unlisted operator to be added onto the policy could lead to midterm cancellation or non-renewal of the auto policy.
When should your adult son or daughter get their own auto insurance policy?
There is not a required age for when your child has to get their own policy. As long as they are still living with you and you have insurable interest in the vehicle they drive, there is no certain age at which you must remove them from your car insurance policy. However, if any of the following factors below, it may be time for your child to be on their own policy.
- They are married or have children of their own.
- They are the sole owner of the vehicle they drive and do not live in your household.
- They are financially independent.
If none of the above factors are in play yet, many insurance experts recommend keeping your teen or young adult on your policy.