5 Most Expensive States to Insure a Teen Driver

Source: Thinkstock
Source: Thinkstock

The age of sweet 16 seems so young when we as parents look back, but it’s an age many young people look forward to reaching. If it’s approaching that time in your child’s life (or your own life) where it’s time to start thinking about college, increased independence, and leaving the proverbial nest in the next few years, a driver’s license and insurance may also be high on your list of considerations.

Driving time is not only a time where parents look upon their children and think, “wow, they’re growing up so fast.” For many parents and teens, it’s a time of weighing costs and benefits, comparing insurance quotes, and searching for the safest and most economical vehicle possible. Teens are the “riskiest drivers on the road,” reads the introduction of a new study by InsuranceQuotes.com.

As young and inexperienced drivers, crash rates for teens are significantly higher than for older drivers. How much higher? For teens, these rates are three times more than they are for adults ages 20 and over. Car crashes account for one-third of deaths of teens ages 16 to 19, rendering auto accidents the leading cause of deaths for teens.

To learn more about the Insurance Quotes study on teen drivers, we spoke with Laura Adams, InsuranceQuotes.com’s senior analyst. The study explains how 30 years ago, 80 percent of teens ages 17 to 19 had a driver’s license. Today, this number has drastically decreased to only 60 percent of teens who hold a license.

Why? “Whether this is a result of urbanization, they’re taking public transportation more, or, it’s the economic factors, [for instance], the unemployment rate for teens is huge (roughly 19 percent versus around 6 percent for the rest of us), [maybe] they just can’t afford the cost of a car or to help mom and dad with the cost of insurance … those factors could be in play,” says Adams. She also explains how even the Internet and social media may be contributing factors. More and more, teens are interacting with one another online, working online, and completing schoolwork online. These teens may not see as much of a need to obtain a license and drive around to various destinations, as they have social interaction from a home PC, phone, or tablet — interaction that previous generations were unable to have without driving.

In addition to providing data and statistics on teen driver safety, the Insurance Quotes study also tells us the rate increase we are subject to when we add a teen driver in each of the 50 states, and nationwide. The overall nationwide increase for adding a teen driver decreased since last year. “This is the second year that we’ve done this study … I thought it was very interesting that this year, there was actually a lower percent increase for adding a teen than last year. We were at about 84 to 85 percent last year, this year we’re at 79 percent. We don’t know if that trend will continue, we’re certainly going to watch it,” she says. You can check out the most expensive states for adding a teen driver, and tips on how to save money on the following pages.

Source: Thinkstock
Source: Thinkstock

The Most Expensive States To Insure a Teen Driver: (Based on a percent increase to insurance premiums)

  1. New Hampshire — 111 percent
  2. Rhode Island — 107 percent
  3. Maine — 107 percent
  4. Wyoming — 106 percent
  5. Connecticut — 102 percent

(You can view the rate increases across all 50 states in the InsuranceQuotes.com’s study here.)

In these states, your $80 per month policy could go up to $160 after adding a teen driver. Or, your $100 policy could reach $211. States where premiums are higher generally have less stringent insurance pricing regulations. Other factors, like geography, weather and climate, and driving culture come into play as well. Adams explains how states with heavy storm activity, for instance, may have more insurance claims than those with moderate weather, resulting in a potential higher premium for the stormy state.

The states where adding a teen driver comes with the least increase to your policy are Hawaii (17.2 percent increase) and New York (52.6 percent increase.) Considering the relatively high cost of living in these states, one would think the increase in insurance premiums would be high in these locations.

“What we see playing out at the bottom of the list with Hawaii being only a 17 percent increase [is due to the fact that] they have some very interesting state regulations, when we isolate something like a teen driver in our data studies, they [Hawaii] are always going to come out on the bottom because they prohibit age, gender, or even driving experience from effecting auto rates … they’re the only state that has that kind of a regulation, so they’re kind of an outlier in the study,” she explains. In Hawaii, regulation prohibits insurance companies from charging a 17-year-old male more than a 45-year-old female, strictly based on their demographic characteristics.

Other states, like California, have regulations on insurance pricing as well. California does not allow credit to be factored into the rate calculation, although in many states, credit is a contributing factor. Some states may place a cap on the degree to which insurance companies may consider factors like age in their rate calculations. “There are a lot of different dynamics going on in each state,” Adams explains.

Source: Thinkstock
Source: Thinkstock

Lowering cost

When adding a teen driver, you can benefit from a few cost saving tips.

Know where you stand

Is your teen a female with good grades, or a male with a ‘D’ average? Factors, like gender and grades, often play into the calculation. “When an insurance company sees a particular profile of customer that’s filing more claims, and even more expensive claims, they are going to raise rates for that particular profile of customer … they use this historical information,” says Adams.

Conduct a bit of research on your state’s (and your insurance company’s) policies. Get an idea of any factors that are working in your favor, and any factors that place you or your teen at risk for receiving higher rates. You may be able to receive discounts for things like auto-pay, multi-car discounts, or if your teen completes a driver safety program, for instance.

Delay a bit

Sometimes, waiting a little while to have your teen completely out on the open road pays off big. Rates vary by state, but in New Jersey, for instance, the cost of adding a teen ranges from a ballpark of $1,800 to $2,500 per year. Waiting one year will save you this money, plus the cost of gasoline, car maintenance, and a potential car payment.

Look into electronic monitoring devices and pay-as-you-drive programs

Some insurance companies offer devices that will monitor for dangerous driving behaviors, like speeding. Some families have even decided to install DriveCam video cameras into their teen’s vehicles, which will alert parents when teens make driving errors. You may receive discounts for using these devices.

Usage-based, or pay-as-you-drive insurance programs are fairly common among large insurance providers. Insurance companies advertise discounts in the range of 20 to 50 percent, if you install a device that monitors your driving habits, including how hard you brake, possibly even when and where you drive. Although these programs are not strictly designed for teens, they can certainly be used to save money on a teen’s insurance bill and also, help improve a teen’s driving habits.

The safer the vehicle, the better

“Big, boring, and slow” — these are three words that Russ Rader of the Insurance Institute of Highway Safety uses in Insurance Quotes study uses to describe the type of vehicle that is safer for a teen. “Larger vehicles are typically safer, and Rader says premiums for collision and comprehensive coverage will be lower if your teen drives a safe car that has little value since it costs less to repair,” reads the study.