Why Do New Drivers Pay So Much for Car Insurance?
New drivers — especially teenagers — face the highest car insurance premiums of any demographic. A 16-year-old with a brand-new license can pay $3,000 to $7,000+ per year for full coverage, while a 40-year-old with a clean record might pay $1,500 for the same coverage.
The reason is simple: crash risk. According to the Insurance Institute for Highway Safety (IIHS), drivers aged 16-19 have a crash rate nearly three times higher than drivers aged 20 and older. Teen drivers are more likely to speed, get distracted, misjudge hazards, and make impulsive decisions.
From an insurer's perspective, new drivers represent higher claims costs. To offset that risk, they charge higher premiums. The good news: rates drop significantly as you gain experience, maintain a clean record, and age into lower-risk brackets.
Data point: Adding a teen driver to a family policy increases the household premium by an average of 161% according to Insurify. But that's still cheaper than buying the teen their own policy.
How Much Does Car Insurance Cost for New Drivers?
Costs vary widely based on age, state, vehicle, coverage level, and whether the new driver is on a parent's policy or buying their own. Here are national averages for 2026:
Teen drivers (16-19) on a parent's policy: $2,500-$4,000/year added cost. The household policy total might go from $1,800/year to $4,500/year after adding a teen.
Teen drivers (16-19) with their own policy: $5,000-$8,000/year for full coverage. Liability-only might be $2,500-$4,000/year.
Young adults (20-24) with their own policy: $3,000-$5,000/year for full coverage. Still expensive, but significantly lower than teen rates.
New drivers (25+) with no prior insurance: $2,000-$3,500/year for full coverage. Rates are lower because age and maturity offset the lack of driving history.
State matters enormously. In Michigan, Louisiana, and Florida, teen drivers can pay $7,000-$10,000/year. In states like Maine, Idaho, or Vermont, the cost might be $2,500-$4,000.
Vehicle matters too. Insuring a teen in a 2015 Honda Civic might cost $4,500/year, while a 2023 Dodge Charger could be $8,000+. Insurers consider theft rates, repair costs, safety ratings, and horsepower.
Should a New Driver Get Their Own Policy or Stay on a Parent's?
In almost every scenario, adding a new driver to a parent's policy is significantly cheaper than buying a standalone policy. Here's why:
Multi-car discounts: Insuring two or more vehicles on one policy saves 10-25% per car.
Multi-policy (bundling) discounts: If the parent bundles home and auto insurance, the entire household benefits from 15-30% savings.
Loyalty and longevity discounts: Parents with established policies often have tenure discounts that reduce the overall premium.
Shared liability limits: The parent's higher liability limits protect the entire household, including the new driver, without the teen needing to purchase separate high-limit coverage.
Example cost comparison:
Parent's policy before adding teen: $1,600/year. Parent's policy after adding 17-year-old driver: $4,200/year (increase of $2,600). Separate policy for 17-year-old: $6,500/year.
The parent's policy costs the household $4,200/year total. A separate policy would cost $1,600 + $6,500 = $8,100/year. That's $3,900 more per year.
Pro tip: Even if the teen owns their own car, they should still be added to the parent's policy as a listed driver. It's almost always cheaper than buying a separate policy.
When a separate policy might make sense:
The new driver is over 18 and not living with parents. The parent has a poor driving record or high-risk profile that raises the teen's rate. The new driver wants financial and policy independence. Even in these cases, compare quotes both ways before deciding.
What Coverage Do New Drivers Need?
New drivers need the same core coverages as experienced drivers, with a few extra considerations:
1. Liability insurance (required)
Every state except New Hampshire requires liability coverage. Minimums vary (e.g., 25/50/25 or 50/100/50), but experts recommend at least 100/300/100 — especially for new drivers, who are more likely to cause accidents.
If the teen is on a parent's policy, the parent's liability limits protect the entire household. If the teen has a separate policy, make sure limits are adequate.
2. Collision and comprehensive (highly recommended)
If the car is financed, leased, or worth more than $3,000-$4,000, full coverage is essential. New drivers are more likely to have accidents, so protecting the vehicle makes financial sense.
Choose a deductible you can afford — $500 or $1,000 is common. Higher deductibles lower premiums but increase out-of-pocket costs if you file a claim.
3. Uninsured/underinsured motorist coverage (UM/UIM)
About 1 in 8 drivers nationally is uninsured (much higher in some states). UM/UIM protects you if you're hit by someone without insurance or with insufficient coverage. Highly recommended for all drivers, especially new ones.
4. Medical payments (MedPay) or personal injury protection (PIP)
Covers medical bills for you and your passengers regardless of fault. Especially important if the new driver doesn't have robust health insurance. PIP is required in no-fault states.
5. Optional but useful add-ons:
- Rental reimbursement (pays for a rental while your car is being repaired)
- Roadside assistance (towing, jump-starts, flat tires)
- Gap insurance (if financing a new car — covers the gap between loan balance and car value if totaled)
Best Discounts for New Drivers
New drivers have access to several powerful discounts that can reduce premiums by 25-40% or more. Here are the most valuable:
1. Good student discount (5-25% off)
Most insurers offer this to students under 25 who maintain a B average (3.0 GPA) or make the Dean's List. You'll need to provide a report card or transcript. Some insurers accept standardized test scores (SAT/ACT) as proof.
2. Defensive driving course discount (5-15% off)
Completing an approved driver safety or defensive driving course can earn a discount. Many states require or incentivize these courses for new teen drivers. Check if your insurer accepts online courses.
3. Telematics / usage-based insurance (up to 30% off)
Programs like Progressive Snapshot, State Farm Drive Safe & Save, or Allstate Drivewise monitor your driving via a phone app or plug-in device. Safe driving habits (smooth braking, low speeds, limited night driving) earn discounts. This is one of the best ways for new drivers to prove they're low-risk.
4. Low mileage discount (varies)
If the new driver doesn't commute long distances or only drives occasionally, you may qualify for a low-mileage discount. Typically applies if you drive under 7,500-10,000 miles per year.
5. Away-at-school discount (10-25% off)
If the student driver attends college more than 100 miles from home and doesn't have a car on campus, many insurers offer a significant discount. The student is still covered when they return home for breaks.
6. Multi-car and bundling discounts (10-30% off)
Adding a teen to a parent's multi-car policy, especially one bundled with homeowners or renters insurance, can save hundreds per year.
7. Affinity and group discounts
Some insurers offer discounts through employers, alumni associations, military service, or membership organizations (AAA, Costco, etc.).
Stack them: You can combine multiple discounts. A teen with a good student discount + telematics + away-at-school + multi-car bundling could reduce premiums by 40-50% or more.
How to Get Car Insurance as a New Driver: Step-by-Step
Step 1: Decide whether to join a parent's policy or buy your own
Get quotes both ways. In most cases, staying on a parent's policy is far cheaper. If you're under 18, you'll likely need a parent as the primary policyholder.
Step 2: Gather required information
- Driver's license number (or learner's permit details)
- Vehicle identification number (VIN)
- Lienholder or leasing company info (if applicable)
- Driving history (accidents, violations, training courses)
- Social Security number (for credit-based insurance score)
- School name and GPA (for good student discount)
Step 3: Choose your coverage
Start with your state's minimum liability requirements, then add collision and comprehensive if the car is valuable. Consider uninsured motorist coverage and MedPay. Choose a deductible you can afford.
Step 4: Get quotes from at least 3-5 insurers
Rates for new drivers vary dramatically between companies. Compare quotes from large national carriers (State Farm, GEICO, Progressive, Allstate) and regional or specialty insurers. Use a comparison tool to streamline the process.
Step 5: Apply for every discount you qualify for
Don't assume insurers will automatically apply discounts. Ask specifically about good student, defensive driving, telematics, multi-car, bundling, and affinity discounts. Provide documentation (transcripts, course certificates) as needed.
Step 6: Enroll in a telematics program
If the insurer offers usage-based insurance, sign up. It's a low-effort way to save 10-30% and helps new drivers build good habits.
Step 7: Review and finalize the policy
Make sure coverage limits, deductibles, and listed drivers are correct. Confirm payment method (monthly vs. paid-in-full, autopay discounts). Get a copy of your insurance ID card (digital or physical) immediately — you'll need proof of insurance to register the vehicle and drive legally.
Step 8: Re-evaluate annually
Shop for new quotes every year at renewal. Update your GPA if it improved. Add a defensive driving course certificate. As the new driver gains experience and turns 25, rates will drop significantly.
10 Tips to Lower Insurance Costs for New Drivers
1. Stay on a parent's policy as long as possible. Even after moving out, you may be able to remain on the family policy if you still use the family address as your primary residence.
2. Choose a safe, inexpensive car. Sedans and minivans with strong safety ratings cost less to insure than sports cars or large SUVs. Avoid high-performance or theft-prone models.
3. Maintain good grades. The good student discount is one of the easiest ways to save 10-25%. Keep your GPA at 3.0 or higher and submit updated transcripts each semester or year.
4. Take a defensive driving course. Even if it's not required, completing an approved course earns a discount and makes you a safer driver. Many courses are available online for under $50.
5. Enroll in telematics. Safe driving behavior monitored via app or device can save up to 30%. Avoid hard braking, rapid acceleration, speeding, and late-night driving.
6. Raise your deductible (if you can afford it). Going from $500 to $1,000 can save 20-30% on collision and comprehensive premiums. Just make sure you have the cash to cover the higher deductible if you file a claim.
7. Limit mileage. If the new driver doesn't commute daily or drives fewer than 7,500 miles per year, ask about a low-mileage discount.
8. Bundle policies. If the parent bundles home and auto (or renters and auto), the entire household saves 15-30%.
9. Pay annually or set up autopay. Paying the full premium upfront (instead of monthly) avoids installment fees and often earns a discount. Autopay can save another 3-5%.
10. Shop around every year. Rates change. A carrier that was expensive last year might be competitive this year. Compare at least 3-5 quotes annually.
Common Mistakes New Drivers Make with Insurance
Buying only state minimum liability. Minimums are often far too low to cover serious accidents. A single crash can result in $100,000+ in medical bills and property damage. Opt for at least 100/300/100 in liability coverage.
Skipping collision and comprehensive. If the car is worth more than a few thousand dollars, you need full coverage. New drivers are higher risk, so protecting your investment matters.
Not asking about all available discounts. Insurers won't always volunteer every discount. Ask specifically about good student, telematics, defensive driving, bundling, and affinity discounts.
Buying a separate policy when they could join a parent's policy. Standalone policies for teens cost 2-3× more than adding them to a family policy. Always compare both options.
Letting a violation or accident go unreported. Failing to report an at-fault accident to your insurer can result in policy cancellation or denied claims. Always notify your insurer promptly.
Not updating the policy when circumstances change. Moving, changing schools, graduating, or getting married can all affect rates. Notify your insurer to ensure you're getting the right discounts and coverage.
Choosing a car before checking insurance costs. Some cars cost 2-3× more to insure than others. Get insurance quotes before buying a car, not after.
Frequently Asked Questions
New drivers age 16-19 pay an average of $5,600 per year for full coverage on their own policy, though costs range from $3,000 to $7,000+ depending on state, vehicle, and whether they're on a parent's policy or buying their own. Adding a teen to a parent's policy costs $2,000-$3,500/year, which is significantly cheaper. Rates drop noticeably after age 25 with a clean record.
Yes. Adding a teen to a parent's policy typically costs $2,000-$3,500/year in added premium, while buying a separate policy for the teen costs $5,000-$8,000/year. You also benefit from multi-car and bundling discounts on the parent's policy. Staying on a family policy is almost always the most cost-effective option.
New drivers can access good student discounts (5-25% off for 3.0+ GPA), defensive driving course discounts (5-15% off), telematics/usage-based programs (up to 30% off for safe driving), low mileage discounts, away-at-school discounts (10-25% off if the student doesn't have a car at college), multi-car and bundling discounts (10-30% off), and affinity discounts through employers or organizations.
In most states, no. Minors (under 18) generally cannot enter into legal contracts, so a parent or guardian must be the named policyholder. The 16-year-old is listed as a driver on the policy. Once the driver turns 18, they can legally purchase their own policy, though staying on a parent's policy is usually much cheaper.
If the car is financed, leased, or worth more than $3,000-$4,000, full coverage (liability + collision + comprehensive) is essential. If it's an older, low-value car owned outright, liability-only may be sufficient — but new drivers are higher risk, so full coverage provides important protection. Also consider uninsured motorist and medical payments coverage.
Insurance companies typically consider you a new or inexperienced driver for the first 3-5 years of having a license, or until age 25, whichever comes later. Rates begin to drop noticeably after age 25 with a clean driving record, as you move out of the highest-risk demographic.