What to Know When Adding a Teen Driver to Your Car Insurance Policy

Older people enjoy generalizing about younger generations, but one stereotype is painfully accurate: young people are terrible drivers. Unfortunately for parents who add their teen drivers to their car insurance policies, bad driving can be costly, even if the young driver never gets into an accident.

A study commissioned by insurance pricing website InsuranceQuotes looked at how much it would cost a family to add a driver aged 16 to 19 to their policy. On average, the answer was 82 percent more per year.

Why Adding a Teen to Car Insurance Raises Costs

“Auto insurers are primarily concerned with one question: Are you a safe or risky driver?” said insuranceQuotes' Nick DiUlio, an insurance analyst.

However, insurers do not view all teenagers in the same way. For example, the average increase in car insurance premiums for a 16-year-old male driver is 112.1 percent, compared to roughly 80 percent for a female driver of the same age. By the time those drivers reach the age of 19, the male driver will have cost his family an additional 70%, compared to 51.3 percent for the female driver.

However, age and gender are only a small part of the overall risk that drivers pose to insurers. Americans are driving more than ever before, according to the Federal Highway Administration. Vehicles in the United States logged 3.21 trillion miles in 2017, matching the previous year's record and increasing from 3.1 trillion miles in 2015. It's the sixth year in a row that mileage hasn't decreased, which isn't ideal for drivers. According to the National Safety Council (NSC), traffic fatalities surpassed 40,000 for the second time in two years in 2017, with a 20 percent increase since 2014.

Worse, according to the NSC, 4.57 million drivers were seriously injured in 2017. Meanwhile, the total cost of motor vehicle fatalities, injuries, and property damage in 2016 was $413.8 billion, a more than 10% increase over 2015. As a result, insurance companies are paying much closer attention to how people drive and how far they travel.

For young drivers, this means that insurance companies are scrutinizing how bad they are at driving. According to the National Safety Council's teen-focused website DriveItHome.org, the 3,327 teen driving deaths in 2015 — the most recent year for which data is available — exceeded the number of teens killed by homicide or suicide.

According to the Centers for Disease Control and Prevention (CDC), motor vehicle accidents are the “leading cause of death for U.S. teens,” and 235,845 drivers aged 16 to 19 were treated in emergency rooms for injuries sustained in motor vehicle accidents. In 2013, young people aged 15 to 19 made up only 7% of the U.S. population. However, they accounted for 11% ($10 billion) of total motor vehicle injury costs.

According to the Insurance Institute for Highway Safety (IIHS), teenagers “drive less than everyone except the elderly, but their crash and death rates are disproportionately high.”

According to Mike Barry, vice president of media relations for the nonprofit Insurance Information Institute, the high cost of insuring teenagers is the only way to insure a fair cost for everyone else.

“Unfortunately, teens aren't very good drivers because they don't have a lot of experience behind the wheel,” Barry says. “Teens are twice as likely as adults to be involved in an accident, and they are 50% more likely to be involved in a fatal accident.” When you add a driver who is more likely to be involved in more accidents, as well as more serious accidents, your insurance costs will skyrocket.”

Changes in Teen Driving Statistics

There are ways to reduce that cost, but not all of them are as effective for teens as they are for the rest of us. According to a 2017 insuranceQuotes survey, an American who drives 5,000 miles per year pays 9 percent less on average for car insurance than a driver who drives 20,000 miles per year — a little more than the 13,476 miles the average American drives annually, according to the Department of Transportation. Teens, on the other hand, drive only about 7,624 miles per year, which is less than any other demographic except those aged 65 and up. However, both of these age groups have higher accident rates than those aged 20 to 64, who drive twice as much.

There is a chance that the problem will resolve itself as well. For example, the IIHS reports that nearly 10,000 teen driver deaths occurred in 1975, a figure that has steadily decreased every year since. According to the National Highway Transportation and Safety Administration (NHTSA), fatal crashes among drivers aged 15 to 20 are down 43% from 7,493 in 2006. Sure, modern vehicles are safer, but economics, ride-sharing apps, and graduated driver license (GDL) programs are also keeping more teens off the road. According to a 2012 University of Michigan study, 80 percent of Americans aged 17 to 19 had a driver's license 30 years ago. Currently, it is less than 60%.

According to the New York Times, less than half of U.S. youths aged 19 and under had a driver's license in 2008, down from nearly two-thirds in 1998. In addition, the Department of Transportation reports that only 28% of 16-year-olds and 45% of 17-year-olds had driver's licenses in 2010. This has decreased from 50 percent and 69 percent, respectively, in 1978. The number of 16-year-olds with driver's licenses peaked at 1.72 million in 2009 before dropping to 1.08 million by 2014.

According to the Insurance Institute for Highway Safety (IIHS), teen driver fatality rates began to fall around 1996, when states first implemented graduated driver licensing (GDL), and have continued to fall. Between 1996 and 2010, this reduced accidents involving 16-year-olds by 68 percent. During the same time period, fatal crashes among 17-year-olds fell by 59 percent, 52 percent among 18-year-olds, and 47 percent among 19-year-olds.

Meanwhile, according to Edmunds.com, the proportion of new cars purchased by Americans aged 18 to 34 has fallen by 30% in the last five years. According to a Pew Research Center study, people under the age of 35 bought 13% fewer cars in 2010 than they did in 2010.

Look to Big Brother to Save Money on Your Teen’s Car Insurance

There are steps to take when adding a teen to your car insurance policy for parents who are unfortunate enough to have teenagers who want to drive more frequently. You can set a good example by driving safely, emphasize the dangers of distracted driving, and even establish driving rules and schedules. Technology and insurance companies, on the other hand, can assist with the latter.

Pay-as-you-drive or usage-based insurance programs, such as Progressive's Snapshot or Liberty Mutual's RightTrack, track driving habits using small sensors installed in a car's dashboard or an existing on-board communications system (think OnStar).

That means strictly counting the miles you drive, according to providers such as State Farm and MetroMile. Other insurers, such as Progressive, Allstate, The Hartford, Liberty Mutual, GMAC, and Travelers, can track how many miles you drive each day, how often you drive between midnight and 4 a.m., and how frequently you slam on the brakes. If these devices — or even telematics systems or smartphones — like what they see, good drivers can receive discounts ranging from 5% to 30%.

Progressive's Snapshot program, for example, has gathered enough data to determine that not only were school driving manuals incorrect about keeping four seconds between you and the driver in front of you, but that even the most aggressive stoppers take 12 seconds to come to a complete stop at 60 miles per hour. At that speed, it takes the average driver 24 seconds — or approximately 420 yards — to come to a complete stop.

“After analyzing Snapshot driving data, we discovered that hard braking is one of the most highly predictive variables for predicting future crashes,” says Dave Pratt, Progressive's general manager of usage-based insurance. “We know that tailgating is a major cause of hard braking, so we're using our data to help drivers be as alert and aware as possible on the road.”

The monitoring aspect has some privacy-conscious U.S. drivers concerned. In fact, 51 percent of U.S. drivers told insuranceQuotes that they would never participate in a pay-as-you-drive insurance program. This is an increase from the 37% who were adamantly opposed to pay-as-you-drive insurance in 2014.

The National Association of Insurance Commissioners (NAIC) predicts that by 2020, 20% of all auto insurance companies in the United States will offer some form of pay-as-you-drive program. That isn't as frightening as most drivers believe. More than half of those polled by InsuranceQuotes believe insurers can monitor whether or not they've been drinking and driving (they can't), while 35% believe insurers can raise rates for driving in "high-crime areas" (they can't).

Although 26 percent of respondents rejected pay-as-you-drive insurance because they "don't understand how it works," this has been less of an issue with younger drivers. Nearly half (47%) of drivers aged 18 to 29 are aware of pay-as-you-drive programs, compared to only 22% of drivers aged 65 and older. Meanwhile, only 15% of millennials share their elders' privacy concerns, and 43% of drivers aged 18 to 29 said they would consider enrolling. That far outnumbers the 36% of those aged 50 to 64 who would do the same, as well as the 28% of those aged 65 and up who would give it a shot.

“From thinking about pay-as-you-drive programs and electronic monitoring devices to shopping for cheaper policies and teaching the dangers of distracted driving, there are many steps parents can take to maximize safety while also lowering monthly costs,” DiUlio says. “It is critical for parents to take the initiative.”