Car insurance shopping for a teen can be tricky Kids and Money: Car insurance shopping for a teen can be tricky

KIDS AND MONEY

If you have a 16-year-old itching to get behind the wheels of the family four-door, you may want to tamp the brakes until you've figured out the cost of auto insurance.

Sure, you probably know it could cost several thousand dollars in premiums to add a young driver to your policy. But what type of coverage do you need? Collision, comprehensive, along with liability? How much does where you live factor into your rate? How can you save money, and what are some of the best car insurers for teens?

Two recent reports - from WalletHub and Bankrate.com - explore what can be a nerve-wracking process for parents and an exciting milestone for teens.

Because young drivers have limited driving experience and are more likely than older drivers to be involved in car accidents, their annual premium can be considerably higher. Car crashes remain one of the leading causes of deaths among drivers aged 13 to 19, according to WalletHub analyst Chip Lupo and author of the company's "2025 Best and Worst States for Teen Drivers" report.

"It's critically important to focus on safety first," Lupo said. Enroll your teen in driving classes, reinforce seat belt use and set strict rules around phone use and impaired driving, he said.

According to Bankrate research, parents adding a 16-year-old to their policy as opposed to a separate policy experience the highest average rates, with an average annual full coverage premium of $5,923 for a male teen and $5,522 for a female teen. That's nearly double the cost of car insurance for older adults.

Many factors determine auto insurance premiums, one of them being the state in which you live. Every state has its own regulations regarding the type and amount of insurance that is required to drive legally.

"The best states for teen drivers promote easy access to driving classes, strict laws for bad behavior on the road, and well-maintained roads," Lupo said.

WalletHub's research ranked New York, Oregon, New Jersey, West Virginia as the best states for teen drivers while Montana, Missouri, Wyoming, Mississippi, and North Dakota were the worst. New York, for example, has the second fewest teen driver fatalities per capita, and the fourth-lowest percentage of drivers who use phones while driving.

If your teen has a car, some financial planners suggest keeping the child on your auto policy until they leave home and establish their own residency, which could allow you to maintain multi-car policy discounts. Some insurance companies provide student discounts so it pays to shop around for the lowest rate. Progressive's Snapshot program, for example, rewards teens based on how they drive.

In addition, it's mobile app can reveal if your child is driving distracted.

State Farm offers its Steer Clear discount program for those who are younger than 25, haven't caused any accidents in three years, and complete a driver education program.

Nationwide offers two usage-based programs - SmartRide, and SmartMiles - for families that don't drive often.

In addition to those three insurers, Auto-Owners, and Geico are among the best car insurance companies for teens, according to Bankrate's research.

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