How Much is Car Insurance for an 18-Year Old?

How Much is Car Insurance for an 18-Year Old?

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Car insurance is a mandatory expense for all drivers. Unfortunately, it’s also quite expensive. This is especially true for young drivers. Teenage and college-age drivers experience the highest car insurance rates. How expensive is it? The answer depends on several factors, including credit history, state of residence, type of coverage, and type of car being insured. Here’s how to determine the cost of car insurance for an 18-year-old.

Whose Policy Is It?

The number one consideration for determining the cost of car insurance for an 18-year-old is whether they will purchase their own policy or remain on their parents’ policy. The family can save money by simply adding a teenage driver to a parent’s insurance policy. In fact, the family can receive savings in the form of multi-car discounts and good student discounts, which reward the teenager’s good grades.

There are risks associated with adding a teenage driver to a parent’s policy, though. If the driver is involved in any accidents, the policyholder will be responsible for any costs that rise above their policy’s limits or fall outside their coverage.

A driver who obtains their own policy will limit the liability for their family. Their parents’ premiums won’t rise and their assets will be inaccessible in case of an accident. However, it will result in higher costs for the student driver.

Other Factors Affecting the Cost of Insurance for 18-Year-Olds

Outside of the decision to purchase a separate policy or remain on a parent’s policy, there are other factors which may impact the cost of insurance for teenage drivers. These factors include:

  • Credit history: Teenagers typically have a very thin credit file. This results in higher premiums, because insurance companies don’t have a history of repayments to go by. Adding the driver to a parent’s policy can help eliminate this risk while the teenager works to build credit through small purchases and repayments.
  • Insurance company: Insurance costs will vary from one company to another. It’s important to shop around for the best coverage and rates before obtaining a policy for a teenage driver. Look for possible discounts the company may offer a student driver.
  • State of residence: Insurance costs will also vary from one state to another. For instance, the average rate for an 18-year-old male driver in Hawaii is about $900, while the same driver would pay around $8,716 in Delaware. Research the types of rates you can expect in your state.
  • Type of coverage: You may get away with low rates by going for minimal coverage. Keep in mind, though, that younger drivers are at higher risk for accidents, tickets, moving violations, and other issues on the road. Having more comprehensive coverage may limit costs in the long run.
  • Type of car being covered: Certain types of cars are more expensive to insure, because they are more expensive to repair. For a teenage driver’s first car, you want to avoid high-performance cars with expensive parts and import vehicles whose parts must be ordered overseas. The easier a car is to repair, the cheaper it will be to insure.

Discounts for Student Drivers

Though purchasing insurance for an 18-year-old driver is expensive, there are discounts available that can reduce the cost of insurance. One is the good student discount. It rewards good grades with savings of up to 25 percent. Not all companies will offer this though, and the rate of the discount will vary.

Driver education programs may also help to qualify for discounts. For instance, Allstate runs a program called teenSMART, which gives a 10 percent discount to teenage drivers who complete the program.

Car Insurance is Necessary, But It Doesn’t Have to Be a Headache

Car insurance for 18-year-olds is a pricey but necessary expense. The 18-to-25 age group experiences the highest insurance rates, especially for teenage males. These are facts that you cannot change. However, there are ways to bring your costs down.

Teenagers can be added to their parents’ policies until they have more stable driving and credit histories. If they go to college out of state, they can take advantage of that state’s lower insurance costs, as long as they establish residency.

Getting quotes from multiple insurers can inform you of the best rates. Purchasing a car that is easy to repair and cheap to insure will also bring costs down. Going for coverage that is right for you and your budget will help.

Finally, taking advantage of discounts, such as good student and driver education discounts, will keep your insurance premiums lower. Use these tips to lower your teenage driver’s insurance costs and you can both breathe a little easier.