Most teens can't wait for the freedom and independence of the day they get their driver's license. What is less fun to think about is car insurance. Unfortunately for new and teen drivers, car insurance can be quite costly. That doesn't mean you can't still get a good deal though. Here we break down which car insurance companies are the cheapest for new drivers. We also examine the cost of being added on to your parent's car insurance plan, and the cost for an adult new to driving.
Table of Contents
- Cheapest Car Insurance Company for Teen Drivers
- Best Auto Insurance for Teen Drivers by State
- Consider Getting Added to Your Parent's Policy
- More Ways to Save for Teens
- Cost of Car Insurance for New Adult Drivers
We looked at over 200 cities and 103 companies to see which one was the most affordable for young drivers based on a sample 17 year old male driver. Like in our findings for the overall cheapest company, the cheapest for young drivers was also Erie Insurance. We found Erie on average to be about 3.2x less expensive than the national average.
Interestingly, none of the "Big Five" car insurance companies, State Farm, GEICO, Allstate, Progressive and Farmers are in the top five. Overall we found these companies to not be the most economical option for a young driver to pick as their first car insurer. Of the five above, Nationwide is the largest, being available in nearly every state with the exception of a small few. In the table below you can see the 15 cheapest insurance companies for young drivers, and their rates for our sample driver.
|4||Grange Insurance Association||$3,673|
Some Notable Companies by Region
Unfortunately, not every cheap company is available in every state. Some car insurance providers are more prominent in certain parts of the country, where they may be most affordable. Other companies may actually be more expensive in certain areas and should be avoided.
Best for Teenagers in the North East and Near Mid-West: Erie
Erie is the overall cheapest insurer for teen drivers. In every state we found Erie, it always beat the state average, and was frequently the first or second most affordable company overall. In Ohio and New York for example, the average price for Erie was nearly 3x under those states' average.The main issue with Erie however, is that it is only located in nine states (Illinois, Indiana, Maryland, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, and Wisconsin). If you live in any of those states though, Erie should be your first choice for affordable insurance.
Best Auto Insurance for Teens in the West: Grange Insurance Association
For those in the West, Grange Insurance Association (not to be confused with Grange Insurance which operates in the south and mid-west), is a great alternative to Erie, The Cincinnati and Chubb which are all located in the east. Grange operates in California, Wyoming, Colorado, Washington and Oregon. In Oregon, rates from Grange were about 75% less expensive than the state average. For those looking for car insurance in California, Unitrin is also another cheap alternative.
Best Insurers for Teens Nationally: Nationwide & State Farm
In many states, State Farm beat the cost average, and in some cases like Utah, by as much as 2x. The ubiquity of State Farm makes its a viable option for people in an area not served by the more affordable companies we show above. Another benefit of State Farm is its highly touted customer service track record. Backed by one of the largest agent networks in the country, State Farm is regarded as the best for customer service amongst the large insurers. As we discuss here, forming a bond with an agent, especially at a young age, can actually end up saving you a good deal of money in the long run.
Nationwide is one of the most affordable large companies we found, being available in 46 of the 50 states, making it just a tad short of the "Big Five" in terms of availability. In states like North Carolina and Pennsylvania, Nationwide turned out to be the most affordable provider, even beating out the overall cheapest in Erie. There are several other states where Nationwide was the second or third least expensive provider as well.
The cheapest insurance in your state may not actually reflect the cheapest overall insurers we list above. While Erie and The Cincinnati are usually the first or second least expensive in the states they are available, there are also states like Arizona where the cheapest company is Ameriprise--a company that does not even appear in the top fifteen cheapest overall. Take a look below to see what is the best option in your state.
|State||First Cheapest||Yearly Rate||Second Cheapest||Yearly Rate||Third Cheapest||Yearly Rate|
|Arkansas||Columbia Insurance||$2,980||Southern Farm Bureau||$3,184||Shelter||$4,092|
|Colorado||Colorado Farm Bureau||$2,840||Grange Insurance Association||$3,176||American Family||$3,820|
|Iowa||Pekin Insurance||$927||Progressive||$1,326||Farm Bureau||$1,539|
|Idaho||Grange Insurance Association||$2,634||GEICO||$2,790||Mutual Enumclaw||$2,952|
|Kentucky||The Cincinnati||$3,234||Kentucky Farm Bureau||$3,744||Motorists Mutual||$4,749|
|Louisiana||Southern Farm Bureau||$2,778||State Farm||$6,672||Allstate||$10,106|
|Massachusetts||Plymouth Rock||$2,247||GEICO||$2,811||Commerce Insurance||$3,267|
|Maryland||Erie||$3,039||Penn National||$4,320||State Farm||$5,079|
|Minnesota||Farm Bureau Mutual||$3,225||Western National||$4,158||Allied||$4,308|
|Mississippi||ALFA||$1,553||Unitrin||$2,472||Mississippi Farm Bureau||$2,599|
|North Dakota||Allied||$3,180||North Star||$4,056||State Farm||$4,488|
|Nebraska||American Family||$3,282||GEICO||$4,032||State Farm||$4,110|
|New Hampshire||Commerce Insurance||$1,056||Nationwide||$2,124||Concord||$2,664|
|New Jersey||Penn National||$5,390||State Farm||$5,661||Allstate||$10,479|
|New Mexico||GEICO||$3,144||Allied||$4,536||State Farm||$4,746|
|New York||Erie||$1,967||GEICO||$3,713||Central Insurance||$4,885|
|Oklahoma||Oklahoma Farm Bureau||$3,396||Shelter||$4,152||State Farm||$4,752|
|Oregon||Grange Insurance Association||$4,300||State Farm||$4,728||GEICO||$5,072|
|Rhode Island||State Farm||$4,020||Grange Insurance||$4,188||Quincy Mutual||$5,784|
|South Carolina||Southern Farm Bureau||$2,666||Nationwide||$5,686||GEICO||$7,572|
|South Dakota||Unitrin||$2,760||Farmers||$2,784||Western National||$3,216|
|Tennessee||Erie||$1,160||Utica National||$2,456||The Cincinnati||$2,907|
|Texas||Texas Farm Bureau||$2,873||State Farm||$4,054||GEICO||$6,893|
|Utah||State Farm||$2,414||GEICO||$2,645||Farm Bureau||$4,404|
|West Virginia||Pekin Insurance||$1,076||Western National||$3,026||GEICO||$3,192|
|Wyoming||Progressive||$2,160||State Farm||$3,888||Grange Insurance Association||$3,888|
If the above prices are too expensive for you to afford on your own, a cheaper alternative will be to see if you can be added to your parents' policy. The person most affected in this case is your parent, who is taking on a significant risk by adding a new, teen driver to their policy. As a result, insurance companies will increase their yearly payments. Nonetheless, the increase is still far less than the yearly price of getting insurance on your own, as you can see below.
On average, adding a 17 year old male driver to an existing policy will add about $2,600 more per year. Compared to the national average of getting coverage yourself, a seventeen year old would save about $5,100 if you would come to an agreement with your parent in which you would pay for your portion of the car insurance. Whether they'll want to add you to their policy is another question.
If your parents happen to insure their car with GEICO, you'll get one extra perk. GEICO is unique, in that if you opt to join your parents' policy, you can eventually leave to start your own, and receive a better rate due to your family being apart of GEICO. You can read more about GEICO's Family Pricing here.
There are a several ways as a young driver to save money on your premium. The first is by qualifying for discounts. Most major insurers will give you a discount for being a good student or taking a driver's education course for example. If you go on your parent's policy as well, most large insurance companies will knock down their premium if you are away at school, and have limited access to the vehicle.
Another significant way to reduce costs is by selecting your coverage carefully. The values above for our sample 17 year old driver are for getting full coverage, as in, all components of car insurance. Full coverage insurance is significantly more expensive than the minimum required by states. The reason being when you opt for full coverage, you are also buying collision and comprehensive coverage. The cost for just your collision insurance can make up half or almost half of your entire premium. The downside to not having collision coverage however, is that your insurance company will not pay to fix your vehicle if you are the one to crash it. You can read more about collision and comprehensive insurance here. It is for this reason we would recommend you only opt for basic coverage if your car is not worth much money--less than a few thousand dollars. If you were to crash a valuable car, then the cost of fixing it will end up being more expensive than what you would have paid for full coverage.
This scenario is actually quite common, where a person decides to start driving well into their adulthood. While the risk-taking behavior of your teens may be gone, you are still an inexperienced driver. This makes you a riskier driver in the eyes of insurance companies. As an inexperienced adult driver, you should expect prices to be higher than what peers who have been driving for many years are paying. We looked at one GEICO quote from New York and found that an experienced adult of 30 years of age would pay $1,368 per year. In contrast, a teenager would pay nearly $10,000 per year, and an inexperienced adult of 30 years of age $4,296 per year. Overall, we expect prices for this group of driver to be less than a teenager, but significantly more than for an experienced adult.
|Profile of Driver||Yearly Average Rate (NY)|
|30 year old Adult with 14 Years Driving Experience||$1,368|
|30 year old Adult with Less than One Year Driving Experience||$4,296|
|Teenager With No Driving Experience||$10,000|
How Did We Get Our Info?
For the cheapest insurers, we acquired quotes from over 103 companies in 200 cities across the U.S. for a sample, 17 year old male driver who drives a 2011 Toyota Camry. We specified that he previously did not have insurance, and was opting for full coverage (see limits below). We restricted the top 15 cheapest companies to ones that were found in at least 25 cities nationwide. For adding onto a parent's policy, we assumed the parent was a 45 year old male, married, with no previous accidents or incidents in their driving record.
|Coverage Type||Study Limits|
|Bodily Liability||$50,000 per person/ $100,000 per accident|
|Property Damage||$50,000 per accident|
|Uninsured/Underinsured Motorist BI||$50,000 per person/ $100,000 per accident|
|Uninsured/Underinsured Motorist Property||$50,000 per accident|
|Comprehensive & Collision||$500 Deductible|