Car Insurance for Kids: Coverage, Cost & Companies

Car Insurance for Kids
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The cost of car insurance can skyrocket when a child is added to the policy. Insurance for young drivers might be expensive, but it’s manageable if you shop around and take advantage of discounts and savings opportunities. It’s safe to assume that many parents view the requirement to add kids to their car insurance coverage with less enthusiasm. Also, finding cheap car insurance for kids might add to the pressure of raising a new driver in the family. In this article, we will discuss the cost of car insurance for kids and the best companies you can get this insurance from.

What is Car Insurance for Kids?

Car insurance coverage for “kids” typically refers to young drivers, often teenagers or individuals in their early twenties, who are just starting to drive. Insurance companies determine premiums based on risk factors, and young drivers often face higher rates due to their limited experience and statistically higher likelihood of accidents.

When a kid obtains a driver’s licence, they can either be added to their parent’s car insurance policy or get their own policy. If they’re added to a family policy, the overall premium may increase due to the higher risk associated with inexperienced drivers. Insurance coverage for young drivers usually includes liability coverage (to pay for damage they might cause to others) and collision/comprehensive coverage (to protect their own vehicle).

Insurance costs for kids depend on various factors like the type of car, location, driving record, and coverage options. Some insurance companies offer discounts for good grades, completing driver’s education courses, or using monitoring devices that track driving habits.

Also, it’s crucial for young drivers and their parents to shop around, compare quotes, and understand the terms and conditions of the insurance policy to find the most affordable and suitable coverage for their needs. Building a good driving record over time can lead to lower premiums as they gain experience and demonstrate responsible driving behaviour.

What Type of Car Insurance Coverage Should Your Kid Have?

All of the following types of insurance coverage should be in place for your kid at a minimum but they are often mandated by states.

#1. Liability Coverage

Most states in the United States mandate drivers to have liability insurance. Therefore, your kid needs to carry at least the state-mandated minimum quantity of liability insurance. If you can afford it, though, it’s smart to get your kid covered above and beyond the state-mandated minimums.

Liability coverage helps pay for any damages or injuries your teen causes to a third party while behind the wheel. If your kid causes an accident with significant damage or injury, the minimum liability insurance may not be adequate, and you will be responsible for paying the remaining expenses out of pocket. If you find yourself in this position, it may be worthwhile to pay for additional liability coverage or even to get an umbrella policy to provide even more liability protection.

#2. Collision Coverage

If you have a car loan, your lender will almost certainly insist that all listed drivers get collision insurance. No matter who was at fault in an automobile accident, this insurance can help cover the costs associated with fixing your vehicle. Without collision insurance, you would have to pay for the costs associated with fixing your vehicle out of your own money.

#3. Comprehensive Coverage

In the event of a disaster, comprehensive insurance can help pay for repairs or replacement costs. If you need to finance your car, your lender will likely insist that you get collision and comprehensive coverage. Also, if your car is damaged in an accident that was not your fault, this insurance might help you pay to have it repaired or replaced.

How Do People Afford Car Insurance for Their Kids?

There are a number of ways that parents can save money on their kid’s car insurance. One option is to include the teen driver on the family’s current car insurance policy. Although this may raise the total cost of insurance, it is generally less expensive than buying a new policy for the kid. Insurance companies occasionally offer discounts for multiple vehicles, allowing families to save money.

As an additional cost-cutting measure, some households select greater deductibles. They might ease their immediate financial strain by agreeing to pay extra out of pocket in the event of an accident.

Parents should instill in their children the importance of safe driving practices and a spotless driving record. Safe young drivers can receive discounts and reduced prices from many insurance companies.

Ultimately, families can receive the best car insurance for their kids at an affordable price by shopping around and comparing quotes from several insurance companies.

Car Insurance for Kids Cost

Adding a kid to your car insurance coverage will almost certainly result in a significant cost hike. Auto insurers tend to view young drivers as a high-risk demographic due to their lack of driving experience. Young drivers often have limited or no credit history, another factor that contributes to increased insurance costs.

According to Quadrant Information Services, car insurance for a 35-year-old male with a good credit score and a spotless driving record costs an average of $144 per month or $1,730 per year. The costs associated with providing complete coverage for a kid on their own car insurance policy are detailed in the following table.

Driver AgeAverage Monthly Insurance CostAverage Annual Insurance Cost
Car Insurance for Kids Cost

Although insurance rates are high for drivers aged 16 and 17, due to inexperience, they begin to decline after that point. Rates for young individuals typically improve when they turn 25.

Car Insurance Cost Discounts for Kids

Discounts can be a significant factor in lowering car insurance costs. Some of the most popular discounts for kids are as follows, and they can be used to reduce already-low premiums:

#1. Academic Merit Awards

Good students can expect discounts from most insurance companies. In most cases, students are expected to keep a 3.0 GPA (the equivalent of a B average) or higher. Typically, a driver must be under the age of 25 and enrolled as a full-time student in order to be eligible for good student discounts.

#2. Courses in Defensive Driving 

Safe and defensive driving classes are often rewarded with premium discounts from insurance providers. Teenage drivers who have taken driver education classes in preparation for their licensing examination may also be eligible for a price reduction.

#3. Discount for Out-Of-Town Students

This price discount is available to carless college students who are away from home. Usually, a student needs to be at least 100 miles from home and unable to use a car on a regular basis to qualify for this type of discount.

When Should Kids Pay Their Own Car Insurance?

A kid does not have to be withdrawn from their parent’s car insurance coverage at a certain age. Most people buy car insurance at the same time they buy a new house or get married. If your kid moves out and maintains regular usage of a vehicle at their new address, they should get their own policy of car insurance.

In addition, your kids’ permanent address should be included on the policy, as the ZIP code is a major factor in determining the cost of car insurance.

Why Is Car Insurance So High for Kids?

Car insurance costs are higher for kids, including teenagers and young adults, due to several factors. First and foremost, statistically, young drivers are more likely to be involved in accidents, especially during their first few years of driving. Inexperience and a tendency to take risks contribute to this higher accident rate. Insurance companies assess these risks and set premiums accordingly.

Additionally, young drivers often lack a driving history, which insurers use to gauge a driver’s reliability. Without a track record of safe driving, insurers have to rely on generalizations and statistical data, leading to higher premiums. Furthermore, young drivers are often seen as a higher liability because they may be more prone to distractions, such as mobile phones or peer passengers, which can increase the likelihood of accidents.

The insurance company will also take into account the vehicle’s make and model. Insurance costs tend to be higher for kids because they prefer smaller, quicker cars. All these factors combined contribute to the high cost of car insurance for young individuals.

Cheap Car Insurance for Kids

Travelers, USAA, and Geico all provide cheap car insurance policies for kids. However, the average cost of a kid’s car insurance policy ranges from $1,623 per year to $3,192 per year, with the actual cost varying by age, state, and gender. The annual cost of adding a kid to a family policy averages $2,047.

As a general rule, the costs of insurance for kids are higher than for older, more experienced motorists because of the higher chance of collisions associated with teenage drivers. Therefore, it is essential to shop around for insurance in order to get the most affordable one.

Here are some overviews of the best cheap car insurance companies for kids:

#1. Geico 

Because it consistently ranks at the top of our best rankings, Geico also made this one. The company’s prices for new drivers are among the most affordable in the US; according to Bankrate, a 16-year-old’s additional premium for full coverage is $2,168 per year. Geico also has a good customer satisfaction rating from J.D. Power and a low complaint rate from the National Association of Insurance Commissioners (NAIC).

Furthermore, Geico is a good alternative if you’re a kid looking to lower the cost of insurance because of the company’s generous discounts designed exclusively for them. Some examples of these discounts are the “good student” discount (up to 15% off) for students with B averages or above, the “new vehicle” discount (up to 15% off), the multi-car discount (up to 25% off), and the “good driver” discount (up to 22% off) for teens and young adults with a five-year accident-free driving record.

Another reason we appreciate Geico is that the firm is honest about the savings customers may expect to see. Other insurance companies may promise discounts, but they won’t say how much you’ll save until you sign up.

#2. USAA 

United Services Automobile Association policies aren’t available to the general public, but if you or a family member is a service member or veteran, your kid could be eligible for a policy.

In part because of its excellent customer service, J.D. Power has ranked USAA among the best car insurance companies for kids. The carrier scored 884 on a scale from 0 to 1000 for general customer satisfaction and 909 on a scale from 0 to 1000 for customer satisfaction with automobile claims. In comparison, the state and national norms are 834 and 909, respectively.

Furthermore, for individuals who are eligible, USAA’s prices are already competitive with other insurers; taking advantage of reductions makes them considerably lower. It offers the same discounts for good students and driver education graduates as numerous of its competitors. A legacy discount of up to 10% is available to kids who switch car insurance plans.

#3. State Farm

Another nationwide insurer that offers young drivers a wide variety of discounts on prices is State Farm. State Farm’s Drive Safe & Save app monitors your driving habits to reduce the cost by as much as 30%. Steer Clear, a program offered by State Farm, provides teens and young adults with the chance to save money while learning safe driving skills.

In addition, drivers under the age of 25 who have not been involved in an accident or received a moving ticket within the past three years are eligible for a 15% discount, far sooner than with Geico. Family members of college students who rarely drive receive a “student away at school” discount.

When taking into account that the average annual extra cost for full insurance for a 16-year-old is $2,077, State Farm’s discounts for kids are quite generous when compared to other insurance companies on our list.

#4. Amica 

Amica is one of the top car insurance companies for kids because of its high customer satisfaction scores. It is the oldest mutual auto insurer in the country, meaning that its policyholders own it. Also, with the exception of Hawaii, this airline serves the entire country.

It offers something different than the norm when it comes to discounts for young drivers: a legacy discount, in addition to the usual “good student,” “student away at school,” and “defensive driver training course” specials. Discounts are available to young drivers whose families have had Amica car insurance for at least five years. As with State Farm, 19-year-old drivers without accidents in three years may qualify for a discount.

#5. AAA

When it comes to car insurance, AAA is one of the most affordable options for kids. AAA has excellent ratings from consumer watchdog groups and offers numerous discounts for young drivers, such as those for good grades, limited driving experience, and defensive driving.

Parents will also like that AAA offers AAADrive. This tool lets you create alerts for when your child crosses location, speed, and other limits.

Benefits of Car Insurance for Kids

Car insurance for young drivers, often referred to as “kids,” provides several benefits. Firstly, it ensures financial protection in case of accidents, covering repair costs for the insured vehicle and any other property damage. This is crucial for young drivers who may lack experience on the road, making them more susceptible to accidents. Secondly, car insurance for kids provides liability coverage, protecting young drivers from potential lawsuits resulting from accidents where they are at fault. This safeguards their personal assets and future earnings.

Additionally, car insurance offers medical coverage, covering medical expenses for injuries sustained in accidents. For young drivers who may not have robust health insurance, this can be invaluable. To reassure young drivers about vehicle safety, car insurance covers theft, vandalism, and natural calamities.

Furthermore, having car insurance helps kids comply with legal requirements. Car operators in the majority of modern nations and states must have car liability insurance. Lastly, car insurance companies often offer various discounts and rewards, encouraging responsible driving behaviour among kids and potentially lowering their premiums over time, making it a valuable investment for them.

It is required by law for everyone operating a car or truck to carry insurance. if your kids reside with you and will be using a vehicle registered to you or someone else in the family, adding them to your policy is typically the most cost-effective choice. 

When your kid passes the driver’s license exam, you must update your car insurance policy to protect them. In the United States, driving without insurance carries serious repercussions. Most families choose to put their kids on car insurance plans rather than purchase separate coverage for each teenager.

You can add someone as either an approved or excluded driver to control who is allowed to use your vehicles. By signing a contract, you must guarantee that they will not use any of your car insurance. If you decide they can use one of your vehicles, you can make them a “named driver” on your policy. If you decide they can use one of your vehicles, you can make them a “named driver” on your policy.

What Type of Insurance Is Only for Kids?

There isn’t a specific type of insurance that is exclusively for children (referred to as “kids”). However, parents can include their children in their existing insurance policies to provide coverage for various aspects of their lives. For example:

  • Health Insurance: Children can be covered under their parent’s health insurance plans, either through employer-sponsored plans or government programs like Medicaid or the Children’s Health Insurance Programme (CHIP).
  • Life Insurance: Parents can purchase life insurance policies that cover their children. These policies are often designed to provide financial protection for the family in case of a child’s unfortunate demise.
  • Education Insurance: Parents can invest in education insurance plans, which help fund the child’s education. These plans provide financial support for higher education expenses.
  • Travel Insurance: When traveling with children, parents can include them in travel insurance policies to cover unexpected events during trips, such as trip cancellations, medical emergencies, or lost baggage.
  • Dental Insurance: Children can be included in their parents’ dental insurance plans, which cover various dental procedures and treatments.

Parents should discuss their insurance options with agents to ensure their kids are covered throughout their lives.

Is Car Insurance for Kids Worth It?: Bottom Line

When it comes to the safety and security of your “kids,” or teenagers, behind the wheel, investing in auto insurance is often a must. Young drivers are statistically more prone to accidents due to their limited experience on the road. Having insurance provides financial protection in case of accidents, covering repair costs and medical expenses, preventing a significant financial burden on parents or the young driver. 

Additionally, insurance helps in legal compliance, as driving without insurance is illegal in most places. While premiums for young drivers can be higher due to the perceived risk, there are ways to mitigate costs, such as choosing a safe and practical car, maintaining a clean driving record, and exploring discounts offered by insurance companies. 

Ultimately, obtaining car insurance for kids is a smart investment that protects them financially and legally.

Frequently Asked Questions

What age is car insurance the lowest?

Your auto insurance premiums will decrease at 19, 21, and even 25 years old, but the biggest savings will be seen at younger ages. Insurance premiums for drivers under the age of 25 are higher than for drivers over the age of 25, since they are statistically more likely to be involved in an accident.

Should parents buy their child a car?

We’ve established that buying your kid a car is a great way to help them out financially. They can acquire a vehicle without incurring any additional debt or depleting their resources. Some households may be relieved to know that their child can get themselves to class or the workplace.

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