Top Cheap Car Insurance for Teens for 2016

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Car insurance for teens, by definition, isn’t cheap. Little driving experience and a statistically higher chance of accidents makes teens a big risk to insurers, so they invariably get charged more for coverage. Because of this, the best cheap car insurance providers for teens are the ones that not only offer quality coverage and claims handling, but also special discounts to students and younger drivers to help take the sting out of those otherwise high monthly premiums.

To find the best policy for you or your teen, you’ll need to shop around for quotes to find the best possible deal on the coverage options you want.

I looked at every nationally available insurer in the country to find those that consistently offer the most affordable rates and discounts to teen drivers, as well as exemplary coverage and customer service. GEICO came out on top, with high customer satisfaction rankings, low premiums, and the largest selection of teen-specific discounts.

State Farm provides the best claims handling overall, but offered fewer discounts and higher premiums. Nationwide and Progressive also received high customer satisfaction ratings and offered a wide range of discounts to teens, so may very well be able to offer you the best deal, too. The only way to find the best deal for you or your teen is to request multiple quotes and compare your options.

The Simple Dollar’s Top Picks for Best Cheap Car Insurance for Teens

Each of these top picks have strong financial ratings and are known for offering consistently affordable rates. They provide quality coverage, 24/7 claims service, accident forgiveness, and special discounts to students and younger drivers to help take the sting out of those high premiums.

  • Best Overall: GEICO
  • Best Customer Service: State Farm
  • Honorable Mentions: Nationwide and Progressive

How I Found the Best Cheap Car Insurance for Teens

It needed to be available nationwide.

I focused on companies that provide auto insurance in all 50 states. That meant a number of regional and exclusive providers, like USAA, didn’t make the cut. However, if you’re dissatisfied with our top picks, you may want to consider other options like these. You very well could find a better deal.

The providers had to be reliable.

I axed any company with less than an A- rating from A.M. Best. I also required a similar rating from S&P, Fitch, or Moody’s. These companies measure the financial strength of insurers and how likely they are to be able to pay out your claims. You don’t see a lot of startups in the insurance industry because long-term stability is so important. If your insurer goes under, you lose your safety net, along with all the money you paid for it.

There had to be adequate coverage options.

Insurers are required by law to offer state-mandated coverages, as well as collision and comprehensive protection for your vehicle. Some also offer optional coverages that can come in handy after an accident. Teens are statistically more likely to be in a crash, so things like accident forgiveness and GAP coverage are worth considering. There’s also mechanical breakdown coverage, which is useful if your teen drives an older vehicle that may need repairs down the road.

Steep discounts were a must.

Many insurers also offer discounts to younger drivers, designed to offset their high premium rates. These include good student, safe driver, and student away at school discounts. Taking a driver’s ed or defensive driving course can also earn you savings with most car insurance companies. You may also have the option to let the insurer monitor your driving for a period of time. If it verifies that you’re a safe driver, you could be eligible for further discounts. Though less common, some companies also offer a vanishing deductible, which will help ease the strain on your wallet if you need to file a claim.

Customer service had to be top-notch, too.

Customer service is often overlooked, but it can do a lot to ease (or contribute to) the headache of filing a claim. That’s why I also evaluated the top companies based on the ease of filing a claim and their scores in J.D. Power’s latest auto insurance customer satisfaction survey.

The Best Cheap Car Insurance for Teens of 2016

Best Overall: GEICO

GEICO is known for offering low rates to all drivers and its list of discounts is hard to match. There are plenty for younger drivers to take advantage of, including good student, driver’s education and seatbelt use discounts. If your vehicle has airbags, anti-lock brakes, daytime running lights, or an anti-theft device, you can also save. GEICO is the only company on this list that doesn’t offer a monitored driving discount to its customers.

In terms of coverage, GEICO covers all the basics and also offers accident forgiveness and mechanical breakdown coverage. Accident forgiveness is an optional coverage offered by all our top picks that prevents your rates from going up following your first at-fault accident.

Mechanical breakdown coverage is much rarer and pays for any repairs your vehicle needs as a result of normal wear and tear. GEICO is the only company on this list to offer this coverage, so if you’re interested in that service, it’s worth getting a quote.

What really helped GEICO clinch the top spot, though, was its Family Pricing Program. This program allows teen drivers who were previously on their parents’ insurance to get their own policy at a special rate. This usually ends up being more affordable than the rate a teen would get shopping for a brand-new policy. If you have a teen driver who will be transitioning to their own policy in a few years, this is something you may want to take advantage of.

Best Customer Service: State Farm

State Farm rates typically aren’t quite as low as the other companies on this list, but its reputation for excellent customer service earned it a place among the top picks. It scored above the regional average in seven out of 11 regions in J.D. Power’s auto insurance survey, with customers reporting a high degree of satisfaction with claims handling and their interactions with company representatives.

State Farm’s selection of discounts is comparable to GEICO’s, with good student, driver training and student away at school discounts. It also has an accident-free discount that kicks in after three years of accident-free driving, which is two years less than what most insurers require for this kind of discount. You can also save if your vehicle is equipped with an anti-theft device or passive restraint system. State Farm’s Steer Clear programenables drivers under 25 to save up to 15% on their premiums by completing a safe driving course online, at your local State Farm office, or through the company’s mobile app.

If your teen doesn’t drive often, consider enrolling in the Drive Safe & Save program. This monitors how often you drive and offers discounts for low mileage. You get a 5% discount automatically for signing up, and depending on how far the car is driven each policy term, you could cut your premiums in half.

Honorable Mentions

Nationwide

Nationwide was a contender for the top pick, but fell short because GEICO had higher customer satisfaction ratings and better discounts for young drivers. Nationwide has a good student discount, but is missing other common options like driver training and student away at school discounts. There is an accident-free discount, but it doesn’t kick in until you have five years of safe driving under your belt. You can get credit for your safe driving by enrolling in the SmartRide program, where you install a small device in your car that monitors how many miles you drive, when you drive, and how fast you brake and accelerate. At the end of the program, Nationwide will look at the data and may offer you a discount for driving safely.

If you are currently insured through Nationwide you may be able to help your teen secure a more affordable rate with the Family plan. This plan enables all members of your household to share in your discounts. So, for example, if you’re eligible for a multi-policy or accident-free discount that your teen doesn’t qualify for on their own, these discounts will also count toward their savings, reducing their monthly premiums.

Progressive

Progressive is another insurer known for offering low rates, but its few discounts don’t provide young drivers with many ways to save. Buying online and being a good student will earn you some savings, but there’s no option to save for completing a driver training course or for students away at college who aren’t driving their vehicles very often.

The Snapshot program works similarly to Nationwide’s SmartRide. You put a device in your car that records when and how often you drive, and it notes any dangerous behaviors, like quick acceleration or braking. Safe driving will be rewarded with an additional discount.

Progressive is the only company on this list to provide GAP insurance as an optional coverage. If your car is totaled in an accident, this coverage helps pay the difference between the actual value of your vehicle and the total amount you have left to pay on your loan. This may be worth considering if your teen has a newer vehicle that isn’t paid off yet.

Car Insurance 101: What You Need to Know Before You Buy

Car insurance isn’t complicated, but there are some basic things you should understand before shopping for a policy.

How Much Insurance Do I Need?

Every state requires its drivers to carry auto insurance. The exact types and amounts vary, but most require around $25,000 of bodily injury liability coverage per person and $50,000 per accident, plus $10,000 of property damage liability coverage. Some states also require uninsured or underinsured motorist coverage and personal injury protection. For complete details about what your state requires, check with your DMV or take a look at our list.

If you have a lease or loan on your vehicle, your lender will also require you to purchase collision and comprehensive coverage. This is a smart idea anyway, because it protects your vehicle in the event that it gets stolen, vandalized, or damaged in a crash or natural disaster. If you own your vehicle outright, however, and it isn’t worth much, you may consider foregoing this coverage, as it raises your insurance premiums significantly.

Whenever possible, you should consider choosing more than the bare minimum coverage, though. If you get into an accident that causes someone a $40,000 injury, your $25,000 state minimum liability coverage won’t get you very far. You’ll be responsible for the extra $15,000 out of your own pocket.

As painful as insurance premiums can sometimes be, they’re nowhere near as bad as one accident cleaning out your entire savings account. It’s up to you to decide how much coverage you need, but most companies recommend $100,000 of bodily injury coverage per person and $300,00 per accident, along with $100,000 of property damage liability coverage.

Factors that Affect Premiums

Insurance companies weigh many factors when determining auto insurance premiums, including:

  • Age: Younger drivers have less experience behind the wheel and are statistically more likely to get into accidents, which increases their risk to insurers.
  • Driving record: Teens don’t have much of a driving record to speak of, which makes it difficult for insurance companies to predict how safely they will drive, so they charge more to hedge against that risk.
  • Credit score: Creditworthiness is used as a measure of responsibility and has been correlated with how likely a driver is to file a claim. Teens are again at a disadvantage here because they have little or no credit history they can use to demonstrate their responsibility.
  • Where you live: If you live in an area where there’s a high risk of car theft, for example, you can expect to see higher rates. Cities, in general, have higher auto insurance premiums than rural areas. Rates are also dependent on what coverages are required by your state.
  • Your vehicle: Vehicles with high safety ratings and safety equipment like anti-lock brakes or an anti-theft device can earn you lower auto insurance rates.
  • Your gender: Statistics have shown that women are less likely to get into an accident than men, so they’re usually quoted lower rates, especially during their teenage years. Sorry guys!
  • Marital status and education level: Being married and having a college degree both decrease auto insurance rates because of a lower perceived risk. Unfortunately, this is also going to work against most teens.
  • Your level of coverage: If you purchase higher coverage limits or optional coverages like accident forgiveness or rental car reimbursement, you can expect to pay more than someone choosing the state minimum.

Ways to Save When Insuring a Teen Driver

It’s true that no matter what you do, a teen driver’s insurance is going to cost more than almost anyone else’s, but there are a few things you can do to minimize the strain on your wallet:

  • Go on a family plan. Rates are usually more affordable when teens are added to a parent’s plan rather than purchasing their own. Teens may be able to take advantage of additional discounts this way that they wouldn’t be eligible for otherwise.
  • Take advantage of discounts. Look at what savings are available to younger drivers. Most insurers will offer good student, driver training, and student-away-at-school discounts. They may be eligible for some vehicle safety discounts as well.
  • Allow driving to be monitored. If you can prove to the insurer that you don’t engage in dangerous driving behavior, like fast accelerating or braking, the insurer may give a break on its rates.
  • Limit driving time. Less time on the road means a smaller chance of getting into an accident. Some insurance companies will even give discounts to those who drive less than a certain number of miles each year.
  • Choose a safe vehicle. You want something with high safety ratings that isn’t a target for car thieves. Depending on what safety features are installed in the vehicle, you may be able to earn additional discounts this way as well.
  • Shop around. Get quotes from multiple providers before committing to a purchase. Make sure you look at how much you’re getting for your money, not just who offers the lowest price.


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