Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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UPDATED: Jul 14, 2021

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Here's what you need to know...

  • All young drivers are classified as high-risk operators because they’re inexperienced behind the wheel
  • When you have a 16-year old in the household who only drives with their permit, be sure to notify your insurance agent
  • In most cases, 15- and 16-year olds who have a learner’s permit won’t be rated as primary drivers on the policy
  • When a teen driver is issued an unrestricted license, they must be added to the parent’s policy if they live in the parent’s home
  • If you don’t want your licensed teen driver to affect your premiums and they live in your home, you must sign a driver exclusion form
  • If an unlisted teen or an excluded teen has a claim, the insurance company has the right to deny your claim
  • Policies go up by an average of 79 percent when adding newly licensed drivers
  • You can save money adding a teen to your policy if they qualify for driver training discounts or good student discounts

One you start to really shop the rates for car insurance on a teen driver, the idea of being responsible for endless drop-offs and pick-ups doesn’t sound so bad. You’ve gone years without a ticket and an accident just to be dinged on your insurance for having children. Unfortunately, part of the process is rating for risk, and there’s no denying that a 16-year-old driver can be a huge risk behind the wheel of a heavy piece of machinery.

Compare car insurance rates now by using our FREE tool above! Before your teen is licensed, you should look into the conditions on your auto insurance policy. Here’s what you should know so that you can construct the best portfolio of protection.

Do insurance companies need to know who lives in your home?

Insurance companies can’t possibly verify everything that you tell them. While some of your answers can be verified through Motor Vehicle Reports and Claims Loss History Underwriting Exchange (CLUE) records, others can’t.

Even though it might be tempting to conveniently forget that a teen lives in your home, being forgetful could cost you.

You’re obligated under your contract to be forthcoming and honest with all of the answers you give. Since all companies want to know who’s in the home, you’re expected to list both unlicensed and licensed household members over either 13 or 14 when you submit your application for coverage. You’re also expected to list all of the licensed drivers, even if they don’t drive your car and they have their own coverage.

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Why do you have to name unlisted drivers who can’t drive?

When your kid is still just a 6th grader, it doesn’t seem too important, but to the insurer, it helps them set a reminder for future risk changes. Naming a young teen as a household member won’t affect your premiums when they’re not driving, but it does give the insurer the ability to set a reminder to look for new risks right around the time they might be licensed.

Since insurance companies consider current risks and the potential for risk in the future, it’s a requirement that makes sense to players in the industry. Especially when the residents in your home are classified as high-risk. If you as a consumer aren’t honest about the younger residents in your home, it’ll only have a negative effect on your policy. It’s even possible that your claims could be denied.

Why are 16-year-old drivers called high-risk operators?

All teen drivers, regardless of their driving record, are labeled high-risk operators by carriers. It might not seem fair to a teen when they have a clean record, but pricing profiles in the industry are based on both statistics and risk. Since teens are prone to more risky behavior by nature, they come with higher rates.

What do the statistics say about teen drivers?

Risky behavior rears its head in statistics. You might believe that your teen is the most responsible teen in the world, but insurance companies can’t gauge every teen individually. Instead of looking at teens from household to household, the insurer will use statistics of teens in certain age groups.

According to the Center for Disease Control and Prevention, teens between 16 and 19 are three times more likely to have an accident than other drivers over the age of 20.

Males carry even more risk than their female counterparts, and that’s why premiums for males are higher than females in teenage bands.

Since young drivers account for a large percentage of vehicle injury costs reported in the nation, it only makes sense to charge higher premiums for teens. In fact, insurance companies earn huge profits on the premiums they charge for policyholders with teens.

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Are you charged if your 16-year-old only has a permit?

Having a permit is a bit different than having a license. A permit is a provisional license that comes with restrictions so that a teen can drive for learning purposes only. Since there are restrictions, some insurers won’t charge you until your teen has a license. You’ll need to check with the insurer to see if the coverage is free.

How much will premiums go up when a teen is rated?

How much your premium goes up is dependent on your policy before your teen is even licensed. If you already have an expensive vehicle to insure or you have other risks with your driving record, adding a teen will have a greater impact. According to studies conducted on premiums, the rates will nearly double after a teen is added.

What if you don’t let your teen drive even with a license?

If you don’t allow your teen to drive any cars in your home, you might be required to sign a driver exclusion form. This form says that you understand no coverage is provided when a specific driver operates your cars. Don’t do this unless your teen really isn’t driving.

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How to Save on Teen Car Insurance

Premiums might be high, but there are ways to keep the costs to insure a teen down. Here are a few money-saving tips that might be useful:

  • Qualify for a Good Student Discount
  • Require your teen to get driver training
  • Buy a safe car
  • Drop full coverage on your teens car if possible
  • Get a student away at school rating

When you’re loyal to insurance companies, you’d expect to get the best rates for your loyalty. While you do get a discount, some companies aren’t competitive when there are teens in the home. If you want to save money and compare rates, you can do a comparison with an online rating tool. Compare insurance rates and then insure your 16-year-old for financial protection. Enter your zip code in our FREE tool below to compare car insurance rates instantly!