How Much Does it Cost to Insure a New Driver?

So, you’ve got a new driver or a soon-to-be permitted or licensed driver in the house? Dare we say “congratulations”? 

We know that this is an exciting time at home, but also a very scary proposition at the same time. At Berry Insurance, our team collectively has 16 children between us – several of whom have already reached this exciting milestone, and a few that are right around the corner, so we know exactly how you are feeling right now!

Not only have we lived it, but over the years, we’ve been asked this question a lot by our clients. While we wish it was a simple answer, the fact of the matter is, the cost to insure your newly licensed child(ren) depends on a number of factors. A good estimate for you to use is between $500-$2,000. But let’s dive into the factors that can drive this cost on one end of the spectrum versus the other.  

What factors determine auto insurance costs for new drivers? 

Basic driver training

If you enrolled your child in Drivers Education courses, they will be eligible for a discount on their car insurance. The savings is typically $100-$200 annually and you don’t even need to supply the course completion certificate to be eligible.

Defensive driver training

One step above basic Drivers Education classes are defensive driving classes. These courses teach individuals of all ages specific driving tactics, such as winter driving, emergency braking skills, following distance/tailgating, anti-cell/distraction experience, etc. Many insurance companies offer policy discounts after successful completion of this course. For example, Safety Insurance offers a 5% discount to those who complete the training.  

Telematics 

An inexperienced driver who elects to participate in an insurance company’s telematics program could be eligible for a 2% credit on their policy premium. The telematics program is an app installed on your teen driver’s phone used to monitor driving habits and behaviors. There are no special requirements or equipment to install on the vehicle.

Years of driving experience

Obviously, if your son or daughter has just obtained their license, they have no prior driving experience. The good news is that as the driver gains more experience and has more years behind their belts, their premiums will begin to lower. Insurance companies start to trust the capabilities of new drivers the longer they drive and the more experience they have. 

Good student discount

A student that maintains a B or better average in school (high school or college) can supply their transcript to receive a discount on coverage. Insurance companies view students with higher grades as more conscientious individuals and therefore reward their academic success with lower insurance premiums. The savings could be up to 10%! For parents having their child pay for insurance, having lower insurance costs is a great motivator to keep up those good grades!

Away at school?

For students who attend school more than 100 miles away from home, they may be eligible for a Student Away at School discount. Insurance companies offer this discount because the student won’t be using the vehicle while they are at school, which in turn means there is less likely to be an accident. This discount could be as much as 10%.

If your child is currently away at school, or about to start, you may be wondering if you should remove them from your current auto policy. While it may remove eligibility for discounts, it could offer other savings. Learn what's best for your policy and family in this article: Should I Exclude My Child from Auto Insurance While They’re Away at School?

Vehicle garaging

When I first got licensed, I had just graduated high school and was about to head off to college. My parents bought me a used car, and the plan was to take my car to school with me – from Massachusetts to Rhode Island. If you plan to allow your child to take a vehicle to school, this will change the garaging zip code, which could cost you more or save you money (woo hoo!).

For more information on my vehicle garaging affects the cost of your insurance, check out our “How Much Does Car Insurance Cost?” article.

Who owns the vehicle?

There are 4 different ownership scenarios that will affect the cost of car insurance for your newly licensed driver:

• Your child will use your existing car (or someone else’s car) on an occasional basis.
• Your child will use your existing car, and they will be listed as the principal driver.
• You purchase an additional car for your child to use, and they will be listed as the principal driver.
• You have your child buy a car in their name, and require them to purchase car insurance in their name as well.

All of these scenarios will affect the cost of insurance in different, and often surprising ways. For example, while traditionally having your child obtain their own insurance policy may seem like the most expensive option, many insurance companies offer new policy discounts that can actually make it a cheaper alternative!

There is one other scenario that we get asked about a lot – parents who only own or drive company cars. A vehicle registered in the name of a business does NOT give personal auto insurance liability coverage. 

So if this scenario describes your situation, and your child will be driving a company car, be sure to contact your insurance agent for further guidance.

Policy coverages & limits

The coverage parts and limits elected on your Massachusetts auto insurance policy will also affect the overall cost. For example, if your child is driving an older, used vehicle, you may decide to forgo collision coverage, which would save you money. Typically we see individuals remove collision coverage when the cost to repair the vehicle after an accident would be more than it is worth.

Or, you may elect to increase your coverage as the likelihood of an inexperienced operator having an accident is higher. Increasing coverages *may* increase your overall cost. Some insurance companies view policyholders with higher limits as safer drivers, thereby rating them less than someone with low limits. 

Hidden cost to insuring a new driver

While it’s important to discuss the many factors that affect the cost of adding a newly licensed driver to your auto insurance policy, it’s also important to let you know of an additional cost that may affect you. 

This is umbrella insurance. 

If you currently have a personal umbrella policy, and you add a new inexperienced driver to your auto policy, you should also expect your umbrella policy premium will increase as well. Your umbrella policy provides an extra layer of insurance protection above and beyond the limits on your auto policy, so adding a new driver will result in an increase on that policy coverage as well. We never like there to be surprises when it comes to your insurance costs, so knowing this ahead of time will help prepare you for your discussions with your insurance agent.

Ready for your teen to hit the road?

And speaking of insurance agents, now is a great time to give Berry Insurance a call. We’ll help run through all the different scenarios with you to determine how much it will cost to insure your new driver and identify ways that you can save along the way. Fill out the form below to get started now!

PS: Berry Insurance clients receive a $30 discount on InControl Crash Prevention programs state-wide. When you reach out, ask us how!