Teens Who Get a Driver's License at 16 Will Cost Their Families Over $33,000
According to a new report by ValuePenguin.com under LendingTree, the financial burden of adding a teenage driver at age 16 can reach $5,380 annually, equating to up to 19% of a family's income in certain states. By delaying until age 22, families can save an average of $33,091 over six years. Families in states like Michigan and Louisiana face the highest costs, while lower-income households bear significantly higher insurance premiums. Encouraging teens to wait before driving could be financially beneficial.
- Families can save an average of $33,091 by delaying a teen driver's license until age 22.
- Costs to add a driver decrease by 37% for a 22-year-old compared to a 16-year-old.
- Adding a 16-year-old driver costs $5,380 annually, causing significant financial strain.
- In states like Michigan and Louisiana, families allocate up to 19% of their income for insurance.
NEW YORK, March 23, 2021 /PRNewswire/ -- Getting a driver's license is one of the biggest rites of passage for 16 year-olds across the country, but can American families afford the expense in 2021? Depending on the state, a teen driver can take up as much as
Key findings:
- Adding a 16-year-old as a driver of an insured vehicle costs an average of
$5,380 a year. Even with a good student discount — which only lowers insurance costs by an average of7% across the country — adding a 16-19 year old to a family's car insurance policy costs$4,799 a year on average. - By waiting until age 22 — the age when many young Americans graduate from four-year college — young drivers can save their families an average of
$33,091 over the six years they waited. Additionally, the cost of adding a new 22 year old driver to a car insurance policy drops by37% to$3,931 a year. - Families in Michigan, Louisiana, Arizona, Florida and Kentucky will experience the biggest financial burden if their 16 year old got a driving license. Families here will need to allocate
10.9% to19% of their incomes to insure a teen driver. Good student discounts here reduce overall annual expenses by less than2% . - Families in poor neighborhoods pay significantly more for car insurance when adding teen drivers to existing policies, especially in big cities. In New York, lower-income families will need to pay
$4,452 more for car insurance than the wealthiest if they added a teen driver to their policy. The trend is the same in Los Angeles ($441 more) and Chicago ($2,242 more).
According to Andrew Hurst, Insurance Data analyst at ValuePenguin.com by LendingTree, "A teen driver can be a heavy financial burden for most, but that burden might be heavier to bear in a year when many American families are struggling. The data shows that the most financially at-risk families are the same who can least afford to pay the inflated premiums it takes to add a teen driver onto an existing policy." He adds, "If families are able, encouraging a teenager to wait until they've graduated could make a lot of financial sense. For those who don't have the luxury of waiting — because they need multiple vehicles for work or school, or because they live in areas with poor public transportation — the discussion is a lot more difficult."
To view the full report, visit: https://www.valuepenguin.com/cost-of-adding-young-driver-to-family-car-insurance
ValuePenguin.com analysts looked at insurance rates for 16- through 22-year-old drivers across the country who did and did not qualify for good student discounts, to determine the cost of adding these drivers to an existing policy as the third driver of a vehicle. The young driver's 45-year-old parents were primary drivers of the insured vehicle. Rates were publicly sourced from insurer filings and should be used for comparative purposes only, as individual quotes may be different.
States Where Teen Drivers Represent the Biggest Financial | ||
State | Average Cost of Adding at | Percentage of |
Michigan | ||
Louisiana | ||
Kentucky | ||
Arizona | ||
Florida | ||
Rhode Island | ||
Mississippi | ||
Texas | ||
Nevada | ||
South Carolina | ||
Alabama | ||
West Virginia | ||
Illinois | ||
New York | ||
Oklahoma | ||
Connecticut | ||
Minnesota | ||
New Mexico | ||
Arkansas | ||
Utah | ||
Tennessee | ||
Oregon | ||
North Dakota | ||
Georgia | ||
California | ||
Colorado | ||
New Jersey | ||
Delaware | ||
Ohio | ||
Maryland | ||
South Dakota | ||
Massachusetts | ||
Montana | ||
Indiana | ||
Wyoming | ||
Kansas | ||
Iowa | ||
Virginia | ||
Missouri | ||
Idaho | ||
Pennsylvania | ||
New Hampshire | ||
Wisconsin | ||
Nebraska | ||
Alaska | ||
Vermont | ||
Maine | ||
Washington | ||
Hawaii | ||
*Rates for North Carolina not featured due to unavailable data
About ValuePenguin.com:. ValuePenguin.com and its parent company, LendingTree® (NASDAQ: TREE), have a common mission: to empower consumers with tools, information, and resources to help them make smarter, more informed financial decisions. For more information, please visit www.valuepenguin.com, like our Facebook page or follow us on Twitter @ValuePenguin.
Additional Information: https://www.valuepenguin.com/health-insurance
Media Contact:
Divya Sangam (Ms.)
646 693 8445
Divya@lendingtreenews.com
View original content to download multimedia:http://www.prnewswire.com/news-releases/teens-who-get-a-drivers-license-at-16-will-cost-their-families-over-33-000--301253619.html
SOURCE ValuePenguin.com
FAQ
What are the average costs of adding a teenage driver in different states for TREE?
How much can families save by waiting until age 22 for their teen to get a driver's license according to TREE?
What percentage of income do families in Michigan spend on insurance for a 16-year-old driver according to LendingTree?
How do good student discounts impact insurance costs for young drivers?
What is the significance of the ValuePenguin.com report for families considering teen drivers?
