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Teens Who Get a Driver’s License at 16 Will Cost Their Families Over $3,700

The cost of insuring a teen driver can take up as much as 19% of a family’s income, according to a new study released this week.

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It’s a big deal for teens, but it’s a costly one for families….one that may be getting more and more difficult to afford. Depending on the state, a teen driver can take up as much as 19% of a family’s income just for car insurance costs alone, according to a new ValuePenguin.com by LendingTree report. By waiting until the age of 22 to drive, young drivers can save families an average of $33,091 on car insurance, though most drivers can’t wait that long.

The latest report, which you can read in its entirety here, examined insurance rates for drivers aged 16 to 22, as well as those who did not qualify for ‘good student discounts.’ The goal was to determine the cost of adding a young driver to a policy as a third driver.

In Georgia, public information showed the average cost of adding a teen driver to the insurance policy was $3,781 per year.

Among the other 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 of 7% 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 by 37% 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% to 19% of their incomes to insure a teen driver. Good student discounts here reduce overall annual expenses by less than 2%.
  • Families in poor neighborhoods pay significantly more for car insurance when adding teen drivers to existing policiesespecially 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 Insurance Data analyst Andrew Hurst, “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.”

States Where Teen Drivers Represent the Biggest Financial
Burden
StateAverage Cost of Adding at
Teen to A Family Car Insurance
Policy
Percentage of
median income
Michigan$15,30819.30%
Louisiana$11,02616.40%
Kentucky$8,52512.60%
Arizona$8,97812.00%
Florida$7,82411.00%
Rhode Island$9,63310.10%
Mississippi$5,0888.80%
Texas$6,6148.70%
Nevada$6,2988.20%
South Carolina$5,0947.20%
Alabama$4,6587.00%
West Virginia$4,6996.90%
Illinois$6,2536.80%
New York$6,0666.60%
Oklahoma$4,2736.30%
Connecticut$6,3596.20%
Minnesota$6,0226.00%
New Mexico$3,7406.00%
Arkansas$3,7355.60%
Utah$4,6755.50%
Tennessee$3,7435.30%
Oregon$4,6175.20%
North Dakota$4,5815.10%
Georgia$3,7815.00%
California$4,5795.00%
Colorado$4,6984.90%
New Jersey$5,4714.90%
Delaware$4,4944.90%
Ohio$3,8324.90%
Maryland$5,2544.90%
South Dakota$4,0254.90%
Massachusetts$5,3124.80%
Montana$3,5574.70%
Indiana$3,6444.70%
Wyoming$3,8414.60%
Kansas$3,6754.40%
Iowa$3,5404.40%
Virginia$4,2434.40%
Missouri$3,2854.40%
Idaho$3,1034.30%
Pennsylvania$3,6394.20%
New Hampshire$4,4034.10%
Wisconsin$3,2293.70%
Nebraska$3,1623.70%
Alaska$3,6943.60%
Vermont$3,1433.60%
Maine$2,5573.10%
Washington$3,0643.10%
Hawaii$1,8772.00%

*Rates for North Carolina not featured due to unavailable data

The Georgia Virtue
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