Obviously, many factors come into play when auto insurance companies are determining your insurance rates. However, one of the biggest variables that most insurers consider is the driver’s age, with teens and young adults under 25 receiving some of the highest rates across the board. Their rationale: Stats show that young drivers tend to end up in more accidents than older, more experienced drivers; also, they typically drive older, less reliable cars with fewer safety features than their parents.
Therefore, when you select an insurance company for your young driver, you want to look at several factors, too. We scoured carriers’ offerings, looking at average premiums, young driver discounts, accident forgiveness policies, and more to compile a list of the best car insurance companies for teen and young adult drivers (or families with same). Based on our findings, our top five are:
- Erie Insurance: Best Overall for New Drivers
- Allstate: Best for College Students
- State Farm: Best Student Discounts
- Progressive Insurance: Best for Good Drivers
- Nationwide: Best for Accident Forgiveness
- USAA: Best For Military Families
Named after its Pennsylvania hometown, Erie Insurance has provided car, homeowners, and other insurances since 1925. The company is known for its sterling record in settling claims and for its overall client service. In fact, J.D. Power placed Erie in the top five insurance companies in the nation for its 2019 U.S. Auto Claims Satisfaction Study and the National Association of Insurance Commissioners gives Erie an 8 out of 10 for auto claims satisfaction and customer experience.
Erie is unfortunately not a nationwide carrier; rather, it is a region-specific insurance company, based primarily in the Northeast and Midwest. Its products are available in Illinois, Indiana, Kentucky, Maryland, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, Wisconsin, and the District of Columbia. To verify coverage in your area, you can visit the Erie Insurance website and enter your zip code.
In the areas it serves, Erie Insurance offers all of the state-required auto insurance coverage. Additionally, it offers:
- Pet Insurance (for injuries during an auto accident)
- Personal item coverage for items damaged, destroyed or lost in an auto accident
- Glass coverage for windows, windshield
- Roadside assistance/rental car coverage
- Locksmith services
Also, for just $30 extra per year, you can add Erie Auto Plus® to your policy. With this plan, you receive diminishing and waived deductibles, a $10,000 death benefit and other elevated benefits, and other perks.
Among the wide array of discounts are some rate reductions that will specifically appeal to parents of teen drivers or young drivers paying for their own insurance policy. These deals include:
- Youthful Driver Discounts of up to 20% for unmarried drivers under 21 who live with their parents
- Driving Training Discounts for drivers under 21 who complete an accredited training course
- Erie Rate Lock, which keeps premiums the same every year regardless of accidents
- Multi-car and multi-policy discounts of up to 25%
Erie Insurance has an extensive history and excellent reputation in the insurance industry. Additionally, Erie offers some of the best premium rates for young drivers—close to 40% cheaper than the national average; of course, premiums vary widely, but most young drivers save at least 25%. And then there are all those discounts specifically geared towards drivers under 21.
Obviously, the biggest drawback to Erie Insurance is its limited availability. Additionally, Erie Insurance does not allow customers to file claims online: They must call their local agent or use the toll-free number to the corporate service center. However, customers seem satisfied with the insurance claims process as a whole, even if it strikes some as a bit old-school.
College presents an entirely new experience for most young adults, especially when it comes to driving. Some students may commute to campus daily from home, whereas others’ cars sit parked for weeks on end while they live on campus. Regardless of what your college experience holds, though, Allstate will leave you in good hands while you work on earning that degree.
Allstate is the third largest auto insurance company in the country and offers policies in all 50 states. With over 15,000 Allstate agents across the country, you can likely find an Allstate agent close to your home. Allstate requires that you enroll with one of their local agents, but if you would prefer a completely online experience, you can always look into Esurance, a subsidiary of Allstate.
As one of the leading car insurance providers in the country, it’s no surprise that Allstate offers everything you could want and more when it comes to coverage. In addition to all the traditional car insurance coverage types, Allstate also offers roadside assistance with towing coverage, sound system insurance for damaged or stolen after-market systems, and rental car reimbursement. Additionally, Allstate offers rideshare insurance, classic car coverage, and Mexican travel insurance if you plan to drive across the border.
Obviously Allstate offers a great list of discounts. However, we selected them as the “best for college students” because of the numerous ways that college students can save with Allstate.
- A Smart Student Discount of 20 percent for those who maintain a B average
- A Resident Student Discount of 20 percent for students who attend college at least 100 miles from home and don’t have the car with them
- The Milewise Program that bases premiums on the amount of miles you drive per month — which can save college students who don’t drive often tons of money.
Allstate’s discounts and wide availability of coverage make it a great choice for many families. What’s more, the company offers a great mobile app and many online tools in addition to their extensive network of local agents.
With that being said, many sources note that Allstate has low claims satisfaction ratings in many parts of the country. The company also has slightly higher average premiums than other competitors on this list and is known for rate hikes.
State Farm has grown over the past century into one of the largest insurance companies in the nation: In fact, with 83 million policies across the U.S., it insures more cars and homes than any other carrier. State Farm has top ratings from both A.M. Best and the Better Business Bureau. Its network of local agents prides itself on providing the best possible customer service.
State Farm is available nationwide in all 50 states and the District of Columbia. Unlike some companies that work only out of a corporate headquarters—increasingly common in this digital age—State Farm has a decentralized model, functioning more like a network of regional agents dedicated to their local communities.
State Farm offers all the needed and desired coverage for any driver nationwide. Additional coverage options include:
- GAP insurance
- Rideshare insurance for Lyft and Uber drivers
- Emergency roadside assistance
- Rental car & travel expense reimbursement
State Farm seems to love young drivers—students in particular. Among the breaks it offers:
- Good Student Discount of 25% for those in high school and college students who maintain good grades
- Student Away Discount for families with a college student who only uses the car when at home
- Defensive Driving Discount for anyone who completes an approved driver safety course
Additionally, State Farm offers a Steer Clear® discount of 15% for drivers under the age of 25 who maintain a clean record—that is, they receive no traffic violations—for three consecutive years.
State Farm is a venerable, trusted insurance company, one of the oldest in the U.S. It numerous discount options for young drivers, especially students, whether they live at home or are away at school.
Although State Farm does offer highly competitive rates for auto insurance, most reviews and rating sites state that State Farm’s customer satisfaction ratings and claims processing satisfaction are mediocre at best. Also, while it offers services online, including quote offerings and claim filing, State Farm prefers that you work with one of the company’s local agents—a drawback for do-it-yourselfers.
Since 1937, Progressive Insurance has grown into a household name, especially in the last decade—thanks in large part to its tongue-in-cheek ads featuring perky agent Flo and, of late, her nerdy sidekick Jamie. Behind the jokes, though, lies a solid company that is especially sensitive to safe drivers.
Progressive provides insurance in all 50 states and the District of Columbia. However, it doesn’t work through a proprietary network of agents as State Farm does. Although some local independent insurance agents sell Progressive, along with other carriers’ products, most Progressive customers manage their policies online.
Like most other car insurance companies, Progressive offers all of the basic liability and collision/comprehensive coverages, plus things like uninsured motorist coverage and personal injury protection. Additionally, Progressive offers the following:
- GAP Coverage
- Roadside Assistance
- Custom Parts Coverage for aftermarket additions
- Rideshare Coverage
- Deductible Savings Bank, which drops your deductible amounts the longer you go without an accident
- Mexico Car Insurance for those taking their car across the border
While many companies reward safe drivers, Progressive offers one of the best discounts in the industry. Those who go three years without any accidents or violations can earn upwards of 30% off their annual premiums. Most other firms only offer 10%–20% off.
Additionally, Progressive offers the following discounts to young drivers:
- Teen Discount available to parents who are insuring a driver under 18
- Good Student Discount for high school and college students who maintain a B average
- Distant Student Discount available to families with a child who is away for college
- Online Sign Up Discount, which provides a 7% discount just for selecting your coverage online
- Paid In Full Discount for customers who pay six months worth of premiums in advance
Progressive actually offers one of the best digital experiences out of all the major insurance companies across the nation, with a variety of features like the Name Your Price Tool and Comparison Tool, which lets you compare rates side by side when shopping for a policy.
Given that Progressive offers some great ways to compare costs and find coverage that fits your budget, it’s ironic that many customers and independent review sites find the company’s rates are, on average, higher than some other companies on our list. Of course, that doesn’t take into account all the discounts your young driver might qualify for, especially that juicy 30% off if they’re a good driver. Also, in its 2019 Claims Satisfaction Survey, JD Power rates Progressive in the bottom half (17th out of 25th) of insurers, which implies policyholders are less than thrilled with the payouts on their claims.
As we noted in our intro, young drivers are some of the most likely to end up in an auto accident; according to the CDC, teenage drivers are nearly three times more likely to be in a fatal crash than their older counterparts. Many insurance companies heavily increase the cost of your insurance after an accident, especially if you and yours are deemed at fault. Nationwide Insurance offers one of the best accident forgiveness programs in the industry, which is why we are featuring it on our list of the best insurance choices for young drivers.
Nationwide Insurance sells policies in most states. However, to paraphrase its familiar jingle, Nationwide is not “on your side” in Alaska, Massachusetts, or Louisiana.
Nationwide offers all of the personal and auto coverages you would need for your young driver. Additionally, Nationwide Insurance offers the following specialty coverages:
- 24/7 Roadside Assistance
- Vanishing Deductible Policies
- Total Loss Deductible Waivers
And then there’s that Accident Forgiveness plan. Most insurance companies don’t extend accident forgiveness to additional drivers on an insurance policy; some don’t offer it to drivers under 18 at all. Nationwide does both. Given how often teens are put on their parents’ insurance (see below), and how their premiums can soar as much as 30% after their first at-fault incident, Nationwide’s plan can offer significant savings.
When it comes to discounts, Nationwide is highly competitive with all the other insurance companies on this list. For young drivers, in particular, Nationwide offers:
- SmartRide Program that tracks usage and driving habits for drivers
- Good Student Discount for high school and college students who maintain a B average
- Defensive Driving Discount for those who complete a qualifying driver safety class
- Multi-car and multi-policy discounts for families who bundle insurance coverages
We recommend Nationwide for anyone who thinks their young driver may end up in an accident. Furthermore, Nationwide’s SmartRide Program can save families up to 40% if their young driver maintains safe driving habits.
Nationwide isn’t available in all states, though. Furthermore, even the Accident Forgiveness program isn’t available everywhere, so check with Nationwide about your coverage options before signing up.
For current or former military members and their families, USAA car insurance is hands down a top choice based on its low premiums and outstanding customer service. In fact, J.D. Power ranks USAA as their third-best carrier nationwide, and even higher than that in some regions.
Although USAA is offered across the United States, enrollment is limited to military families. In fact, enrollment is limited to active, retired and honorably separated members of the U.S. military, ROTC and other commissioning program officer candidates, and adult children of USAA members.
In addition to the required minimum car insurance coverage, USAA offers rideshare coverage for Lyft and Uber drivers, 24/7 roadside assistance, and towing coverage. The latter two can be especially beneficial for accident-prone young drivers.
USAA offers significant discounts to all its customers. When it comes to perks that pertain to young drivers specifically, though, USAA offers the following:
- Family Discounts for people under 25
- A Driver Training Discount for people under 21 who complete a training course
- Good Student Discounts for high school and college students who maintain a B average
USAA offers amazing rates and outstanding customer service. The company also has a highly comprehensive website and mobile app for tech-savvy customers.
However, USAA has limited eligibility since it’s only available to military families. Also, the company does not have any local agents, so the only option is to use the website or call USAA’s toll-free number, which offers 24/7 service.
What Types of Coverage Are There?
Although there are some exceptions, most car insurance companies offer:
- Bodily Injury and Property Damage Liability to cover the other party’s medical care and damages when you are the at-fault driver
- Collision Coverage to cover your own vehicle’s damage regardless of fault
- Comprehensive Coverage to pay for non-accident related damages
- Personal Injury Protection/Medical Payments to cover your medical expenses in case of an accident
- Uninsured Motorist Coverage to cover your damages and medical expenses when the at-fault driver doesn’t have accurate coverage
- Guaranteed Asset Protection (GAP) Coverage to cover the gap between your car’s lease or loan and the determined value in the case of a total loss
How Much Coverage Do You Need?
Given the depressing odds of their being in an accident, when it comes to young drivers, the more coverage the better, especially if your teen or college student is driving a fairly new car that is under a lease or loan. However, most states only require limited coverages, so you can sometimes save money by only insuring a car and its driver for the mandated protection and amount.
Can Teen Drivers Join Their Parent’s Insurance?
Yes, they can. Nearly all insurance companies allow you to add drivers to existing policies; in fact, to be covered, a driver must be enumerated in the policy (insurance factors not only the vehicles on the policy but the listed drivers for each car). This means that you must have your teen on your policy before filing any claim that involves them. Coverage can’t apply retroactively.
Always shop around for rates before automatically adding your newly licensed teen driver to your car insurance. Your current carrier should always be your first stop, given breaks companies often offer for multi drivers and loyal customers. With that being said, some companies charge more to add a young driver than others do, and it never hurts to know what other options other insurers may offer—for bargaining with your carrier if nothing else.
The Bottom Line
Although young drivers are often some of the most expensive to insure, you can find ways to save money by choosing companies with low rates, student discounts, and good accident forgiveness policies. While we highly recommend the five insurance providers on this list, it’s always worth shopping around to compare rates before you make a long-term commitment to one company.
When selecting the best car insurance companies for young drivers, we not only considered each company’s financial strength and ratings with companies like J.D. Power and the Better Business Bureau, we also looked at rate comparisons and discount offerings listed on insurance provider websites and in independent reviews.