A Teens Auto Insurance Rates

Letting a teenager drive is scary enough for any parent. Add in the parents’ car that the teen is driving on the family’s auto insurance policy, and you might not get any sleep at night. Throw in a DUI, and it’s a nightmare.

A DUI or DWI — police terms for driving under the influence or driving while intoxicated — is a “scarlet letter” to auto insurers, says Troy Thompson, owner of Pinnacle Insurance Agency in Coon Rapids, Minn. Half of the companies Thompson works with will drop an entire family if their teen has a DUI, he says.

“They don’t want to be anywhere near someone in a household with a DUI,” Thompson says.

If an insurer does keep the family policy, parents with such a teen will likely see their rates double or triple, he says.

Two types of policies

A teen’s auto insurance rate depends on whose policy they’re on — their own or their parents — and if the teen owns a car. Using a parent’s car on a family auto insurance policy is a lot cheaper than doing it on your own.

A family policy can cost about $100 per month and will rise to $200 after a DUI, while a teen with their own policy will pay up to $500 per month and could see their rate go up to $800 per month, Thompson says. “No policy is cheap when you have a 16-year-old,” he says.

When the teen turns 18, they can stay on the parents’ policy as long as they live in the house, he says. But after moving out or having a vehicle in their name, they must have their own insurance, he says.

If the teen has their own insurance policy because they own a car that’s in their name, then they’ll face an “astronomical” rate increase after a DUI, Thompson says. Families and insurance agents don’t always put a car that’s in a kid’s name on the kid’s insurance policy, he says, but it should be.

“You can’t insure somebody else’s vehicle if you don’t have any skin in the game with that vehicle,” Thompson says, meaning your name on the title.