Blog: Cheaper For Young Adults To Stay On Parents' Car Insurance
By Jim Donovan
PHILADELPHIA (CBS) -- Eighteen-year-olds pay an average of 18% more for car insurance if they sign up for an individual policy as opposed to remaining on their parents' policies, according to a new insuranceQuotes.com report. The "penalty" for buying individual insurance instead of family coverage is much higher in some states.
For example in our region, Pennsylvania 18-year-olds pay an average of 24.94% more for individual coverage. Delaware isn't far behind at 24.20% more, and in New Jersey young drivers can expect to shell out an extra 19.08% for coverage. In fact, Hawaii is the only state that doesn't allow auto insurance companies to factor age or length of driving experience into their costs.
"In most states, individual policies significantly add to the already high cost of insuring a teen driver," says Laura Adams, insuranceQuotes.com's senior analyst. "Parents with an 18-year-old on their policy pay an average of 77% more than they would without the teen. While this certainly isn't cheap, it's usually much better than the individual policy option. Parents who wish to foster financial independence can still ask their child to pay for all or at least some of the increase."
Adding a young drive to an existing auto insurance policy certainly isn't cheap. In fact families see an average annual premium increase of 80 percent. But it's still a cheaper option than obtaining an individual policy as adding a young driver to an existing policy spreads out the insurance risk and insurers want to keep the parents' business.
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