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What is family car insurance?

Family car insurance is a policy that covers all of the legal drivers in the family. Since many insurance companies offer discounts when you buy more than one policy from them, most families choose to have just one. Auto insurance is needed to protect you and your family while you are driving.

A family car insurance policy could also be called a multi-policy. This is because it usually has more than one car. A policy for more than one vehicle has simple requirements: You should be able to get insurance as long as there are two or more drivers on the policy.

With a policy that covers more than one vehicle, each driver is usually given one vehicle. Insurance companies think that younger drivers are more of a risk, so it's best to put them in older cars. Most of the time, it costs less to fix or replace a lower-priced car, which can make up for the higher rates that come with having a teen driver on your policy.

Why should you get family auto insurance?

One of the best things about family car insurance is that it saves money. Depending on the insurance company, a multi-car policy can save you anywhere from 10% to 25%. Compared to other discounts, like those for going paperless or being a good student (which are usually between 5% and 10%), a multi-car discount is a big deal.

If you need to make a claim, you only have to pay one deductible with a family car insurance policy. Even if more than one car is damaged because of the same incident, like a tree falling on the house, you will only have to pay your deductible once.

Some states also let people with the same policy add coverages together. This means that if you get into an accident, you might be able to use the coverages on both cars to pay for a larger amount of damage. When you put all of your family members on the same policy, some drivers may get discounts they wouldn't have had otherwise.

Most of the time, only one driver needs to have good grades to get a good student discount, but it applies to the whole policy. Discounts for being a good driver can also make up for other things that raise insurance rates, like adding a younger driver to the policy.

Lastly, most families should only have one policy. With a multi-car policy, you can insure all of your cars with one policy that has one payment date and one date when it needs to be renewed.

Pros and cons of owning a family car insurance policy

Pros Cons
Single point of contact and the same benefits across the whole household. Have to pay the same amount for both good and bad drivers.
Much cheaper than insuring each driver in a household individually. Having several bad drivers on a policy can make the premium go up.
Stack insurance coverages.  

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How is family car insurance calculated?

A family's car insurance rate is influenced by many things, such as:

  • The year, make, and model of each car.
  • The history of each driver's driving, including any tickets or DUIs.
  • Location, including where each driver lives and where they most often go to work.
  • Age of every driver included in the policy
  • Gender of each driver
  • Grades on a driver which can impact the discounts

If your family has other types of insurance, like homeowners, renters, or RV insurance, you might be able to combine policies to save more money.

Factors that affect family car insurance rates

The car itself

Some cars have to pay more for insurance than others. When you choose other packages and add-ons, the details about the make and model are taken into account. For a brand-new car, you would want a wider range of coverage.

It's because if the new car gets broken, it will cost a lot to fix. Instead, if you have an old car, you might be able to afford to replace parts and fix it. So, the car insurance premium is based on how old the car is.

Location

The place where your car is registered is a big factor in how much your car insurance costs. The premium will be higher if you live in an area with a lot of people or in a city. Because there are more claims because of a lot of traffic, crowding, vandalism, and other things.

Driving efficiency

If you are a bad driver who gets into more accidents, you are more likely to hurt yourself. Also, you won't get a discount for not making a claim, so your premium will go up.

Declared value of the insured

The IDV of the car is the amount for which you want an insurance policy to guarantee payment when you make a claim. Depreciation is another thing that changes the value of IDV. When the IDV goes up, so does the premium, and vice versa.

Deductibles

A deductible is the amount of the claim that you will have to pay out of your own pocket. In addition to the standard deductible that comes with your car insurance, you can ask your insurance company to raise the deductible. If your deductible is higher, the premium you pay will be less, and vice versa.

Driver's age

Insurance companies do take age into account when figuring out the premium. Since younger drivers are more likely to cause an accident, their premium are considerably high than young adults.

Coverage type

If you get comprehensive coverage; your premium could be different from one insurance company to the next depending on the discounts and rates they offer. If you buy extras for your car insurance on top of the comprehensive coverage, your premium will go up.

What is the best car insurance for families?

Car insurance that is tailored to you and your car. Auto insurance for a family can change often and can be expensive, so it's important to know the best ways to save. Every step your family takes can affect your auto insurance rate, whether you get married, buy a house, or add a teen driver to your policy.

Average car insurance rates

Based on marriage status

Marital Status Average Monthly Car Insurance Rate
Single $136
Married $125
Divorced $130
Widowed $122

Based on homeownership status

Homeownership Status Average Monthly Car Insurance Rate
Renter $133
Condo Owner $127
Homeowner $127
Renter w/ Multi-Policy Discount $120
Condo Owner w/ Multi-Policy Discount $115
Homeowner w/ Multi-Policy Discount $112

Families with a teen driver

Car Insurance Company Average Monthly Rate
Allstate $647
Farmers $525
The General $359
Nationwide $298
Progressive $543
State Farm $320
USAA $390

Find out more about how much car insurance costs for teens.:

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Family car insurance discounts

  • Good student discount - It's easy to get this discount. Insurance companies think that students with a GPA of 3.0 or higher are safer drivers, so they give them lower rates. Most insurance companies need a transcript that is up-to-date every time a policy is renewed as proof. The amount of a discount varies by company.
  • Defensive driver discount - If your insurance company agrees, you can get a discount if you take a course on safe driving. Even if your insurance company doesn't offer a discount for defensive driving, it's probably a good idea for a teen driver to take one. The amount of the discount will depend on the company.
  • Good driver discount - If you have never made a claim, this discount is automatically added to your policy. To get this discount, you'll need to make sure that your teen doesn't get any tickets or cause any accidents. The amount of the discount varies from company to company.
  • Discounts based on type of vehicle - Teens tend to be bad drivers, so it's in your best interest to let them drive a cheaper car, like a used sedan, instead of one that will cost more to insure. Find out more about insurance for teens who drive.

When should you evaluate your insurance?

When you buy a new car

You have anywhere from 7 to 30 days (depending on your insurance policy) to let your insurance company know that you bought a new car, but you can also compare policies before you buy.

You must get a policy for your new car before the end of your grace period, or you risk driving without insurance. It's not true that it always costs more to insure a new car than an older one.

Changes within your family

As your family changes, so should the people on your insurance policy. Your insurance rates may go up or down if you get married (generally being married lowers rates).

Depending on how well your spouse drives, adding them to your policy can either raise or lower your payments. Even if your spouse doesn't own a car and doesn't drive much, it might be worth it to add them to your policy to lower your rates.

If your teen starts driving, adding them to your policy can cause your rates to go up by a lot because teens tend to be fewer safe drivers. You can, however, get discounts if you are a teen.

When you change how much you drive

Depending on where you live, if you drive less each year, your insurance premiums could go down by a noticeable amount. Check with your insurance company to see if you can get a lower rate if you used to have a long commute but now work from home, moved much closer to your office, or moved to a more walkable area so you don't drive as much.

When your insurance rates go up

If your premiums go up but your driving record hasn't changed, you should look into whether you're getting the best coverage for your money. Now might be a good time to look at other insurance companies to see if you can find a better deal.

When you move

Insurance rates depend on where you live. Even moving within the same state (or city) can change things. For example, if you move from a more urban area to a more rural area, your rates may go down, and vice versa.

How to buy the right family car insurance plan

The first step in getting car insurance is to choose the right coverage. Next, you need to choose a good insurance company. This can make sure that you get the coverage you need at the rates you want and that your claims are paid as often as possible.

Insurance companies should be able to be counted on, and the coverage they offer should be fair for the prices they charge. Because of laws in some states, insurance prices don't vary much from one company to the next. But companies will give different prices in other states for the same coverage.

Compared to bigger companies, many small insurance companies have lower rates because they have lower overhead costs. But if you have an accident and file a claim, these small companies may be difficult or unhelpful and tell you that your policy doesn't cover certain things.

When you really need them after paying your premiums for months, this is not what you want to hear. And don't sign up with a company that doesn't cover accidents that happen out of state.

Getting quotes from more than one company can help you compare them. From there, you can decide which insurance company has the best coverage, premiums, and deductibles for you.

When to avoid family auto insurance policies?

Family auto insurance isn't the best choice for everyone, of course. They are more expensive, and some people can't even get them. Multiple DUI convictions, a lot of accidents, or other traffic violations can make insurance more expensive, and insurance companies may decide that these people can only get individual plans.

Even if you can cover your whole family with one policy, it may not be worth it if the extra costs of your family members are more than the discount you get from having a family policy.

One option is to get a family plan for some of your family members and individual plans for those who are more expensive. But if most of your household drivers are in a high-cost, high-risk insurance pool, it might be cheaper to insure everyone individually.

Auto Insurance Data Methodology

The auto insurance rates published in this guide are based on the results of research completed by Way.com’s data team. Using a mix of public and internal data, we analyzed millions of rate averages across U.S. ZIP codes.

Quotes are typically based on a full coverage policy average unless otherwise noted within the content.

These rates were publicly sourced from insurer filings and should be used for comparative purposes only — your own quotes will differ. Given this, it’s important to go through our insurance steps form to find how much you can save with way.com

FAQ

How does family car insurance work?

The more cars your family has, the more likely you are to get into an accident. And a driver under the age of 25 is considered to be a high-risk driver, which could cause your insurance premium to go up.

By putting all of your car insurance plans into family car insurance, you can get better coverage for all of your cars, and the discounts for having more than one car can help pay for that better coverage.

Is it cheaper to combine car insurance with parents?

Most of the time, adding a teenager to their parents' policy is cheaper than getting them their own policy.

Can a family member insure my car?

Yes, a family member insure your car. Most companies let the driver and policyholder have different names. This happens a lot with teen drivers because their parents are usually the policyholders until they can buy their own car and insurance.

Is family car insurance cheaper?

Yes, family car insurance is cheaper. Depending on the insurance company, a multi-car policy can save you anywhere from 10% to 25%.

Can my dad insure my car?

It is possible for you or a member of your immediate family to insure your car. If the driver and policyholder have different names, most companies allow it. For many teens, this happens because their parents remain the policyholders until they can afford to buy their own car and insurance.

Do you have to live with your parents to be on their car insurance?

If your parents own the car you drive, and you still live with them, you can technically stay on their policy. If you possess a car, even if you live with your parents, you will need a separate insurance policy. All drivers who live at the same address should be registered on the same insurance plan. Your own policy is necessary if you are married and do not live with your parents.

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