Getting that first car insurance policy is rarely as exciting as getting that first car, but it is important. Though it may seem daunting, knowing what to expect and the coverages you need ahead of time can simplify the process. Here’s how to shop like a pro when you get car insurance for the first time.
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What do I need to get car insurance for the first time?
It’s best to have your driver’s license, vehicle registration and payment information with you when you begin shopping for car insurance for the first time, and be ready to share a few details about yourself and others you plan to include on your policy.
Though questions about your marital status, occupation, education and military service can seem intrusive, your responses may qualify you for discounts.
Whether you shop online, by phone or in person, you’re typically asked to provide the following information:
- Your name, address, date of birth and driver’s license number
- A start date for your policy
- Your occupation, highest level of education and military status
- Your marital status
- If you are married and/or plan to include other household members on your policy, you need to provide the license number and date of birth for each driver
- The make, model, year and vehicle identification number (VIN) for each vehicle, as shown on the vehicle’s registration
- Basic details about any traffic violations you or anyone else on your policy has committed within the past three to five years
- When you’re ready to buy, you’ll need to provide the account number for the bank account or credit card you plan to use for payment
Car insurance rates for new drivers
New drivers generally pay higher rates for car insurance than licensed and insured drivers with good driving records.
The exact rate you’ll pay for your first car insurance policy as a new driver varies by state and other factors. However, our analysis of car insurance rates in Texas shows that new drivers may pay 30% to 45% more for car insurance than those with clean driving records and no prior insurance claims.
For example, a new 18-year-old driver pays an average of $330 a month for minimum coverage, which is 31% higher than the rate available to an 18-year-old with two years of driving experience and a clean record.
The good news is that your insurance rates tend to go down as you age, assuming you maintain a good driving record and avoid car insurance claims.
|No prior license/insurance
|Licensed/insured driver with a clean record
|Note: Average rates are based on non-binding estimates provided by Quadrant Information Services. Your rates may vary.
Why do new drivers pay more for car insurance?
Your driving and insurance history are among the key factors that insurance companies use to determine your rate. If you don’t have prior driving and insurance records demonstrating your history of safe driving, you can’t qualify for preferred rates or any claims-free discounts that may be available.
Some insurance companies won’t insure customers without at least six months of continuous car insurance.
Since insurance companies typically can’t access driving and insurance records in other countries, those who have recently moved to the United States, or moved back to the United States after living abroad, are often rated as new drivers.
However, if you have previously been on an insurance policy with someone else, such as a parent or spouse, you will be seen as having prior insurance.
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How can I save money on my first car insurance policy?
The best way to save money on your first car insurance policy is to compare quotes from multiple insurance companies and make sure you are receiving all the discounts you are eligible to receive.
Each insurance company places different weights on your driving and insurance history and all of the other factors they use to determine your rate. Obtaining quotes from multiple companies allows you to find the one that offers the lowest rate for your unique combination of factors.
Even without prior driving and insurance records, you may still be able to qualify for a variety of discounts.
For example, most companies offer discounts for bundling your car insurance with a home or renters policy. Some offer affinity discounts to those in certain professional fields, such as medicine and education, or current and former members of the military.
As they say in commercials, the savings can add up. Don’t be shy about asking for any discounts that may be available to you.
How do I get car insurance?
Whether you prefer to shop online, by phone or in person, requesting a quote is usually the first step in getting car insurance.
You can search for agents serving your community online or use an online comparison site, and you can request a quote online, by phone or by visiting an agent’s office.
Car insurance quotes are free, no-obligation estimates of the cost of proposed coverage, but the rate shown on a quote is not guaranteed.
Once you find an acceptable quote, your next step is to bind the policy. This is typically when insurance companies run database checks of your motor vehicle records and other information you have provided, regardless of whether you are shopping online, by phone or in an agent’s office.
If the insurance company discovers a ticket or accident you have not previously disclosed, your approved rate is likely to be higher than the rate shown in your quote.
If the rate you receive when you bind is unacceptable, you can cancel the coverage at no charge. However, if you wish to proceed, just complete your payment to activate the policy, either immediately or on the start date you have chosen.
How long does it take to buy insurance?
It can usually take anywhere from about a half hour to more than a week to purchase car insurance, depending on your needs and diligence.
If you need a policy right away, such as if you’re itching to drive a newly purchased car off a dealer’s lot, most insurance companies can issue a policy on demand over the phone, assuming you qualify for coverage.
However, having the wrong insurance coverage or overpaying may potentially cost you a lot of money. This is why it’s best to take the time to make sure your policy meets your needs and compare prices from multiple companies to get the lowest rate.
What should I look for in my first car insurance policy?
The most important things to look for in your first car insurance policy are coverages and limits that match your needs.
Your state’s minimum car insurance requirements are a good place to start, but depending on factors such as your budget, net worth and the value of your car, you may need additional coverage.
Almost every state requires liability insurance with specified minimum amounts to cover injuries and property damage you may cause in a car accident, although many states let you post a bond or cash deposit as an alternative.
If the medical bills or car repairs from an accident you cause exceed your liability limits, you may have to tap into your savings or other assets to cover the shortfall, or face liens, asset forfeiture or wage garnishment. This is why it’s best to choose liability limits that match your net worth, which may exceed your state’s minimum requirements.
Uninsured motorist coverage
Several states require motorists to carry uninsured motorist coverage (UM), which covers injuries you and/or your passengers suffer in an accident caused by an uninsured motorist.
UM is typically available on an optional basis in states where it’s not required. It is often paired with underinsured motorist (UIM) coverage, and sometimes sliced and diced further into separate coverages for bodily injury and property damage.
A good rule of thumb is to choose UM/UIM limits that match your liability limits. Since uninsured motorists are a nationwide problem, UM is typically worth adding to your policy on an optional basis in states where it’s not required, if you can afford to do so.
No-fault personal injury protection
If you live in a no-fault insurance state, such as Florida, New Jersey or New York, you’ll be required to carry personal injury protection (PIP), which covers injuries you and/or your passengers suffer in a car accident, regardless of fault, as well as lost wages and other benefits.
PIP is available on an optional basis in several states where it’s not required.
The basic PIP limits available in states where it is required is usually enough to cover your initial medical bills and/or costs not covered by your health insurance provider. This makes it worth considering in states where it is optional.
Collision and comprehensive coverages
Collision and comprehensive coverages are usually required for a car loan or a lease, but they are otherwise optional.
- Collision coverage generally covers damage to your own car from an accident you cause. Collision can also cover damage caused by an uninsured motorist or a hit-and-run driver.
- Comprehensive coverage typically covers damage from any cause other than a collision, including flood, fire and falling objects, plus vehicle theft and glass breakage.
Collision and comprehensive coverages are offered with a deductible, which is the amount you pay for repairs before your insurance funds kick in. Both coverages are capped at your car’s market value, after depreciation.
If you don’t have a loan, you can still purchase collision and comprehensive coverage as protection from potentially expensive car repair bills. However, you won’t need either coverage if your car’s value is less than your deductible, or even slightly more.
Other common car coverages to consider
The following additional coverages are available on an optional basis in most states and may be worth adding to your policy, depending on your needs and budget.
- Medical payments (MedPay): MedPay covers medical treatment for injuries you and/or your passengers suffer in a car accident, regardless of fault. In some states, it’s offered as an alternative to PIP. In certain other states, including Florida, it can complement PIP.
- Guaranteed asset protection (GAP): GAP covers the difference between your car’s market value and your loan balance. This may be useful if your loan balance is greater than your car’s market value, which is also known as upside-down financing. GAP may be cheaper from an insurance company than it is from a lender.
- Rental car reimbursement: This coverage reimburses you for rental car costs, up to your policy’s limits, while your car is in the shop for covered repairs.
- Roadside assistance/towing: If you don’t already have roadside assistance from AAA, your cell phone provider or any other entity, getting it from your insurance company usually only adds a few bucks a month to your car insurance bill.
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