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Best Car Insurance for First-Time Buyers

Find out how to save money and get the right policy when you buy your own car insurance for the first time.

buying car insurance for first time

If you're buying a car insurance policy for the first time, you'll find it's a major part of your vehicle costs. Once you're the registered owner of a car, you need your own auto insurance policy. That means you can no longer benefit from the cheaper rates that come with staying on your parent's plan.

Auto insurance is required in most states. So if you buy a car, you need an auto policy to cover it before you drive off the lot. This article covers everything first-time insurance buyers need to know about car insurance, including:

How much does car insurance cost for first-time buyers?

Car insurance for a driver with no insurance history is about 400% more expensive than car insurance for a driver who has held an insurance policy for several years.

Costs depend on several factors, but your driving and insurance history is one of the main factors. This data set analyzes two drivers who don't have a driving record or insurance history, ages 16 and 30. Those rates are compared to what a 40-year-old with a clean driving record and robust insurance history would pay.

These are the average costs for a car owner by age:

Average insurance premiums for drivers with no insurance history

Age of driver 16 years old 30 years old 40 years old
Annual premium $6,620 $6,620 $1,667
Monthly premium $552 $552 $139
Average rates are based on non-binding estimates provided by Quadrant Information Services. Your rates may vary.1

Although insurance rates usually decrease after age 25, that's not the case for our 30-year-old driver with no driving record or insurance history. According to our data, drivers with no insurance history pay an average of $4,953 more per year for car insurance than drivers with an auto insurance history. If you're buying insurance for the first time, you should expect to pay significantly more.

Luckily, the longer you have a policy and a good driving record, the more your rates will decrease. Over time, you should expect your costs to get lower, as long as you're not involved with any major traffic violations.

The best insurance companies for first-time buyers

To find the cheapest policy, it's important to shop around with several insurance providers. We've analyzed both large, national insurance companies and small, local companies to find the lowest prices.

Best large insurance companies for drivers with no insurance history

Company Average annual premium Average monthly premium
State Farm $3,842 $320
Travelers $4,256 $355
Progressive $4,896 $401
Average rates are based on non-binding estimates provided by Quadrant Information Services. Your rates may vary.1

According to our data, the best large insurance company for a first-time insurance buyer is State Farm®, which has the lowest rates at $3,842 yearly and $320 monthly.

Best small car insurance companies for drivers with no insurance history

Company Average annual premium Average monthly premium
Wawanesa Insurance $2,335 $195
Eagle West Insurance Company $3,909 $326
California Capital Insurance Company $4,116 $343
Average rates are based on non-binding estimates provided by Quadrant Information Services. Your rates may vary.1

According to our data, the best small car insurance company for first-time owners is Wawanesa Insurance, with annual premiums costing $2,335 and monthly premiums costing $195.

Our data shows that purchasing from a small or local insurance company could be cheaper than purchasing a policy from a large insurance company. That's not always the case though, it just means you should shop around and get quotes from multiple insurers in your area.

How to get auto insurance for the first time

To get auto insurance for the first time, you should shop online to find insurance quotes. Once you get a sense of how much you'll be paying for coverage, you can speak to an insurance agent about coverage limits, deductibles, discounts and more.

You can also speak to an insurance agent or broker in person, but many drivers choose to start the process online.

What coverage should I get?

If you have the budget for it, you should consider purchasing full coverage, which includes liability, comprehensive and collision coverage. You should especially consider full coverage if you own a new, expensive car. And if you're still financing your car, you should consider gap insurance, which covers the amount between what you still owe on a vehicle and what you already paid for it.

You're required to purchase at least your state's minimum liability insurance. But other than that, you can customize your policy how you want it. Keep in mind that only buying liability insurance won't cover damage to your own car or any of your injuries if you're in a crash.

Policy coverage limits

As a first-time policy buyer, you should make sure you have enough coverage. We recommend purchasing 100/300/100 liabilitycoverage limits to protect you if you're in a costly accident.

If you drive an old car, you may be able to forego comprehensive and collision coverage. Comprehensive and collision coverage pays to repair or replace your car if it's damaged. For an old car, it may not be worth the money. However, if your car is new, you should definitely keep comprehensive and collision coverage.

How do first-time buyers get cheap auto insurance?

There are plenty of discounts you may qualify for and changes you can make to your policy to save money as a first-time insurance buyer. These are some of the ways to get cheap auto insurance:

Bundle your insurance policies

If you're a homeowner or renter, you should consider bundling your different policies. Most insurance companies offer significant discounts for bundling your plans. Speak to your agent to see if you qualify.

Consider discount programs your insurer offers

  • Defensive driving course discount. You can earn a 5% to 20% discount from your insurance company for simply completing a defensive driving course. Check with your agent to make sure they offer defensive driving discounts.
  • Safety programs. Many insurance companies also offer programs that reward safe driving with cheaper premiums.
  • Good grade discounts. If you're a student with a GPA over 3.0 or so, you may qualify for a good student discount. You'll have to offer proof of good grades, but it could decrease your rates by 10%.

Compare auto insurance quotes

The simplest way to save money on auto insurance is to compare auto insurance quotes from several insurers. This is a good way to save money because insurers weigh variables differently to price your policy, so coverage could be significantly cheaper depending on the company.

Methodology

1For this sample, we compared rates from auto insurance companies throughout California. Rates are based on the driving profile of a 16-year-old, a 30-year-old and a 40-year-old male. The driver has a 2014 Honda Civic with 100/300/50 liability coverage and $1,000 deductibles for comprehensive and collision coverage. Your rates will differ based on your personal factors.

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