Buying insurance as a new driver is an expensive and confusing maze to navigate. We'll teach you insurance basics and show you how to find the right policy at the right price.
Congratulations on getting a license, new driver! Earning the right to drive is a landmark moment in anyone's life. It opens the door to a whole world of exciting possibilities.
One of the only downsides to obtaining a driver's license is paying for car insurance. It's especially expensive for new drivers, because their inexperience behind the wheel makes them more likely to cause an accident or get a ticket.
Whether you're a teenager or adult, you'll need to do your due diligence when shopping for car insurance. This article will take you through the process of shopping for insurance. That includes choosing a company, picking coverage levels and policy add-ons, and getting discounts.
When shopping for insurance, ask yourself this question: do I have enough coverage in the event of a bad accident? When you're a new driver, this question comes with added importance. You're already paying high insurance rates to begin with, so it's necessary that you get the most out of your coverage.
Every state has legal minimum car insurance requirements. It's the amount of coverage a person needs to legally drive in that state. Specifics vary from state to state, but minimum coverage always includes liability coverage. This helps pay for damages and injuries you cause to other drivers.
While minimum coverage is enough to get you on the road, it's not enough to protect you or your car. As a new driver, it's a good rule of thumb to assume that you'll make at least one mistake behind the wheel. That could be a speeding ticket, fender bender, a DUI, or a totaled car. Do you have enough coverage in the event of the unexpected? The answer, unfortunately, is probably not.
Minimum coverage pays for damages and injuries you cause to other people and their property. It does not pay for damages and injuries to you or your car. If you have minimum coverage and you cause an accident, you're on the hook your repair and medical costs.
Because minimum coverage is, well, minimal, we recommend that new drivers buy additional coverage if they can afford it. But what's the ideal coverage amount? Unfortunately, there's no one size fits all advice. Consider these points to assess what kind of car insurance you need:
Understanding the building blocks of an insurance policy is the first step in finding the right coverage. Familiarize yourself with coverage terms like liability, collision, comprehensive, personal injury protection, and uninsured/underinsured motorist coverage. For a helpful breakdown on each term, read our short article on car insurance coverage basics.
If you drive a new (or really nice) car, you'll want more than minimal coverage.
First, if you're financing a new car, you need to purchase GAP insurance. A new car depreciates in value the moment you drive it off the lot. If you total it a week after buying it, the insurance company will write you a check for the car's market value, which will be less than what you paid for it. Assuming you financed the car, it's probable you owe more for the loan than the amount your insurer paid you. GAP insurance covers that amount.
Even if the car is completely paid off, it represents an expensive investment. It would be wise to protect this investment with full coverage car insurance. That's especially true if you drive a collector car, or if you live in a disaster-prone area.
If you drive an old beater with a constantly lit check engine light and a laundry list of peculiar problems, don't pony up the cash for full coverage. As a new driver, you're already going pay higher-than-average rates for car insurance. Don't make it more expensive than needed.
Consider choosing a high deductible and skipping comprehensive and collision coverage if your car is only worth a few thousand dollars.
As we mentioned earlier, as a new driver it's a good rule of thumb to assume you're going to get into an accident at some point. That's why you should add accident forgiveness to your policy. Most major insurance companies offer it as a policy add-on. Accident forgiveness, unsurprisingly, does exactly what the name suggests. It gives you a mulligan after an accident, meaning your insurance rates won't rise after they normally do.
If you cause a bad accident and damages exceed your insurance limits, you're at risk of a lawsuit. Other drivers can use legal action to get reimbursed for their damages and injuries. Make sure you have enough liability to cover yourself. We recommend the following amount:
If you get injured in a car accident, medical bills can quickly pile up. Hopefully you have decent health insurance. Even if you do, however, health insurance doesn't always cover car accidents. If it does, there are usually coverage limits – meaning you could quickly hit said limit after an accident.
That's where medical payments coverage helps. It pays for medical bills after a car accident. You can also opt for personal injury protection (PIP), which expands on medical payments coverage to reimburse you for lost wages, childcare, physical therapy, and more.
Since PIP offers more coverage, it's usually more expensive than medical payments coverage. You should consider purchasing medical payments coverage.
Let's get one thing straight: there are numerous options when it comes to picking a car insurance company. The following companies offer good policies for first-time drivers including low-mileage options, good student discounts, and safe driving programs. Be sure to check for local companies in your state that aren't listed here.
There are two types of new drivers. One is a teenager who recently became old enough to legally drive a car. The second is an adult of any age who, for whatever reason, only recently learned how to drive. Unfortunately, no matter what type of new driver you are, car insurance won't come cheap.
Teenagers always pay the highest car insurance rates of any group. Our study found that teens pay $438 for a standard car insurance policy.
Even if they're not teenagers, new drivers also pay higher rates for insurance. Their lack of experience, a non-existent driving record, and no insurance history means they'll pay higher rates when they first get a license.
One thing is clear: whether you're a teen, 25 years old, or older, it takes work to find cheap car insurance as a new driver. Here are steps you can take to find get the best deal on car insurance for new drivers:
These programs can be extremely helpful for new drivers. One of biggest insurance knocks on new drivers is the fact that they have little or no driving history. A telematics program sets rates based on current driving behavior, instead of past performance.
A: Have your parents contact their car insurance company and ask to add you as a named driver. If you live with them and don't own your own car, it's a straight forward process.
If you have your own car, you will need to add the car on to their policy as well. However, if your name is on the title of the car, there's a good chance the insurance company will require that you buy an individual policy.
A: It's usually much cheaper to join your parent's plan. Our research shows that adding a teen to an existing policy costs $278 a month compared to $438 to buy an individual policy.
A: There's no age limit for how long you can stay on your parent's car insurance. As long as you're dependent, meaning you live with your parents at least part-time and drive their car, you can stay on the insurance.
However, if you move out or buy your own car, your insurance company will probably want you to get an individual policy. Each insurance company has their own definition for dependent, so contact the insurer to find out the exact details.
A: There are a ton of factors that go into determining the price of your insurance policy. As a new driver, a huge part of your insurance rate is your lack of driving experience. Other things that impact the price of your policy include where you live, your credit score, and your car's make and model.
A: If you're a teenager, you're stuck with expensive insurance for at least a few years. If you avoid accidents and citations, your rate starts to lower around age 25. But if you're a new driver at age 25 or above, it'll take a few years of building up driving experience and insurance history before your insurance premium gets lighter.
Tired of paying an arm and a leg for car insurance? Shop around and compare auto insurance rates from at least three insurers. There's a good chance you're paying more than you need to. Let QuoteWizard help you save some money.
A: Maybe. At the very least, you're probably going to have to make a few changes to your policy. Insurance requirements vary by state. First, make sure your current policy meets the minimum requirements of your new state.
Second, check that your insurance company operates in your new state. Most major companies offer coverage across the country, but that's not always the case. If not, you'll need to find a new insurance company.
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