Car Insurance for New Drivers

Buying insurance as a new driver can be confusing and expensive. Here’s how to get the right policy at the right price.

new driver smiling behind wheel of car

If you're a new driver with no history behind the wheel and no car insurance record, get your wallet ready. You'll pay higher insurance premiums than someone who's been driving for even a few years longer.

Why do carriers charge newly licensed drivers more for car insurance than they do more experienced drivers? Because they see them as being especially risky.

So how can a teenager who just got their driver's license, or an adult who did the same a bit later in life, find cheap auto insurance? By following the advice shared here.

Along with that advice, this article will tell you about:

How much is car insurance for a new driver?

New drivers pay 75% more for car insurance than experienced drivers do on average, according to our research.

Here are average sample rates for males aged 16, 30 and 40 in California driving 2014 Honda Civics and carrying the minimum amount of car insurance the state requires.

Average insurance rates for new drivers

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
These average rates are based on non-binding estimates provided by Quadrant Information Services. Your rates may vary.

In our sample, the 16-year-old and 30-year-old were newly licensed drivers with no insurance history. The 40-year-old had lengthy driving and insurance histories.

Although car insurance rates usually drop once a driver is over 25, that wasn't true for the 30-year-old new driver here. This is probably due to his lack of an insurance or driving history.

Regardless, our new drivers paid an average of $4,953 more per year for auto insurance coverage than the experienced driver did. That equals $413 more per month.

Why is car insurance so expensive for new drivers?

New drivers pay higher rates for car insurance than drivers who've spent years on the road, and they do so for a few reasons.

The main reason is new drivers don't have a driving history or record. That lack of experience worries insurance companies. They think it makes you more likely to get a ticket or cause an accident and so charge you more to cover the added risk.

Another reason insurers charge new drivers more for auto coverage is their lack of an insurance history. If you've never bought car insurance before, you'll pay more when you finally get around to it.

Now for some good news: your car insurance rates will go down as you add years to your driving and insurance histories. If you're an especially young driver, though, you may have to wait until you're over 25 for your rates to decrease.

Cheapest car insurance companies for new drivers

If you're looking for the best car insurance for new drivers, start your search at these companies.

Best large insurance companies for new drivers

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

Best small car insurance companies for new drivers

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
These average rates are based on non-binding estimates provided by Quadrant Information Services. Your rates may vary.

Our research suggests that getting quotes from small local or regional companies can help new drivers save money on car insurance. In fact, the best small insurance company we surveyed sent a quote that was $125 cheaper than the best large insurance company's quote. That's a 64% difference.

Does this mean smaller companies always offer the best car insurance rates for new drivers. No, it doesn't. It does mean you should shop around and get quotes from several providers in your area.

How to get cheap car insurance for new drivers

Whether you're a new driver or a driver with years of experience, car insurance won't come cheap.

That's especially true if you're a teenager. Teenage drivers pay the highest car insurance rates of any group. Our study found that teens pay $438 per month for a standard policy.

Of course, new drivers who are older also pay higher rates for car insurance. What can new drivers of any age do to bring those costs down? Here are some steps they can take to find affordable auto insurance:

Join someone else's policy

If you have a roommate, spouse or other family member who has car insurance, see if you can join their policy. Our study found that adding a teen to an existing policy costs $278 a month compared to $438 for an individual policy. Joining someone else's policy should save you money if you're older, too.

Bundle your insurance policies

Another way to save money on car insurance as a new driver is to buy your policy from the same company that sold you renters or home insurance. If you don't have either of those coverage types, keep bundling in mind when you do buy one of them.

Drive a sedan, not a sports car

If you want cheap car insurance as a new driver, drive a sedan. Your car's make and model impact the price of your policy in a big way. People who drive sports cars, luxury cars, trucks or SUVs often pay higher rates for auto coverage than people who drive safer or more economical cars. So go with the latter to keep insurance costs low.

Take a defensive driving course

Most insurance companies will give you a discount of 5% to 20% for completing a defensive driving course. An added bonus: defensive driving courses are cheap.

Enroll in a safety program

Many car insurance companies have programs that reward safe driving. These safety programs are great for new drivers. The insurers who offer them — like Allstate, Nationwide, Progressive and State Farm — set rates based on current driving behavior rather than past performance. They learn about this by having you install a telematics device that monitors acceleration, braking and other metrics. Meet the program's requirements and you'll get a discount.

Get good grades

Earning a B average is enough to decrease your premium by 10% with many insurance companies. So if you're a new driver who's still in school, see if your insurer offers discounts to students with good grades.

Get good credit, too

Your credit history is another rate factor that can affect how much you pay for car insurance as a new driver. Insurers in several states look at this information when pricing policies. If you're a young driver who just got their license, your credit history — or lack thereof — shouldn't hurt you here. If you're an older new driver, though, it could.

As you can see, it takes some work to find affordable auto insurance for new drivers. It can be done, though, so don't give up. Be patient, do your research, shop around and you should get the best premium possible.

What kind of car insurance do new drivers need?

No matter what type of new driver you are, you need car insurance. Every state but New Hampshire requires drivers to carry at least a minimum amount of coverage.

Specifics vary from location to location, but this amount always includes liability coverage. Sometimes it includes uninsured and underinsured motorist coverage or personal injury protection coverage, too.

The state minimum amount of car insurance is enough to get you on the road, but it's not enough to fully protect you or your car. Cause an accident in this situation and you'll have to pay your own repair and medical bills.

How much car insurance coverage should new drivers get?

Buying the bare minimum amount of car insurance coverage won't pay your medical or repair bills if you cause an accident. Here's what you need to buy to protect yourself from those out-of-pocket costs.

Get enough liability coverage so you're ready for the worst

We recommend buying the following amounts of liability car insurance coverage as a new driver:

  • $100,000 of bodily injury coverage per person
  • $300,000 of bodily injury coverage per accident
  • $100,000 of property damage coverage

These amounts will help protect you if you cause a bad accident and the damage costs related to it are higher than your insurance limits.

You need more coverage if you drive a new car

If you're a new driver and you drive a new car, consider getting full coverage car insurance. That means buying a policy that includes liability, comprehensive and collision coverage. Consider getting full coverage, too, if you drive a nice car that's worth a lot of money.

And if your car is new and you're financing it? Consider getting gap insurance. This type of car insurance covers the gap between what you paid for a vehicle and what you still owe on it.

You probably don't need full coverage if you drive an old car

Don't buy full coverage car insurance if you're a new driver and you drive an old car — especially if it has a lot of problems. You're already going to pay more for auto insurance because of your lack of driving experience. Why pay even more by getting coverage you don't need?

So, consider skipping comprehensive and collision coverage if your car is old. And no matter what kind of coverage you buy, choose a high deductible for it.

Buy accident forgiveness

Accident forgiveness will be a real lifesaver if you get into an accident as a new driver.

When you add accident forgiveness to a car insurance policy, your premium won't go up after a crash like it normally would.

Most insurance companies offer accident forgiveness as a policy add-on these days. What if your insurer doesn't? Shop around and find one that does. You may even save some money along the way in the form of lower rates.

Consider buying medical payments coverage, too

Even if you have health insurance, you might need to spend a lot of money on medical bills after an accident. Not all health insurance plans cover car accidents. The ones that do often have coverage limits. Hitting that limit after a crash is easier than you think. And once you hit it, you’ve got to pay for the rest of your medical care out of your own pocket.

That's where medical payments coverage helps. It pays for medical bills after a car accident. Personal injury protection (PIP) is an option, too. PIP is like medical payments coverage on steroids. It reimburses you for physical therapy, lost wages, childcare and more.

Heads up: PIP usually costs more than medical payments coverage. So medical payments coverage will be the best bet for most new and young drivers.

Methodology

We compared rates from car insurance companies throughout the state of California for this sample. These rates are for 16-year-old, 30-year-old and 40-year-old males driving 2014 Honda Civics with 100/300/50 liability coverage and $1,000 deductibles for comprehensive and collision coverage. Your rates will vary based on several factors, including car model, where you live and more.

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