Car Insurance for New Drivers

As if there are not already enough things to worry about as you prepare to get a driver’s license, you also need to shop for car insurance. In addition to being required by law in most states, auto insurance can protect you from potentially huge expenses in the event of an accident. With this in mind, here are the most important things any new driver should know about getting car insurance.

How much does auto insurance cost for new drivers?

New drivers pay more for car insurance than those with reasonably good driving records, because insurance companies view those with no prior driving experience as riskier drivers.

On average, new drivers pay 21% more for car insurance than experienced drivers.

Since teens are considered to be the riskiest drivers by age group, insurance companies tend to charge young new drivers considerably more than older ones.

For example, car insurance rates for a new 18-year-old driver average $592 a month, compared to $286 a month for a new 25-year-old driver.

Since car insurance rates for new drivers vary by company, it’s important to compare quotes from multiple companies when you shop to make sure you are getting the best rate.

Buying car insurance for the first time may seem like a daunting task, but whether you prefer to shop online, by phone or in person, you really only need the following information to get started:

• Your driver’s license number
• Your car’s vehicle identification number (VIN), which is on your registration certificate
• A general idea of the amount of coverage you need

Cheapest car insurance companies for new drivers

State Farm, Erie and American Family offer the cheapest car insurance for new drivers.

State Farm’s rates for 18-, 25- and 35-year-olds average $298 a month, compared to $241 a month from Erie and $271 a month from American Family.

How to get cheap car insurance as a new driver

Car insurance can get expensive for new drivers of any age, but here are steps a new driver can take to get a cheaper price.

Compare car insurance rates

Your age and driving history are just two of the many factors insurance companies evaluate to determine your car insurance rate. They also consider things such as the type of car you drive, the accident and car-theft rates in your community, and, in most states, your credit.

Since each company places different weight on each factor, you may qualify for a significantly lower rate with one company than you do with others. This is why it pays to shop around.

After you lock in your first policy, you should also repeat the shopping process before your first or second renewal. By then, the driving record and insurance history you have established are likely to help you qualify for rates that are closer to the average costs in your state.

Enroll in a safe driver program

Most insurance companies offer a discount to drivers who enroll in their safe driver programs, which are typically managed with a smartphone app.

Insurance companies that offer these programs usually give you a discount just for signing up.

Once you activate the app, it monitors your driving and gives you a safety score based on how well you avoid speeding, hard braking, distracted driving and other risky behaviors. Most companies offer a discount on renewals to customers who maintain a high enough score.

Get on your parents’ policy

New drivers who live with their parents typically receive much lower rates when added to their parents’ car insurance than they do for their own policies.

From an insurance company’s perspective, your parents’ history of responsible driving offsets the perceived risks you present as a new driver, assuming your parents don’t have major accidents or violations on their record.

Parents can usually add a child of any age living in their home to their car insurance, though the specific rules about adding drivers to your car insurance vary by company.

Car insurance discounts for new drivers

Since car insurance discounts also vary by company, shopping around also helps you find the company whose discount structure gets you the cheapest rates.

Most companies offer a discount for bundling your auto insurance with a home or renters policy. You may be surprised by how many other types of discounts are often available.

Some car insurance companies offer discounts to members of the military and those employed in certain professions, such as educators and healthcare providers. Others offer lower rates to those with advanced degrees.

For teen drivers or drivers under 25, some insurance companies offer a good student discount for full-time students who maintain good grades. 

Don’t be shy about asking for as many discounts as possible when you shop, because the savings can add up.

Why is auto insurance for new drivers so expensive?

A lack of experience behind the wheel is the main reason why auto insurance is so expensive for new drivers.

Insurance companies charge higher rates to drivers they consider more likely to be involved in a car accident. Since inexperienced drivers are generally considered more likely to be involved in an accident than those with a record of avoiding tickets and accidents, new drivers are charged higher rates.

In addition to qualifying for low base rates on car insurance, safe drivers often qualify for additional discounts.

For example, Allstate offers a claims-free discount to new and existing customers with no recent claims. Travelers offers a tenure discount to new customers who switch over after four years with their prior company.

These are just a couple of examples of how a new driver who establishes a good driving record may become eligible for lower rates in the future.

Who needs new driver car insurance?

Anyone getting their first driver’s license in the U.S. or getting a license after a lengthy gap in their driving and/or insurance history typically needs to pay new-driver car insurance rates.

U.S. insurance companies generally do not recognize driving and insurance records in foreign countries. This means people who have moved to America from another country are likely to pay higher rates for car insurance. Americans who have lived abroad for an extended period may be charged more, too.

In general, insurance companies consider you a new driver if you:

• Are getting your first driver’s license, regardless of your age
• Have moved to the United States from a foreign country, even if you had a license and insurance in your former home
• Let the driver’s license and insurance coverage you had in America lapse while living abroad
• Have had a sizable gap in car insurance coverage for any reason, including not having had a car for a while

Methodology

The rates shown in this analysis reflect the averages of auto insurance policy quotes for more than 65,000 sample drivers in Oregon, Pennsylvania and Texas, as provided by Quadrant Information Services.

The three states were chosen for their geographical diversity and robust insurance markets, which include rates comparable to national averages.

Sample drivers for our analysis have no prior accidents or violations and drive a 2012 Honda LX an average of 13,500 miles per year.

Quoted rates are based on car insurance policies containing the the following coverages, limits and deductibles:

• Bodily injury liability: $50,000 per person/$100,000 per accident
• Property damage liability: $50,000 per accident
• Collision: $1,000 deductible
• Comprehensive: $1,000 deductible

Oregon policies also include state-required uninsured-motorist coverage and personal injury protection. Pennsylvania policies include first-party medical coverage.

References:

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