For novice drivers, taking the wheel can be a daunting experience, particularly regarding car insurance. Typically, insurance premiums for newly licensed drivers are higher due to their limited driving experience and increased likelihood of accidents. Thankfully, there are various methods available to decrease car insurance expenses for inexperienced drivers. In this article, we will provide you with five useful tips on how to save money on car insurance, allowing you to keep more money in your wallet.
List of Contents
Does a New Driver Need Insurance?
If you want to drive legally in the United States, you need at least the minimum necessary auto insurance coverage in case someone gets hurt, or their car gets damaged while under your care. Some states also mandate Personal Injury Protection and Uninsured/Underinsured Motorist Coverage.
New Driver Car Insurance Cost
Several variables can impact your auto insurance premium as a new driver, including where you live, the kind of car you drive, your driving record, and your credit score. When determining a driver’s premium, insurance companies look at several factors. Still, two of the most important are the person’s age and the amount of driving experience they have.
How Much Is Insurance for a New Driver?
The typical price for a new driver, based on estimates of the total coverage rate, is;
A yearly salary of $5,827 works out to roughly $486 per month. Below is a table highlighting the increased rates for new drivers, especially those who are younger.
| Age | Average Cost of Auto Insurance Per Month | Average Cost of Auto Insurance Per Year |
|---|---|---|
| 16 | $576 | $6,912 |
| 17 | $468 | $5,612 |
| 18 | $413 | $4,958 |
| 19 | $309 | $3,708 |
| 21 | $232 | $2,786 |
| 25 | $168 | $2,019 |
| 30 | $153 | $1,831 |
Car Insurance Prices for First-time Drivers
In the table below, you’ll find the typical annual premiums charged by several major companies to insure a healthy 25-year-old male with a spotless driving record and excellent credit.
| Car Insurance Company | Average Monthly Cost for 25-Year-Old | Average Annual Cost for 25-Year-Old |
|---|---|---|
| USAA | $108 | $1,292 |
| Geico | $118 | $1,420 |
| Erie Insurance | $127 | $1,523 |
| Nationwide | $130 | $1,556 |
| Auto-Owners Insurance | $133 | $1,590 |
| State Farm | $141 | $1,686 |
| American Family | $147 | $1,762 |
| Travelers | $147 | $1,763 |
| Progressive | $161 | $1,934 |
| Allstate | $199 | $2,382 |
The table above demonstrates that USAA and Geico typically offer the most affordable rates for new drivers. According to our research, a full coverage auto insurance policy through USAA costs an average of $1,292 per year, or $108 per month, for drivers under the age of 25 who are eligible for coverage.
4 Tips to Save Money on Car Insurance For New Drivers
Though there is no foolproof method for finding cheap car insurance, there are some steps you can take to bring down your premium. If you’re in the market for auto insurance for a young driver, we suggest the following tactics.
1. Find the Best Car Insurance Policy at the Lowest Possible Rate for New Drivers
In other words, you won’t get the exact quote from multiple insurers. When adding a driver to an existing policy or when shopping around for a new policy altogether, having an idea of what to expect in terms of premium costs is invaluable.
Comparative reviews, such as our Allstate vs. Progressive review and State Farm vs. Geico review, can be helpful when trying to decide between two companies. These provide a side-by-side comparison of each provider’s current deals and existing customers’ opinions of those deals.
2. Improve Your Credit Score
The best way for new drivers to get affordable car insurance is to work on improving their credit scores before they get behind the wheel. Please take a look at our cost averages for car insurance across two age groups and three credit ratings.
| Credit Rating | Average Annual Cost for 24-Year-Old | Average Annual Cost for 35-Year-Old |
|---|---|---|
| Good | $2,424 | $1,745 |
| Fair | $2,966 | $2,144 |
| Poor | $4,507 | $3,254 |
3. Consider New Driver Discounts When Purchasing Auto Insurance
Many auto insurance providers offer discounts for new drivers and students, but there are other ways to cut costs. You may be eligible for a discount if you have multiple policies with the same insurer. This is especially true if you bundle coverages such as auto and home.
- Discount for being a safe driver
- Premium reduction for multiple policies
- Discounts for multiple cars
- Armed forces discount
- Discount on a brand-new car
- Discounts for Vehicle Safety Features
3. Shift the Limits of Your Auto Insurance Coverage
Modifying your existing auto policy may net you a lower premium if you’re looking for savings and have a new driver in your household. Choosing a higher deductible typically results in lower premiums, but it does require you to pay more out of pocket if you ever need to make a claim.
Eliminating unnecessary insurance is another choice. If you have an older vehicle that you’ve paid off in full, you probably don’t need collision or comprehensive coverage anymore. While dropping other parts of your full coverage policy may save you money, in most states, liability insurance is still required.
4. Consider Switching to a Policy That Covers Your Usage.
Usage-based auto insurance, also known as pay-per-mile insurance, bases premiums on a driver’s specific characteristics and annual mileage driven. According to the National Association of Insurance Commissioners, customers who opt for usage-based insurance policies pay less than those who stick with traditional auto insurance because premiums are tied directly to the amount of time spent driving and the quality of the driver.
Not all states offer policies based on policyholders’ actual usage. Not only are they not a good choice for people who drive frequently or have a lengthy commute, but those with poor driving records may see their rates rise.
Auto insurance for first-time buyers
When most people think of new drivers, they probably picture teenagers. However, many different kinds of people are just now getting their licenses, so the term “new drivers” is too broad. Some people who might be thought of as novice motorists include:
- Teenagers
- Older adults who have never held a driver’s license
- Individuals who enter the United States as refugees.
There is other advice for new drivers for each of these demographics because of the wide range of car insurance premiums. Below, we’ll summarize some finer points of obtaining auto insurance for each category.
The Best Ways for New Drivers to Save Money on Car Insurance
Although learning to drive on one’s own for the first time can be an exciting experience for teenagers, the cost of auto insurance is often prohibitive. As was previously mentioned, insurers use a variety of factors to determine premium amounts.
Generally, young drivers can save the most money on car insurance by remaining on their parent’s policies. Several discounts are available from most auto insurance providers to help families save money, including:
- Discounts for careful drivers
- Students need to maintain at least a B average to qualify for discounts.
- Special pricing for full-time and part-time students at any level of education
- Pay less for your car insurance if you take a defensive driving course.
Unless they have their vehicle and no longer live at home with their parents, young drivers cannot be covered by their insurance policy. Remember that young drivers (those with a driving license who are under 25) typically pay significantly higher rates. Insurance premiums will rise considerably if a teen is added to the policy, but the exact amount will vary by provider, vehicle, and location.
Tips for Older First-Time Drivers to Get Auto Insurance
People of all ages get behind the wheel for the first time. Anybody who has spent significant time in a large city without a car, either because they relied on public transportation or lacked the financial resources to buy one, could be considered a new driver. Fortunately, if you’re over 25, you may be eligible for lower rates than a teen driver, even if you don’t have any driving experience.
Alternatives to conventional insurance, such as usage-based insurance, exist for older first-time drivers who live in convenient public transportation areas or don’t plan to drive much.
Auto Insurance for Fresh Arrivals
When they arrive in the United States for the first time, immigrants and foreign nationals are considered “new drivers.” This is because auto insurance companies typically only look at domestic driving records, so even if you have a spotless driving record in your home country, you may be considered a novice behind the wheel in the United States.
Obtaining auto insurance is not accessible if you are an immigrant. People who apply for auto insurance but don’t have current licenses often get turned down. Obtaining a permit without the required government paperwork may still be possible.
A valid foreign passport, foreign birth certificate, or proof of residency in the state are all acceptable forms of identification for undocumented immigrants seeking to obtain a driver’s license in the District of Columbia and the 16 states listed below, as reported by the National Conference of State Legislatures.
Conclusion
Auto insurance costs for novice drivers are much higher than for seasoned motorists. However, to save money on car insurance by shopping around and looking into discounts, you can lower the overall cost of your auto insurance policy.
Researching and comparing quotes from multiple providers is a great way to find the best rate and auto insurance, whether you are a new driver or have been behind the wheel for decades.
FAQs
Car insurance is a type of insurance policy that provides financial protection against physical damage and/or injury resulting from car accidents, theft, or other incidents involving your car.
New drivers typically need liability insurance, which covers the costs of damages and injuries to others in an accident you are responsible for. Some states may also require new drivers to have personal injury protection (PIP) or uninsured motorist coverage.
If you find a better rate or your needs change, you can change your car insurance policy mid-term. Remember to check for potential cancellation fees and ensure that your new coverage will start immediately before you cancel the current one.
Collision coverage generally covers damage to your car due to a collision with another vehicle or object. It does not cover physical damage. On the other hand, comprehensive coverage is a type of insurance that covers all potential damage to your car, including damage from physical harm and collisions.
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Source: MarketWatch