Best Car Insurance for New Drivers – The Ultimate Guide
Key Takeaways:
New drivers are people who have no valid driving history in the US and can include teenagers just learning to drive, people who have opted not to drive before or had a gap in coverage, and those who have recently emigrated to the United States.There are various discounts and ways to save on car insurance for new drivers, including multi-policy discounts and good student discounts. As a parent of a teen driver, it will usually be less expensive to add the teen to your policy rather than get a separate new policy.It’s helpful to compare quotes to find the cheapest insurance for new drivers. Use a quote comparison tool to find the best options when looking for new driver insurance.
Ahhhhh, you finally get to drive! With a new driver’s license in hand, you can get behind the wheel and enjoy the freedom of the road.
It’s exhilarating, exciting, and more than a little scary (especially for parents)!
But hold on — you have to make sure you have the appropriate car insurance for first time drivers. And since you don’t have experience or any driving history, new driver insurance can be expensive.
In this article we look at what you need to get the best insurance for new drivers and how to save on your annual premiums.
Who is Considered a New Driver?
According to insurance companies, a new driver can be anyone who hasn’t driven before and doesn’t have driving history to guide the insurance company in assessing their skill and experience.
That can include teens just starting to drive, but also people of any age who haven’t driven before including immigrants who may have driving experience in another country but are just starting to drive in the United States.
Teenagers and Driving
Car insurance for first time drivers is more expensive than for more experienced drivers because new drivers are more at risk of being involved in an accident.
There’s no getting around these facts:
The second leading cause of death for teenagers in 2019 was motor vehicle accidents. Although this number has dropped significantly in the last several decades going from (9,524 in 1980 to 2,375 in 2019), it is still relevant to insurance companies.Teen drivers between the ages of 16 and 19 are almost three times as likely to be in a fatal car crash as those 20 or older (based on number of miles driven).
This is attributed to the following:
Overall inexperienceDriving while distracted by others in the car, loud music, or while texting or talking on the phoneNot using seat belts (According to the CDC, over 40% of high school students don’t wear seat belts when riding in cars driven by friends)Reckless drivingImpaired drivingDriving at night
Types of Car Insurance for New Drivers
If a new driver lives in a household of already insured drivers, whether a teen or adult, it is usually cheaper to add the person to the existing policy. In fact, most states only allow teen drivers to take out an individual policy if the vehicle is registered in their name.
Adding an additional driver will increase the cost of the overall policy and if that new driver is a teen with no driving history, that cost can be significant.
An alternative solution could be a usage-based or pay-per-mile policy. Through the use of telematics (a plug-in device that monitors mileage, speeds, frequency of stopping or ‘hard braking’, etc.), an insurance company can monitor driving habits and charge per mile. This can be a good alternative for those without a long commute or when trying to curb risky behavior in teens.
How are Car Insurance Rates Calculated?
When looking for the best car insurance for new drivers, it’s helpful to understand all the things that impact the cost of a car insurance policy.
Insurance companies determine insurance policy premiums based on a variety of historical factors or actuarial data. Basically, they keep historical information on everything. From there, they use risk prediction analysis, based on a person’s personal history and the driving population as a whole, to determine how likely it is that someone will have an accident.
Insurance companies will factor in the following:
Personal Demographics
This will include age, gender, location, commute miles, and the crime rate where you live and work. For new drivers, it’s important to update the number of miles you commute to and from work or school so that your carrier has accurate information.
Type of Vehicle
All teenagers dream of driving a hot sports car with loud music blaring out the windows as they cruise down the freeway at top speed.
Luckily, most parents know how dangerous that would be and opt for car choices that are safe.
Insurance premiums are based on the type of vehicle a person drives and safety ratings make a big difference when it comes to saving money on cheap car insurance for new drivers. (Plus, there are discounts available for different types of safety equipment.)
Based on safety, these are the top ten used cars for teens and new drivers if you want to save money on insurance premiums:
Mazda 3Toyota PriusHonda CivicSubaru ForesterHonda AccordHyundai TucsonToyota RAV4Ford EdgeToyota HighlanderToyota Sienna
Types of Coverage
Car insurance for new drivers will have some coverage options, but most states require a minimum liability coverage. Be sure to check with your state here if you have questions about the requirements.
Here are the four main components of coverage available today:
Liability — Liability insurance covers other people, including damage to other’s vehicle and property and their medical coverage if they are injured. This is considered the minimum coverage and is required in almost every state (except New Hampshire and Virginia where a person is still personally liable for damages).Collision — Coverage that will repair or replace the insured’s car regardless of fault. If you lease or finance a car, this type of coverage will be required naming the leasing company or bank as the primary lienholder.Comprehensive — Coverage for the insured’s car that pays for damage caused by non-accident related events, like fire, theft, weather related disasters, falling objects, or vandalism.Uninsured Motorist — Covers damage caused by an uninsured driver, including medical and funeral expenses.
Driving History
Insurance companies want to know what kind of a driver someone is before they agree to take on the risk. When they look at new driver insurance cost, it’s hard for an insurance company to know how someone with perform on the road since there is no history.
This is where they fall back entirely on actuarial data for the same age group in the same area or location. This leads to higher premiums until there is a driving history established.
Credit Score and Credit History
A credit score is used for more than getting a new credit card. Insurance companies use someone’s credit report and score as a character reference. Believing that you can tell a lot about a person by the way they handle their finances, insurance companies base coverage and premium decisions on whether someone has poor, fair, good, or excellent credit.
For new drivers, this can impact their ability to get insurance and how much they will pay for coverage since teens and those new to the US usually don’t have much of a credit history yet.
City or County of Residence
Insurance companies adjust their coverage rates based on what’s happening in different areas. If someone lives in an area that is suffering from increasing crime rates or more climate related catastrophes, there is a good chance their car insurance premiums are going up as well.
Ways to Find Affordable New Driver Insurance Rates
There are ways to positively impact car insurance for new drivers and get premiums that are more affordable.
Stay on a Family Car Insurance Policy
Putting a new driver on the family insurance policy is one way to keep costs down. This can help control costs as well as give the new driver time to establish a safe driving record before they are on their own.
Trade in that Fancy Sports Car
We have already talked about the safest cars for new drivers, but that doesn’t always matter. When picking out that new graduation or birthday present, remember that a safe vehicle will save money in the long run and may help tame a teen’s wilder nature behind the wheel.
Increase the Deductible
Insurance policies can be customized with a deductible that saves money on the monthly premiums. A $0 deductible policy will be far more expensive than one that has a $500 or $1,000 deductible. By increasing the deductible, the cost may be more manageable for a new driver.
Shop Around for the Best Price
It seems insurance is a fixed cost that people get used to paying and don’t question. Initially, and every year after, it’s a good idea to check the marketplace for new driver car insurance quotes. Prices change and circumstances can change as well.
It’s always a good idea to see what the average price is based on your situation especially as a new driver gains experience.
Get All the Discounts Available
Whether an individual policy for a new driver or as an addition to the family policy, it’s always a good idea to review the discounts that are available, including:
Defensive driver course — Discounts are available for taking a defensive driving course or student driving course which is not only good for cost savings, but can be invaluable to a new, inexperienced driver.Good student discount — Most insurance companies offer a discount when a high school or college student maintains good grades. In most cases, they want to see a 3.0 GPA or B average or above.Multiple policy discount — Companies will often offer discounts when there are multiple policies or drivers in one household. This can include home or renters’ insurance, life insurance, or recreational vehicle insurance.Safety equipment discount — If a vehicle has safety or anti-theft equipment installed, most insurance companies will offer a discount as long as the equipment is in good working order and is being used.Military discount or job-related discount — Many insurance companies offer military or job-related discounts.Auto-pay discounts — save up to 1% by paying through an auto pay program.
Getting the Best Price
For new drivers, getting the best price comes down to finding a reputable insurance company that provides new driver car insurance quotes.
In the past, this has meant an extensive amount of leg work. Calling different insurance agents, getting references from friends or family, and manually comparing the mountains of information. At best, it was time consuming — at worst, you were left with a confusing mess and not sure where to turn for help.
Luckily, today things are so much easier with insurance quotes available online. Sure, you still have to talk to an agent, but now you know what to expect and what questions to ask.
For new drivers, it’s important to understand coverage options and what you can do to lower costs now and it the future. Will safe driving history help? Will improving your credit score help? These are things to be prepared for over time to lower your premiums.
Insurance carriers all look at similar things as we’ve discussed, but they don’t release the exact specifics. So, it can benefit you significantly to look at pricing for all major insurance companies. There’s no way to know where your specific circumstances will rate the best offer.
Contact us at einsurance.com and start comparing auto insurance quotes for new driver insurance today.
Kathryn has a background as a small business owner and currency trader. Kathryn also enjoyed a career as a Regional Director and COO in healthcare, specializing in operations, third-party insurance reimbursement, and revenue cycle management.
