If you are getting car insurance for the first time, it is natural to feel overwhelmed by the process. You need to find a reliable insurance company, an agent who can guide you, and choose the right coverage types and amounts that suit your budget and requirements.
Young drivers may remain on their parents’ insurance policy for a few years, but eventually, they will need to get their own policy.
Though first-time car insurance policies offer similar coverage as those issued to experienced drivers, there are a few differences in the process of obtaining them.
This article aims to provide you with all the necessary information about why you need car insurance, how to get your first auto insurance policy, and which insurance companies offer the best rates, to make the process less stressful for you.
Why Do You Need Car Insurance?
Car insurance is mandatory in all states except New Hampshire, although the minimum coverage required varies from state to state. Regardless of age or driving ability, all drivers need to meet their state’s minimum car insurance requirements.
Limited liability insurance, also known as the minimum coverage, protects you from having to pay for damages caused to someone else or their property if you’re at fault in a car accident.
You can choose to add coverage that provides more protection for you and your personal property, but it will increase the cost of your insurance premium.
If you lease or have a loan, you’re required to carry full coverage insurance. This added coverage helps your lender protect their investment and limit their risk.
If you don’t have the proper insurance coverage as specified in your lease or loan agreement, your lender could repossess your vehicle. Therefore, it’s essential to have good insurance coverage to keep your car and bank account protected.
How to Buy Car Insurance for the First Time
If you are buying car insurance for the first time, it is important to equip yourself with the right knowledge about the different types of coverage available and which insurance companies offer the best rates for first-time drivers.
As a first-time policyholder, you need to understand the coverage options, what they cover, and how the insurance company will determine your premium. These steps can be helpful in getting your first car insurance policy:
Do Your Research
When you are in the market for your first car insurance, research is crucial. You should be aware of what qualities auto insurers seek in a good driver, as well as what the top insurance companies provide their customers.
It is essential to know what information the insurance agent requires from you so that you can have it ready when collecting car insurance quotes.
To get an accurate rate, you’ll need to provide the following information to potential insurers:
- Your age
- Your marital status
- Your address
- Your vehicle’s year, make, and model
- Your vehicle’s mileage
- Your driving record
You should learn about different types and amounts of coverage before signing your insurance contract to ensure that you get the best deal.
Decide on Coverage
After learning about the available types of coverage, you can choose the policy that offers you the most protection. In most states, you are required to have at least a limited liability policy. However, you may also consider adding additional coverages, such as:
- Comprehensive coverage: If you add comprehensive coverage to your insurance policy, it will provide you protection in case your vehicle gets damaged due to incidents other than traffic accidents. These incidents may include natural disasters, theft, or other unforeseeable circumstances that are beyond your control. This coverage will give you peace of mind and help you avoid unexpected expenses in the future.
- Collision coverage: If you are responsible for an accident that damages your car, having collision coverage will assist you in paying for the repairs. However, minimum coverage only covers damages to other drivers’ property and their medical expenses resulting from the accident.
- Uninsured or underinsured motorist coverage: Uninsured and underinsured motorist coverage provides protection in case of an accident with an uninsured or underinsured driver.
- Rental car reimbursement or towing coverage: If your car needs repairs after an accident or breaks down, rental car reimbursement and towing coverage can be lifesavers.
Gather Quotes
When looking to choose an insurance provider and policy, it’s important to gather quotes from several sources. To make this process easier, you can obtain an auto insurance quote online and get multiple quotes in a short amount of time.
Once you have received the quotes, it’s important to compare them to determine which one offers the most coverage within your price range.
Pay close attention to the coverage limits and deductible amount you choose to ensure you are comparing similar policies.
It’s worth noting that in some states, insurance companies may ask for additional information such as your gender and credit history.
This information helps the insurance company determine the risk they are taking by insuring you. Lower risk drivers are offered lower rates. Younger drivers are considered a higher risk because they are inexperienced.
Choose a Provider
Once you have compared insurance quotes, take some time to evaluate the provider that offers the best terms and lowest rates that align with your budget.
It’s worth noting that certain insurance companies provide better rates for new drivers, while others offer better coverage for those with more driving experience.
If you’re a new driver looking for affordable car insurance, Business Insider recommends considering the following providers:
- The Hartford Auto Insurance
- USAA
- Geico
- State Farm
- California Casualty Insurance
- Progressive
Sign Your Contract
Before signing your insurance policy, it is important to carefully read through it. Make sure that it includes all the coverage options that you discussed with your agent.
Verify that it has the correct coverage and deductible amounts. Once you are confident that it is the policy you want, you can sign the contract.
The policy should become effective immediately, and you will likely receive an email that you can use as temporary proof of insurance while you wait for your official insurance card to arrive in the mail.
How Much Does First-Time Car Insurance Cost?
Car insurance rates vary depending on several factors. If you are a first-time car insurance buyer, you may find that your rates are higher.
This is because teen drivers and those who are getting their driver’s licenses for the first time are considered high-risk by insurance companies.
According to the Insurance Information Institute, drivers between the ages of 15 and 19 are more likely to be involved in accidents due to their lack of experience and maturity behind the wheel.
Inexperienced drivers may not be familiar with the traffic rules and may not respond quickly or accurately to driving situations.
As a young and first-time insurance buyer, you can expect to pay average rates that are higher than those of more experienced drivers.
- Age 16: $3,192 per year
- Age 17: $2,647 per year
- Age 18: $2,325 per year
- Age 19: $1,623 per year
- Age 20: $1,569 per year
- Age 21: $1,217 per year
- Age 22: $1,094 per year
- Age 23: $1,013 per year
- Age 24: $952 per year
- Age 25: $815 per year
Insurance companies charge higher premiums for younger customers due to their age.
Why Is First-Time Car Insurance More Expensive?
Forbes states that first-time drivers pay more for car insurance due to lack of driving experience and higher risk of accidents.
- Increased risk of filing a claim: Insurance companies determine your rate based on how your demographic’s accident rate compares to others.
- Minimal credit history: Your credit score can impact the cost of your insurance policy. If you’re a young driver without an established credit history, you may be charged a higher rate.
- Inability to qualify for discounts: A lot of young drivers are not eligible for the discount programs offered by insurance companies.
- Inability to combine policies: When a young driver separates from their parents’ policy, both parties may lose multi-vehicle discounts, which are only applicable if more than one vehicle is insured on a policy.
- Lack of driving history: Having a good driving record is important if you want to qualify for lower insurance rates. However, if you’re new to driving, you don’t have much of a record to show. This can negatively impact your insurance rate until you have had the chance to prove over time that you’re a responsible driver.
How to Get the Best Rates on First-Time Car Insurance
Although 18-year-olds are not usually offered the same auto insurance rates as 30-year-olds, there are still some ways that teenagers and younger drivers can save on their first-time car insurance.
One of the most effective methods is to compare quotes from different auto insurance companies to find the best rates. Additionally, U.S. News & World Report suggests that new drivers can improve their chances of getting better insurance rates by:
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When it comes to car insurance, there are a few things that you can do to save money:
1. Review your coverage: Every state and individual have different insurance requirements, so you can save money by dropping coverage that you don’t need.
2. Choose the right deductible: Your deductible is the amount you pay out of pocket before your insurance coverage kicks in. You can choose the amount that you can afford to pay when you set up your policy.
3. Maintain a clean driving record: Avoiding accidents and traffic violations are both good ways to keep your driving record clean. The longer you can maintain a clean driving record, the sooner you can get cheaper car insurance.
4. Choose the right vehicle: Sports cars and luxury vehicles cost more to insure. Instead, choose a vehicle with an excellent safety rating and lots of modern safety features.
5. Ask for discounts: Some auto insurance companies offer good student discounts for high school and college-age drivers who maintain a high GPA. Get good grades to qualify for this discount, and get a lower price on your insurance.
FAQs
Do First-Time Drivers Need Full Coverage?
In most states, limited liability coverage is the minimum amount of insurance required by law. However, the minimum limits for this type of coverage can vary depending on your location. It’s important to note that full coverage isn’t required in any state.
If you have recently obtained your driver’s license, it’s not necessary to have full coverage insurance. However, if you have a lease or loan, your lender may require you to have it. Full coverage typically includes comprehensive and collision coverage that can help pay for damages to your vehicle.
Can First-Time Drivers Get Cheap Insurance?
Finding affordable car insurance can be challenging for new drivers looking to purchase a policy. Despite searching for lower rates and asking for discounts, young adults are generally considered high-risk drivers and therefore face higher insurance rates.
This is because they tend to be involved in more auto accidents compared to older drivers. Your insurance premium is also influenced by factors such as the level of coverage you require and the type of car you drive, whether it’s new or used. Understanding how insurance rates are calculated by your carrier can help you save on your policy.
When Do Insurance Rates Go Down?
As you progress into your 20s, you may notice a reduction in your insurance rate. However, it is typically around the age of 25 when you will see a more significant drop in your insurance premium.
There is no specific age at which insurance rates decrease, but most people have been driving for several years by the time they reach 25.
Factors that can contribute to a lower insurance rate include maintaining a clean driving record over the years, paying your insurance premium regularly, and staying with the same insurance provider for more than a year.
