Auto insurance is one of the most expensive insurance policies U.S. citizens pay for. According to data, the average American pays about $1,771 annually on auto insurance. That translates to about $148 monthly.
The situation is often worse for new drivers. Given the higher risk they pose, new drivers often pay higher premiums for their car insurance. However, you can still get the best car insurance for a new driver by comparing the rates for different companies, choosing a high deductible for fairer premiums, and driving a moderately priced car.
Let’s look into who insurance companies describe as a new driver, how much car insurance costs, on average, for them, and how you can get the best rates in the industry.
Who is Considered a New Driver?
Insurance companies don’t actually offer a category of car insurance for new drivers. However, they apply different rates when issuing car insurance to drivers they categorize as “new.” These drivers include:
Teenagers who’ve just received a driving license
Adults who’re driving for the first time
Drivers of any age with a driving or insurance gap
Foreign nationals and immigrants
How long you’re considered an inexperienced driver depends on the insurance company. For instance, some companies consider a driver new until they complete three to nine years of active driving.
Other carriers use age to determine the experience level of a driver. For instance, anyone under 25 can be termed “inexperienced.”
Teenagers
Teenagers are charged the highest auto insurance rates in the industry. That’s because they pose the greatest risk of getting involved in an accident. As teenagers grow older and gain more driving experience, their rates drop and are eventually promoted to “experienced” status.
Foreign Nationals and Immigrants
Foreign nationals and immigrants are often labeled as inexperienced when looking for car insurance in a new country, despite their years of experience in their home country. That’s because different jurisdictions have different traffic laws.
Moreover, U.S. insurance companies only access domestic driving records when setting auto insurance rates. Therefore, the nonexistence of your record automatically classifies you as inexperienced. The same goes for credit history, which many states use to calculate auto insurance rates.
California, Massachusetts, Hawaii, and Michigan forbid using credit history to determine car insurance rates.
Drivers of Any Age with an Insurance or Driving Gap
Your license can expire if you travel abroad for an extended period or take some time off driving. Without a recent driving history, insurance companies can classify you as inexperienced or a high-risk driver and charge higher rates for car insurance.
How Does Car Insurance Work for New Drivers?
Since there’s no actual car insurance category for “new drivers,” the only way car insurance companies can affect your policy is by adjusting its price. Typically, the more inexperienced you are, the higher you must pay.
In most states, you must purchase the minimum required coverage which includes liability car insurance and bodily damage. Other states also require, at minimum, that you have uninsured or underinsured motorist coverage and personal injury protection.
The Cost of Car Insurance for New Drivers
Apart from your driving record and credit history, the cost of car insurance for new drivers is also determined by the location and vehicle you’re driving. However, insurers weigh heavily on age and driving experience since they’re the most significant indicators of whether a driver will get involved in an accident.
According to data, the average cost of car insurance for new teen drivers is $5,827 annually or $486 monthly. The steep rates for teenagers are because of the higher likelihood of teens getting involved in accidents, as shown by this study.
Moreover, male teens are often charged higher because data shows they’re often the biggest casualties in a car accident.
For a 25-year-old with a good credit rating and a good driving record, the cost varies between $1,292 annually to $2,382.
Depending on the company, you should expect the cost to average around $3,000 annually for the broader classification of “new” drivers.
How to Get the Best Car Insurance Plan for New Drivers
Given the huge variance in car insurance rates for new drivers, there’s a huge chance of saving a lot of cash and getting an affordable car insurance plan. Some of the strategies you can use include:
Compare Companies
Rates across various companies often vary steeply for new drivers, with each insurer using a different formula to calculate the experience and risk of an inexperienced driver.
For instance, auto insurance companies that measure experience by age favor older adults getting into driving compared to companies factoring experience solely by the years of driving the policyholder has on record.
Therefore, contact as many companies as possible and compare the premiums for the most favorable ones.
Drive a Moderately Priced Vehicle
Car insurance rates are also affected by the driver’s vehicle. For instance, a luxury car like a Mercedes Benz will command a higher premium than a cheaper hatchback.
Therefore, combining a new driver with an expensive or brand-new car will hike insurance rates. However, if the car packs a host of safety features, the company might reduce the rates given the reduced risk. Still, you might be charged higher if high-tech sensors and other specialized equipment provide these features.
Generally, if you want to save money on your car insurance premium as a new driver, go for an older, cheaper vehicle.
Choose a High Deductible
In most cases, liability insurance is the only car insurance you’re legally required to carry as a new driver. However, some lenders may require additional coverage, such as comprehensive and collision coverage. These can increase your premiums dramatically.
To soften the financial burden, you can choose a higher deductible which lowers the premiums. Conversely, you’ll have to pay higher premiums if you go for a lower deductible.
Look for Discounts
Despite charging expensive rates for new drivers, most insurers also offer discounts tailored for new drivers. These include:
Student discounts
Student away-from-home discount if you’re using your parent’s policy
Military or occupation discount
Discount for young drivers who’ve taken a defensive driving course
Multipolicy discount for homeowners and renter insurance policyholders
Safety equipment discount
Consult a Trusted Insurance Company to Find the Best Rates for You
Car insurance plans for new drivers are expensive. But that doesn’t mean you can’t get the best rates if you look around. You can find an insurer offering great discounts apart from choosing to drive a moderately priced car and going for higher deductibles.
Consult a trusted insurance company today and discover your best insurance rates as a new driver.