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How To Save on Car Insurance for New Drivers

Doing anything for the first time can be hard, and buying insurance is no different. However, compared to learning to drive, buying insurance should be a snap - even for a new driver.

Learning a few basics about getting car insurance is especially important for new drivers because they face the highest rates. 

By tailoring a policy to fit your needs, taking advantage of special discounts and using easy online tools to shop around, you can make sure you and your vehicle are well covered while saving hundreds, possibly thousands, of dollars. 

Who Is Considered a New Driver?

All new drivers face similar challenges, even though not all new drivers are in the same situation. Different types of people may be classified as new drivers:

  • Teenagers/young drivers. Teens in some states can get a learner's permit as early as age 14. Getting an early start has some advantages in the long run, but in the beginning young drivers face two challenges when it comes to getting car insurance: their young age, and their inexperience behind the wheel. 

  • First-time drivers. Not everybody gets their license as a teen or a young adult. People who become drivers later in life still have to gain some experience behind the wheel in order to qualify for the cheapest insurance rates, but in the meantime being a little older can have some advantages.

  • Immigrants to the United States. Coming to a new country means a fresh start in a lot of ways. That includes some degree of starting over when it comes to getting a driver's license and insurance. 

Whatever type of new driver you are, this article will have information that will help you buy the right insurance at the best prices.

Young drivers face two challenges: their young age and their inexperience behind the wheel.

What Influences the Price of Insurance?

If you want to know where to get cheap auto insurance for young drivers, it helps to start by understanding the things that shape the price of insurance.

Here's the basic rule: the more risk you represent to the insurance company, the more you'll pay for insurance. The key is to find ways to be seen as less of a risk. 

There's a surprisingly long list of things insurance companies view as risk factors.  Here are some of the risk factors that will determine how much you pay for your car insurance:

  • Age. Teens generally pay the highest rates for auto insurance - by far. Then rates start moving steadily downward as you move through young adulthood. Since you can't magically wind the clock forward, it pays to know some other ways to save money on car insurance.

  • Experience. Drivers without a track record represent an unknown future to insurance companies - and they consider the unknown to be risky.

  • Driving record. Mishaps on your record like accidents or moving violations suggest there might be a risk of problems in the future.

  • Credit history. Showing you handle your financial affairs responsibly helps insurance companies think of you as less risky.

  • Type of car. Some cars cost more to fix than others. Some are especially attractive targets for thieves. These things affect how risky a vehicle is to insure.

  • Types of coverage. The more things you insure against, the greater the risk that the insurance company will have to pay out - and the more you'll pay for that insurance.

  • Coverage limits. One way insurance companies limit their risk is by capping the maximum amount they'd have to pay out for a claim. That means you'd have to make up any difference out of your own pocket. If you want a higher coverage limit, it will cost you more.

  • Size of deductible. A deductible is an amount of money you have to pay to cover any damage before the insurance company will chip in. Insurance companies like high deductibles because they reduce the number of claims they'll have to pay out. If you want a lower deductible, you'll have to pay a higher premium.  

  • Location. Insurance claims are more likely to happen in some places than others. This has to do with things like the amount of traffic and the local crime rate. People who live in risky areas pay more for insurance.

  • Vehicle usage. The more you plan to use the vehicle, the higher the risk you'll represent. Also, if you plan to use it for paid activities like ride-sharing or food deliveries, you'll ramp up the risk level - and your premium.

  • Insurance provider. This may be the most important factor to know about because it's one every driver can control. Each insurance company will rate the same driver differently, so the company you choose matters a lot. 

How New Drivers Can Save on Car Insurance

Some factors are beyond your control and may work against you when it comes to car insurance rates, but there are steps even a brand-new driver can take to get a cheaper car insurance policy.

People who become drivers later in life still have to gain some experience behind the wheel in order to qualify for the cheapest insurance rates.

Take a driver safety course

You can't gain experience overnight, but the next best thing is to get educated about how to avoid accidents.

Defensive driving or driver safety courses go beyond the basic driver's ed classes you may have taken to learn how to drive. These more advanced courses teach you proven techniques for avoiding trouble and reacting effectively when problems do occur. 

Insurance companies believe in the effectiveness of this training enough to offer discounts to drivers who take it. Just check first with your insurance company to see which courses will qualify you for a discount.

Sign up for telematic monitoring

Since insurance companies worry about how inexperienced drivers are going to perform, one way you can put them at ease is to take part in a program that monitors how you drive.

This is done through mobile or car-based apps that can track your speed, when and how much you drive, how efficiently you brake and whether you make a lot of sudden movements. 

That monitoring can demonstrate to the insurance company that you are a good enough driver to qualify for a lower rate. Just be sure your driving habits are up to scrutiny! 

Choose a low-risk vehicle

As you can imagine, an exotic Lamborghini is going to cost more to insure than a sensible Subaru. Sometimes though, differences in insurance rates between vehicles aren't so obvious.

Besides the cost of the car, differences in insurance rates may be determined by how prone a car is to expensive damage or how easy it is to steal. 

Do a little research before you buy a car to see how costly it's likely to be to insure. Saving some money here will help contribute to those car payments.

Live in a lower-risk area

Young people and new arrivals tend to move around a lot anyway. When they do, they should be aware of how location might affect the cost of their insurance. Saving a little on insurance might make a safer area more affordable.

Minimize coverage

Naturally, the more insurance you get, the more it will cost. So you can get a cheaper rate by getting just the legally-required amount of liability coverage

The trade-off is, minimizing your car insurance can put you, your passengers and your vehicle at financial risk should you be the cause of an accident. However, when you can, make room in your budget to add collision and comprehensive coverage, especially if your car is worth more than $4,000.

Accept a higher deductible

A higher deductible on your collision or comprehensive coverage means that you can only file a claim if the damage exceeds that coverage amount. This will save money on your premium, but increase the risk that you'll have to pay out of pocket if anything happens.

Raise your credit score

Young people and new arrivals in the country have to go through the long process of establishing a good credit history. 

There are several reasons to do this, including easier access to credit and lower interest rates, but here's another incentive: Improving your credit score can qualify you for lower car insurance rates.

Apply for discounts

Insurance companies have their stated rate schedules but then they often have several types of discounts from those rates. Ask to see a list of an insurance company's discounts so you can see if you qualify for any of them.

Bundle with other policies

Your parents, your spouse or a roommate may also have auto insurance. You may need renters or homeowners insurance. 

These may be opportunities to save money by bundling the policies from the same insurance company, saving you money on your car insurance and the other policies. 

Pay your full premium up front

Monthly payment plans may carry a service charge that raises the overall cost of your insurance. 

It may be difficult to come up with payment for the full term (usually six months) all at once, but if you can it could save you money in the long-run. 

Shop around and compare insurance quotes

Don't just accept the first quote you see, even if it's from an insurance company you or your parents have worked with before. Rates vary greatly from carrier to carrier, so it's hard to say which has the best rates. It's best to just shop around. 

A few minutes spent comparing quotes could save you hundreds of dollars. This means shopping around for insurance could be a very profitable way to spend your time.

Compare Insurance Rates for New Drivers

Common Car Insurance Discounts for New Drivers

Insurance companies offer discounts for a variety of things. Not all of these may be available to relatively new drivers, but below are several examples of discounts you should look into right from the start.

Safe driving courses

For drivers who haven't had time to establish a safe driving record, taking a defensive driving course can be a good substitute. Learning to be a safer driver will make insurance companies view you as less risky, and worthy of a lower rate.

Pay-as-you-drive programs

Also known as telematics and user-based insurance, these programs use electronic monitoring to measure how much and how carefully you drive. These programs only work to your advantage if you limit your mileage and drive safely. 

Good student discounts

Are you getting good grades in school? See if you can cash in on that by qualifying for a good student discount on your insurance.

Discounts for certain professions

Insurance companies offer discounts to people in certain professions, including members of the military, teachers, doctors and law enforcement officers.

Check with the car insurance companies you're considering to see if they offer a discount that applies to your profession.

Anti-theft device discounts

If you have comprehensive insurance, you may qualify for a discount on that coverage if your vehicle has an anti-theft device. This can include both factory-installed and after-market devices.

Bundled policy discounts

Bundling policies is often - but not always - a way to save money on insurance.

Note that bundling policies does not necessarily mean adding a new policy to an existing one. You'll have your best shot at saving money if you get competing quotes from multiple firms for both the existing and the new policy. 

This could result in you saving on the new policy, with the added bonus of saving on an existing one as well.

Car Insurance for Teenagers

Teenagers generally pay the highest insurance rates because history has shown them to be the most unreliable drivers. 

For teen drivers, being named on a parent's policy is often a more cost-effective option than getting a policy on their own. In fact, many insurance companies won't even quote stand-alone policies for teenagers. 

Even though their youth stacks the deck against them, there are some things teen drivers can do right out of the gate to lower their insurance rates. Taking a defensive driving course or qualifying for a good student discount could start those rates heading downward.

Car Insurance for a First-Time Driver

People who learn to drive a little later in life face some different challenges from teen drivers. They may not be in a position to be named on a parent's insurance policy or qualify for a good student discount.

However, they can qualify for a discount by taking a safe driving course. They may also have had time to establish good credit, which should qualify them for cheaper insurance.

In addition, first-time drivers who are a little older are more likely than teens to have other insurance policies to bundle their auto insurance with. They also may be working in a profession that qualifies them for a discount.

Getting Car Insurance After Moving to the United States

If you have come to the United States from another country, you may be able to drive in the United States with an International Driving Permit, as long as you also have a valid driver's license from your home country. However, to get insurance you are likely to need to get an American driver's license.

No matter how much driving experience you may have had in the past, if you're a new immigrant, you are considered a new driver.

Driver's licenses in the US are issued by individual states, and each state's rules vary. Your state's Department of Motor Vehicles can give you information about what you'll need to get a license in that state. 

According to the US Immigration and Customs Enforcement (ICE) agency, any documented foreign national can get a license from any state, even if they are just in the country temporarily as an F, J or M nonimmigrant. Also, the National Conference of State Legislatures lists 16 states (plus the District of Columbia) where undocumented immigrants may be able to get a license.

ICE cites the following as documentation you are likely to need to apply for a driver's license:

  • Valid passport with visa

  • Your immigration, student or visitor forms

  • Form I-797 "Notice of Action" documenting any change in status, if applicable

  • Social Security Number

Once you have a state-issued driver's license, you can apply for insurance. Be advised, though, that no matter how much driving experience you have in your home country, you'll essentially be considered a new driver from the perspective of a US insurance company. 

Where To Get Cheap Car Insurance for New Drivers

Specific insurance rates will depend on the details of your situation, so you should compare specific quotes using SmartFinancial's rate finder tool

Insurance companies often charge extra if you have not been insured previously. To give you an idea of which companies are most welcoming to new drivers, SmartFinancial looked at a sampling of car insurance companies to see which had the smallest extra charge for newly-insured drivers. 

The table below ranks these companies according to which had the smallest extra charge for previously uninsured 20-year old drivers. These amounts may vary according to specific coverage levels chosen.

Ranking of cheapest insurance companies for newly-insured 20-year old drivers

Insurance carrier

Extra monthly charge for previously uninsured drivers

Allied

$2.00

American Family

$2.00

Mercury

$7.00

Safe Auto

$7.00

State Auto

$8.00

Auto-Owners Insurance Co

$9.00

Farmers

$10.00

Allstate

$15.00

State Farm

$15.00

USAA

$18.00

Nationwide

$19.00

Metropolitan

$20.00

Unitrin

$23.00

Encompass

$25.00

Esurance

$26.00

Travelers

$30.00

Chubb

$32.00

Erie

$47.00

Hanover

$52.00

*SmartFinancial

Frequently Asked Questions

Can a teenager get car insurance?

You may have to do some extra shopping around because not all auto insurance companies want to do business with teen drivers. This, along with lower cost, is another reason why being named on a parent's policy is often the best step for young drivers. However, if you shop around you should be able to go it alone if necessary.

Are teens the only new drivers who have to pay more for car insurance?

No. While rates for teens will be especially high, the lack of a proven track record will also count against new drivers even if they are older. For any new drivers, safe driving classes can somewhat offset this lack of experience.

Can a recent immigrant get insurance?

Yes. Both permanent residents and even certain temporary visitors can get car insurance. The first step is to get a state-issued driver's license.

Insurance companies often charge extra if you have not been insured previously.

How To Get Cheap Car Insurance for New Drivers

Since insurance rates are highest for new drivers, those drivers often have the most to gain by shopping around for car insurance.

First, figure out what type and level of coverage you want. Then by entering your zip code below and answering some basic questions, you can compare multiple quotes for free, all at once.

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