Car Insurance for New Drivers: How to Save Money and Get the Best Plan

Confused about car insurance? Here’s everything you need to know about selecting the right plan (and saving money) as a new driver.
Last updated Aug. 9, 2021 | By Larissa Runkle
Car Insurance for New Drivers

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There’s no denying the importance of good car insurance coverage. With millions of car accidents happening in the U.S. every single year, you want to be sure that you, your automobile, and anyone riding in your car are protected while on the road.

Unfortunately, auto insurance isn’t as straightforward as it could be. Finding the right balance of cost and coverage can be tricky, especially if you’re a new or young driver. Because less experienced drivers are more likely to be involved in accidents, car insurance premiums tend to be more expensive than they would be for those who have been driving longer.

But don’t let this discourage you. We dig into all the details on what new drivers should expect to pay for car insurance, plus show you how to find the best deals. Here are the things you’ll want to consider when it comes to how car insurance works and how to get car insurance as a new driver that won’t break the bank.

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How much is car insurance for new drivers?

Auto insurance policies for inexperienced drivers can be pretty pricey, especially when compared to the insurance plans offered for older, more experienced drivers. Using data collected from numerous zip codes in all 50 states, the table below shows the average car insurance costs by age. Also known as state minimums, these costs represent policies that provide the least amount of insurance coverage required by each state.

Here’s a breakdown of those average annual costs for teen drivers:

Age State minimum (annual cost)
16 $2,661
17 $2,208
18 $1,910
19 $1,346

As you can see, the average car insurance state minimum for 16-year-old drivers is roughly $750 more per year than for an 18-year-old driver. There’s also a nearly $600 increase between the annual premiums paid by 18-year-old drivers and 19-year-olds. Those are pretty big gaps to be aware of, and something we’ll dive into later on.

Although the difference in insurance premiums can vary significantly based on your age, at its most basic level, the way car insurance works is that auto insurance companies tend to charge more for drivers under the age of 25. That’s because teen drivers and young drivers have far more accidents than people with more driving experience.

In fact, according to the Insurance Institute for Highway Safety, teenage drivers have nearly four times as many crashes as drivers ages 20 and up. Once drivers hit 25, depending on their driving record, is typically when car insurance rates go down — with some estimates quoting a 30% decrease in price. But until then you should expect to pay a little more for your coverage.

But age isn’t the only factor car insurance companies use to determine how much to charge new drivers. Here are a couple more criteria to keep in mind that might qualify you as new in the eyes of insurance companies.

Car insurance for drivers new to the U.S.

No matter how old you are, if you’re new to driving in the U.S., you might end up paying more for your insurance coverage. That’s because insurance companies generally set their rates based on a driver’s safe-driving history. If you’re a foreign national or newly immigrated resident, this information might not be as readily available, making U.S.-based insurance companies that much more likely to lump you in with all the new drivers.

Even if your chosen insurance company can get their hands on your former driving history, there are cases in which driving records in other countries don’t count toward your record of safe driving in the U.S. Unfortunately, all this might lead to you paying more for coverage in your first years of having a U.S. driver’s license as you work toward proving your good driving habits.

Car insurance after a coverage gap

If you’ve gone any length of time without car insurance, that’s known as a coverage gap. And no matter the reason for your gap in coverage, car insurance companies don’t look at these too fondly.

Maybe you were studying abroad for a year, or just lived in a place where you didn’t need a car. Whatever the reason, you might be viewed as a higher risk due to this disruption in coverage, and have to pay higher rates for a while upon your return to driving.

What kind of car insurance do new drivers need?

Every state has slightly different requirements when it comes to the minimum insurance a driver needs. At its most basic, these minimum insurance requirements will protect both you and your vehicle, as well as anyone else involved in a car accident. This includes accidents that are considered your fault, as well as ones that aren’t.

Most new drivers should expect to shop for an auto policy that includes a few different types of car insurance. These coverages will include bodily injury liability insurance, property damage liability, and uninsured or underinsured motorist insurance.

Although bodily injury and property damage protect the other driver in the event of an accident, underinsured motorist insurance will protect you in the event the other driver doesn’t have adequate insurance. Although only half of U.S. states require UIM, it’s good protection to have — especially because there’s never any guarantee the other driver will have insurance or have adequate insurance to cover damages to your vehicle.

Depending on where you live, you might also be required to have personal injury protection, which covers any bodily injuries to you and your passengers in the event of an accident. Even if this isn’t required by your state, it’s a good one to consider adding to your policy, especially if you don’t have an emergency fund set up to pay for unexpected medical bills.

You can start shopping for car insurance quotes by determining exactly what minimum coverage your state requires and then go from there to decide whether you need add-ons. Although PIP is a valuable add-on to consider (if not already required by your state), other extras such as roadside assistance or rental car coverage may or may not be beneficial to you.

Another important thing to keep in mind when shopping for car insurance is the deductible. A car insurance deductible is the amount you’ll pay up front anytime something happens to your vehicle. Most insurance policies allow you to select the deductible amount for each type of coverage, so spend some time thinking about how much money you want to put out at any given time and what deductibles make the most sense for your budget and car usage.

How to get cheap car insurance for new drivers

Now that you know a bit about what to expect when shopping for insurance policies, it’s time to talk about how to save money on car insurance, even as a new driver. Here are a few tips to help you find the most affordable car insurance you can.

Stay on your parents’ policy

Because multi-car insurance plans are usually more affordable than single plans, there are some pretty great discounts to be had if you can stay on your family’s group insurance policy in your first few years of driving. Another bit of good news? Unlike health insurance plans, there’s also no age limit to staying on your parents’ plan.

Keep a clean driving record

Another thing that will save you money on car insurance is working toward a clean driving record. The longer you go without filing any claims or having any accidents, the more likely you are to qualify for a safe driver discount.

Take advantage of discounts

Some insurance plans also offer other kinds of discounts to young drivers. An example of this is the good student discount. Just what it sounds like, this discount is sometimes available for students who get good grades, the logic being that if you’re responsible in school, you’ll also be a responsible and good driver.

Ask your insurance provider whether it offers any car insurance discounts like this one for young drivers whether it has discounts for having an anti-theft device, for certain safety features installed in your car, or for taking a defensive driving course.

Bundle policies

The more insurance coverage you buy from the same company, the cheaper each individual plan typically is. One example of building policies is if you purchased renters insurance or homeowners insurance as well as car insurance from the same company. If you’re in the market for other types of insurance coverage that you need, try to see if you can get them all from the same provider and take full advantage of the insurance discounts.

Pay upfront

If you can afford to pay for your annual insurance outright in one payment, that will save you quite a bit of money. Lump-sum payments on insurance policies tend to be quite a bit cheaper than monthly payments, so consider putting money aside in one of the best savings accounts before you pull the trigger on a plan.

Make a smart vehicle purchase

Shopping for a new car? The type of vehicle you end up driving may also impact your insurance coverage. Newer, reasonable vehicles tend to be seen as less of a liability than older or flashier cars. If you inherited your grandma’s old jalopy, you might even consider skipping collision coverage or comprehensive insurance coverage, as you’ll likely end up paying more for that coverage than what the car is actually worth.

Comparison shop

One of the best ways to save money on car insurance? Shop around to get the best rate. You can talk to an insurance agent and let them do the shopping for you, or you can do your own shopping easily online.

As with all comparison shopping, it’s important to do your research when selecting the best car insurance plan. Get a few auto insurance quotes and shop the market before you make any final decisions.

Bottom line

There are a ton of smart ways to save money on car insurance, but the most important thing is to select a plan with good coverage that matches your needs and priorities. Whatever savings you might earn on your annual plan will be pennies compared to the expenses that can come up in a major accident.

Shopping for lower rates can be gratifying. But making sure you have the car insurance policy you need is one of the best financial decisions you can make, period.

  • Save up to $500 a year on your car insurance
  • Compare dozens of providers in under 5 minutes
  • Fast, free and easy way to shop for insurance
  • Quickly find the perfect rate for you

Author Details

Larissa Runkle Larissa writes for FinanceBuzz and divides her time between a cabin in the San Juan Mountains and traveling in a van. She enjoys writing about travel, debt relief, personal loans, and mortgages. Her work has been featured on MagnifyMoney, LendingTree, and Realtor.com. Outside of finance and real estate writing, she’s also at work on several fiction projects. When away from the computer, you’ll find her reading, exploring local trails, and climbing rocks.