The Best Car Insurance for New Drivers: What’s Most Important to Consider?

New drivers pose a serious risk to car insurance companies, so they often raise the premiums to make up for the risk. Fortunately, this doesn’t mean you have to go broke to find the best car insurance for new drivers.

Every insurance company offers different benefits and caters to different types of new drivers. Check out the list of auto insurance companies you should consider for a new driver and see how they cover your insurance needs.

Here are the best car insurance companies for new drivers.

• Progressive: Best for drivers new to the country
  
• Nationwide: Best for pay-per-mile insurance
  
• State Farm: Best for older adults new to driving
  
• Geico: Best for new drivers in their 20s
  
• Allstate: Best for new drivers under 21
  
• USAA: Best for military members
  
In this article
• The best insurance for new and first-time drivers
• How much do new drivers typically pay for car insurance?
• What kind of car insurance do new drivers need?
• How to get the best deal on car insurance
• FAQs
• Bottom line
• Methodology

The best insurance for new and first-time drivers

When looking for the best auto insurance companies for new drivers, many factors, such as the driver's age, credit score, and where they live, come into play. For my analysis, I looked at the insurance company’s discount programs that enable new drivers to save money on their insurance premiums.

Progressive: Best for drivers new to the country

Whether you’re a foreign national visiting the U.S. for a couple of months or moving here permanently, you must have car insurance if you drive in the U.S. Not all U.S. car insurance companies offer car insurance for foreigners, but Progressive does.

To qualify, drivers new to the U.S. must have a valid foreign driver's license or international driving permit.

Find out more in our Progressive auto insurance review.

Nationwide: Best for pay-per-mile insurance

If you don’t drive a lot, I recommend considering pay-per-mile insurance to keep your costs low. Unfortunately, not all car insurance companies offer it, though. Nationwide is one provider of this type of insurance and they offer policyholders up to a 10% safe driving discount for using its program after the first renewal.

Nationwide’s SmartMile program charges policyholders a base monthly rate and a per-mile rate. It’s perfect for drivers who don’t get behind the wheel often, like remote workers, retirees, or people who live in metropolitan areas where most things are within walking distance.

Visit Nationwide for more information.

State Farm: Best for older adults new to driving

State Farm is a well-known car insurance provider. Its long-standing history and top ratings make it a perfect choice for older adults new to driving. Unlike many newer car insurance companies that do much of their business online, State Farm has a network of more than 19,000 insurance agents across the country who can provide face-to-face service for their policyholders.

New drivers can earn discounts of up to 30% as they work on their safe driving habits with State Farm’s Drive Safe & Save monitoring program. Although State Farm may not offer the cheapest rates for car insurance, its rates are competitive, especially if you let them monitor your driving habits.

Check out our State Farm auto insurance review for more information.

Geico: Best for new drivers in their 20s

Geico offers numerous discounts to help drivers save money on their car insurance. Drivers in their 20s who are enrolled in college or trade school may qualify for an up to 15% discount just for being a good student who maintains a B average or better. Geico also offers discounts for memberships to college fraternities and sororities, honor societies, and some student and alumni organizations.

Find out more in our Geico auto insurance review.

Allstate: Best for new drivers under 21

Teenagers and drivers under age 21 are often subject to the highest rates for car insurance. Allstate’s special teenSMART program, developed in partnership with Adept Driver, can help reduce the cost of insurance premiums for teenage drivers.

teenSMART is a computer-based driver education program that guides teen drivers through realistic driving simulations. Teens and drivers under 25 who successfully complete the program can qualify for a discount on Allstate car insurance premiums.

Allstate also offers discounts for good students, students who attend school at least 100 miles away from where their car is stored, and young drivers who enroll in its Drivewise mobile app monitoring program.

Learn more in our Allstate auto insurance review.

USAA: Best for military members

When it comes to auto insurance for military members, USAA is the best option. In fact, USAA’s auto insurance is only available to current and former military personnel and their immediate family members. So, if you are a new driver under age 25 in the military or whose parent(s) served in the military, USAA could be the best car insurance for you.

USAA also offers discounts for good students. New drivers can also earn discounts by proving they have safe driving habits using USAA’s SafePilot driving program.

Find out more in our USAA auto insurance review.

How much do new drivers typically pay for car insurance?

Since new drivers don’t have a driving history, most insurance companies charge higher premiums until you establish yourself as a low-risk, good driver. It usually takes around three years of good driving habits to lose the “new driver” label.

The actual cost depends on many factors, not just your driving experience, but can average $2,000 - $5,000 per year and depends on:

• Location
• Make/model and year of the vehicle
• Number of miles driven annually
• Type and amount of coverage

What kind of car insurance do new drivers need?

Every state has slightly different minimum insurance requirements for drivers. At their most basic, these minimum insurance requirements will protect you and your vehicle, as well as anyone else involved in a car accident. This includes at-fault accidents as well as those you aren’t at fault for.

Most new drivers should shop for an auto policy that includes a few different types of car insurance including:

• Bodily injury liability insurance
• Property damage liability coverage
• Uninsured or underinsured motorist insurance

Although bodily injury and property damage protect the other driver in the event of an accident, underinsured motorist insurance (UIM) will protect you if 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 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 your state doesn’t require this, it’s good to consider adding it to your policy, especially if you don’t have an emergency fund set up to pay for unexpected medical bills.

Tip

If you finance your vehicle, you might be required to get collision and comprehensive coverage.

How to get the best deal on car insurance

I know car insurance for new drivers can get pricey, but I’ll show you how to save on car insurance, even as a new driver. Here are a few tips I’ve used to keep insurance as affordable as possible.

Stay on your parent’s policy

If you’re a teen or young adult and live at home, consider staying on your parent’s policy. Multi-car insurance plans are usually more affordable than single plans, so there are some pretty great discounts if you can stay on your family’s group insurance policy in your first few years of driving.

Tip

Unlike health insurance plans, there’s also no age limit to staying on your parents’ plan.

Keep a clean driving record

The cleaner your driving record is, the more money you’ll save on car insurance. While insurance companies like at least a three year driving history to lower your rates, any good driving habits you display will work in your favor. 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

Always ask for any discounts that apply to you when obtaining quotes for new insurance. The good student discount is the most common one for young drivers, but all new drivers may be eligible for other discounts, including:

• Anti-theft device
• Safety features installed in your car
• Taking a defensive driving course
• Active or retired member of the armed forces, including the National Guard and Reserves

Bundle policies

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

Take a higher deductible

A car insurance deductible is the amount you’ll pay upfront anytime you have a claim for an incident that is your fault. Most insurance policies allow you to select the deductible amount for each type of coverage, so consider how much money you can afford at any given time and what deductibles make the most sense for your budget and car usage. A high deductible typically results in a lower annual premium.

Pay upfront

If you can afford to pay for your annual insurance outright in one payment, that will save you a lot of money. Lump-sum insurance policy payments tend to be much 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 drive may also impact your insurance premiums. Newer, reasonable vehicles may be less of a liability than older or flashier cars. If you inherited your grandma’s old jalopy, you might 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 is to shop around for the best rate. Most insurance companies offer free, no-obligation quotes online, and it takes only a few minutes to get one. If you prefer to talk to someone, you can always call each company’s 1-800 number for assistance.

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.

FAQs

What is the best insurance for a new driver?

It’s hard to pinpoint just one company with the best insurance for new drivers. What might be the best option for one driver may not be the best for another. Several factors determine what the best insurance is for you including your customer service preferences, the company’s rates, and its reputation. 


What insurance is the cheapest for new drivers?

It’s hard to say what insurance is the cheapest for new drivers because several factors play into the cost of car insurance premiums. Car insurance costs can vary from state to state. A new driver’s age is also a factor. Allstate may offer the cheapest rates for new drivers under 21, for example, but if the new driver is 23 or 24, they may be able to find more affordable rates with a different insurer. 


Which is the best company for new drivers who are looking for a low deductible?

New drivers who are looking for a low deductible should shop around with different insurance companies to see where they can get the best bang for their buck. You’ll most likely have to pay higher premiums for a lower deductible on your car insurance, but if you get several quotes, you can find the insurance company that has the best deal for you. 


Bottom line

Car insurance is necessary, but I think you must find the perfect balance between affordable premiums and adequate coverage. To do this, I always like to think of the worst-case scenario and determine the financial coverage the insurance would provide should it happen. While saving money on premiums is important, having adequate coverage for the high expenses of a major accident is even more essential for your long-term financial health.

Methodology

In determining our ranking of the best auto insurance companies for new drivers, we looked at popular companies and ranked them according to a series of weighted factors that we consider critical to the consumer. We did not evaluate all companies in the category.