How to Get Car Insurance for the First Time

Getting car insurance for the first time can seem complicated. There are a lot of options when it comes to companies and coverage, and new drivers, especially new teen drivers, can be expensive to add to a policy.

It doesn't have to be complicated, though. To get car insurance for the first time, you'll need to decide what coverage you want, find an insurance company, get quotes, and apply for coverage.

4 steps to buying car insurance for a new driver

Here are the key steps you'll need to take when you're buying car insurance for the first time as a new driver.

1. Decide what coverage you want

The first thing you need to do is decide whether you'll be buying a brand new policy of your own or whether you will be added to an existing policy.

Getting covered by an existing policy may be possible if you live in someone else's home and/or are driving a car they own. This is common for teen drivers, or sometimes for spouses, and it can be the cheapest way to insure a teen.

However, even for teens, you may want to get them separate coverage to avoid insurance rates going up for the primary insured and to set them up with coverage for when they leave home.

If you're adding a teen or another new driver to an existing policy, you should review your current coverage to make sure it's comprehensive enough to pay for any additional costs that might occur. If you're buying your own policy, then you'll need to decide on both types and amounts of coverage.

Types of coverage

When you buy car insurance, you don't just buy one kind of coverage. You have to purchase separate coverage for individual risks that you face. Here are some of the most common types of car insurance that you may need or want to buy.

• Bodily injury liability: Bodily injury liability covers you if you injure others. Your insurer will pay for medical bills, lost wages, pain and suffering, and emotional distress you cause crash victims to experience if you're at fault for an accident. This type of coverage is required by law in almost every state.
• Property damage liability: This is also sometimes called "physical damage coverage." It pays for damage you cause to someone else's property. This is also required coverage in most states.
• Personal injury protection: Some states require you to buy personal injury protection, or PIP coverage. PIP coverage pays for your own injuries and usually for partial lost wages from more minor crashes. In "no-fault" states, you must use PIP to pay for losses instead of relying on an at-fault driver's liability insurance when your injuries are minor.
• Uninsured/underinsured motorist coverage: Uninsured or underinsured motorist coverage pays bills another driver should have covered for you but can't because they had too little insurance or no insurance at all. Some states require this coverage or make it mandatory unless you decline in writing.
• Collision coverage: Collision coverage pays for damage to your own vehicle after a crash, even if you were at fault or if the crash was a single-car accident. States don't require this, but if you have a loan or lease, you'll likely be required to buy it by your loan or lease provider.
• Comprehensive coverage: Comprehensive coverage pays for any losses that aren't crash-related. From windshield damage to hail damage to losses if a tree falls on your car, this type of protection pays for many different kinds of issues. It also provides coverage if your car is stolen. Like collision coverage, states won't require this, but your loan or lease provider likely will.
• Medical payments coverage: Medical payments coverage can pay for medical and funeral expenses for you and others if you are hurt in an accident no matter who is to blame. It can also pay for losses if you're hurt as a pedestrian.
• GAP insurance: Cars are often worth less than you owe on them if you have an auto loan. GAP insurance will pay the difference between the fair market value your insurer is willing to pay if your vehicle is totaled and the remaining amount due on your loan. Some lenders and lease providers require you to get this coverage.

Amount of coverage

Once you've decided on the kinds of coverage you need, you'll have to decide how much coverage to buy. That's because there's a maximum limit on how much your insurer will pay. If you buy liability coverage with a $25,000 per person and $50,000 per accident limit, the most the insurer pays is $25,000 to each injured person and $50,000 to all parties hurt in a crash.

States set minimum requirements for how much bodily injury and property damage liability coverage you need. These are often pretty low limits, though, with some states requiring as little as $10,000 per person and $20,000 per accident in bodily injury liability. If you stick with the minimum, your insurance won't provide enough protection to cover anything but the most minor of accidents. After all, one hospital visit could easily eat up to the $10,000 limit.

If you have too little coverage, crash victims could pursue a claim against you personally — or you could end up having to cover your own out-of-pocket losses if your own car is damaged or you are hurt in a crash with an uninsured driver.

You don't want to face devastating financial loss by doing this, so consider how much coverage you need to protect your wealth. Experts like Dave Ramsey recommend a $500,000 minimum liability policy, but consider the value of your own assets to decide what's best for you. If you own substantial property or have a higher income, you're a bigger target for lawsuits, and so you may need more protection.

It can be tempting for parents to want to buy the minimum coverage for a teen driver to save money because premiums are often so expensive. Unfortunately, this is a risky move because teens are also more prone to crashes — and a parent's assets are in jeopardy if something goes wrong. If a vehicle for the teen is being added onto the policy, it's also a good idea to make sure comprehensive and collision limits are high enough to cover it.

2. Gather information

Next, it's time to get ready to shop for coverage, which means gathering the information that you need to buy a policy. Typically, this includes:

• The name and license information for any drivers who will be on the policy
• Details about the vehicle being purchased, including the make and model number (It's easiest to have the VIN number so the insurer can automatically look up information about the car's features.)
• Information on the amount of coverage you want
• Details about grades for teen drivers who qualify for good student discounts
• Proof of driving instruction, as completing driver's education or defensive driving courses lower policy costs, especially for teens
• Information about organizations, memberships, and employers to see if you qualify for discounts that can come with certain memberships or jobs

3. Get quotes

When buying insurance, you don't just want to purchase the first policy you find. You should get quotes from multiple insurance companies to make sure you get a policy that provides the best value. This is true even if you already have coverage because the best car insurance for young drivers may be different from the policy you already have in place.

You can compare quotes online quickly and easily, and you should get quotes from at least three different insurers — ideally, from as many as possible. Prices can vary substantially from one carrier to the next.

You'll also want to be sure you're getting comparable quotes from each company with the policies offering the same types and amounts of coverage so you can compare apples to apples.

4. Decide on an insurance company

As you get quotes, price is likely to be a primary focus, but it shouldn't be the only focus. You'll also want to consider things like:

• The insurer's reputation: Check the complaint database for the National Association of Insurance Commissioners and review JD Power customer satisfaction ratings to see how the company compares.
• The coverage types: Some insurers offer specialized riders or add-ons you may want to take advantage of like new car replacement coverage.
• Types of discounts: Some insurers offer more opportunities than others to save money. For example, some, but not all, insurers offer discounted coverage for students away at college.
• Access to local agents: Many companies have local support for those buying coverage, but some other insurers are online only. Decide if in-person support is important to you and, if so, look for a company that provides it.
• The insurer's financial strength rating: Services like AM Best rank insurers based on how stable their finances are. You want to make sure the company can actually pay your claim.

By considering all these factors, you can find the coverage that's right for you.

Tips for lower rates

Buying auto insurance coverage for the first time can be expensive, especially for teens, but you do have options to try to lower the cost. Some of the best ways to get affordable premiums include:

• Providing proof of good grades to qualify for good student discounts
• Buying vehicles with good safety records and low rates of theft, as insurers consider the risk of the vehicle as well as the driver
• Installing telematics programs that monitor your driving and provide discounts for safe drivers
• Maintaining a clean driving record to avoid higher premium for those with an accident history
• Taking advantage of discounts for memberships in certain groups or organizations
• Completing driver's education or safe driving courses

These steps can make a big difference in the price you ultimately pay for a policy.

FAQs

Bottom line

Getting the right coverage in place is critical to make sure your assets are protected when you or your teen is behind the wheel for the first time. Take the time to understand your coverage options and shop around for the right policy so you can get the best price for the coverage you need before you or your teen hits the road.