Tips for Buying Car Insurance for the First Time
Last Updated on March 11, 2023
Buying car insurance for the first time can seem intimidating. Fortunately, with some preparation, it’s easy to buy car insurance for the first time.
As a new car insurance customer, you may pay higher rates for insurance. Insurance companies have no record of your driving history, which means you don’t qualify for a safe driving discount or other bonuses.
However, some insurance companies also give incentives to new drivers. Insurance companies want to attract new drivers and retain them for life. Some companies are particularly friendly towards new drivers, offering cheap rates and great coverage. Other companies prefer older, more experienced drivers.
Today, we’re explaining everything you need to know about buying car insurance for the first time, including the best car insurance companies for first time drivers and our best tips for buying car insurance for the first time.
Table of Contents:
- How Car Insurance Works for First-Time Drivers
- What You Need When Buying Car Insurance for the First Time
- Tips for First-Time Car Insurance Buyers
- Be Prepared to Pay Higher Rates as a First-Time Insurance Customer
- Top 10 Best Car Insurance Companies for First-Time Drivers
How Car Insurance Works for First-Time Drivers
There are multiple situations where you could be buying car insurance for the first time.
Maybe you just bought your first vehicle. Maybe you just passed your driving test and received a driver’s license.
Or, maybe you’ve been driving for years – but only recently moved off your parents’ insurance policy. You may have stayed on your parents’ policy while living at home, for example, but switched to your own policy after moving away.
In any case, car insurance for first-time drivers works in a similar way to ordinary car insurance. Here’s the basic process you use to buy car insurance for the first time:
Step 1) Compare quotes online. Insurance companies offer different prices and packages. As a new driver, you might pay higher rates with some companies but not others. By comparing multiple quotes online, you can ensure you get the cheapest possible prices on car insurance.
Step 2) Complete an insurance application. After finding a quote you like, complete an application with that insurance company. Some drivers complete applications with multiple insurance companies before making a final decision. Others work with an insurance broker to find the best rates.
Step 3) Obtain coverage. Once you decide on the right insurance company, you can choose the start date for your policy. Generally, you want your policy to start as soon as you start driving. If you are purchasing a vehicle on October 31, for example, then you need your policy to start on October 31.
Essentially, buying car insurance as a first-time driver is the same process as buying car insurance as an experienced driver. You shop around, pick an insurance company, then obtain car insurance.
What You Need When Buying Car Insurance for the First Time
You can compare car insurance quotes online with just a ZIP code. By entering basic information about the type of your vehicle – like its age and make and model, you can get a more customized quote.
To complete a car insurance application, however, you may need all of the following information and documentation:
- Driver’s license
- Date of birth
- Address
- Occupation
- Marital status
- Education level
- Vehicle make, model, and year
- Vehicle mileage
Tips for First-Time Car Insurance Buyers
Here are some tips for first-time buyers from our car insurance experts:
Know Minimum Car Insurance Requirements for your State
Each state has its own unique insurance laws. Two states (Virginia and New Hampshire), technically don’t require car insurance at all. Some states require just $15,000 of coverage, while other states require $50,000 of coverage or more. Some states require uninsured driver insurance or medical payments coverage, while others only require liability coverage.
Fortunately, you don’t need to memorize state insurance requirements when shopping around. Any insurance policy you buy will (at least) match your state’s minimum insurance requirements. However, many drivers buy extra coverage above and beyond the state’s limit. If you want extra coverage for added peace of mind, then research your state’s minimum insurance requirements.
Understand How Optional Insurance Coverage Works
Certain car insurance coverage is legally required. Most states require bodily injury liability coverage and property damage liability coverage, for example.
However, no state requires collision or comprehensive coverage. These coverages are optional. If you don’t have collision or comprehensive coverage, however, then you have limited protection for your vehicle:
Collision Coverage: Collision coverage covers damage to your own vehicle in an at-fault accident. If you cause an accident and don’t have collision coverage, then you need to pay to repair or replace your vehicle out of pocket. Liability insurance only covers damage to other vehicles – not your own vehicle.
Comprehensive Coverage: Comprehensive coverage is another optional insurance coverage option. Comprehensive coverage covers vandalism, environmental damage (like hail), theft, and break-ins, among other incidents. Without comprehensive coverage, insurance will not compensate you if your vehicle is stolen.
PIP or Medical Payments Coverage: Some states require personal injury protection (PIP) or medical payments coverage, but most states do not. These coverages function similar to health insurance, covering certain medical bills and other expenses after an accident.
Uninsured or Underinsured Motorist Coverage: Some states require uninsured or underinsured motorist (UM/UIM) coverage, although most states do not. UM/UIM covers accidents involving a motorist without insurance (or with too little insurance). Without UM/UIM coverage, you may receive no compensation after an accident with an uninsured driver.
Rental Car Coverage: Most insurance policies cover rental cars, which means you receive insurance automatically on any cars you rent. However, you may need to pay extra for rental car reimbursement insurance, which compensates you if you need to rent a replacement vehicle after an accident.
Which coverage should you get as a first-time car insurance buyer? It depends on your budget, risk aversion, car value, driving habits, and other factors.
If you want full coverage and maximum protection, then you can buy a policy with all of the above items.
If you want the cheapest possible car insurance that allows you to legally drive, then you can skip all of the optional products above and buy basic minimum liability insurance.
Learn How to Save Money on First Time Car Insurance
As a first-time car insurance customer, you may pay higher rates for car insurance than a more experienced driver. Fortunately, even new drivers can save money on car insurance by taking advantage of certain discounts.
Some of the Discounts Available to First-Time Drivers Include:
- Safe driving discounts
- Bundling discounts
- Multi-vehicle discounts
- Good student or good grade discounts
- Good credit score discounts
- Driver education course discounts
As a first-time car insurance customer, you may not have the discounts of older drivers. Older drivers might qualify for homeowner discounts or bundling discounts, for example, because they’re further along in life.
Fortunately, insurance companies still offer discounts specifically for young drivers, including good grade discounts, driver safety course discounts, and other discounts just for younger drivers.
Be Prepared to Pay Higher Rates as a First-Time Insurance Customer
It doesn’t matter if you’re 46 years old or 16 years old: if you are buying car insurance for the first time, then you’re riskier to insure than a more experienced driver.
Insurance companies consider your insured driving history before assigning a rate. Do you have a long and proven track record of driving accident-free, claim-free, and citation-free? Or do you have 0 months of driving experience?
As an older driver, your rates may decline sharply as you maintain a safe driving record. A 16-year-old driver might pay high rates until age 25 even with safe driving behavior, for example, while a 46-year-old driver might see rates drop significantly after 12 months of safe driving.
There’s no way around it: as a first-time insurance customer, you can expect to pay significantly higher rates than other drivers your age with more experience.
Typically, first-time drivers pay $3,500 to $5,000 per year for car insurance, depending on their state. The average experienced driver in the United States, meanwhile, pays around $1,350 per year for car insurance.
Top 10 Best Car Insurance Companies for First-Time Drivers
Some companies like having first-time drivers in their pool. First-time drivers balance the insurance pool. They’re riskier to insure, but insurers can also charge higher rates, so they balance out some of the older, more experienced drivers in the pool.
Other insurance companies dislike having young drivers in their pool. These insurance companies prefer having older, safer, more experienced drivers, but charge younger drivers relatively high rates.
The Top 10 Best Insurance Companies for First-Time Drivers Include:
- Progressive
- Liberty Mutual
- Travelers
- GEICO
- Allstate
- State Farm
- USAA
- Erie Insurance
- American Family Insurance
- Nationwide
The best insurance companies vary widely from state to state. GEICO, for example, tends to offer the cheapest car insurance for drivers in most states, although it’s not the best choice for first-time drivers in every state. Meanwhile, USAA offers cheap car insurance for first-time drivers, although USAA is only available to military personnel and their families.
There’s no single car insurance company in the United States that’s “the best” for first-time drivers. By comparing quotes today, you can ensure you pay the lowest possible rates for car insurance as a first-time driver in any state. A few minutes of research could save you thousands per year on car insurance.
Final Word on Buying Car Insurance for the First Time
Buying car insurance for the first time can seem intimidating and expensive.
Fortunately, it doesn’t have to be. By researching car insurance companies, understanding coverage options, and comparing quotes, you can pay the cheapest possible rates on car insurance even as a first-time buyer.
