The Best and Cheapest Car Insurance for New Drivers

If you recently got your driver’s license, you’re probably also in the market for your first car insurance policy so you can drive legally.

Car insurance for new drivers can be pretty expensive, but there are ways to keep the cost affordable. We’ll explain how much you can expect to pay and how to lower your car insurance rates.

We’ll also discuss how insurance companies determine your rates and which companies might have the cheapest new driver car insurance.

What qualifies as a new driver?

There isn’t unique insurance made solely for new drivers, but insurance companies usually use these rules to determine status:

• Teens who recently obtained their driver’s license
• Adults driving for the first time
• Foreign nationals and immigrants entering the country
• Any driver with a gap in insurance coverage or driving time

New drivers get hit with high rates due to inexperience, but there are ways to save. Let’s dive more into these types of new drivers and how they can save money on car insurance. 

Teens

Car insurance companies quote teen drivers higher rates because they’re statistically a higher risk on the road. The best way to lower the rates of auto insurance for teenage drivers is to add them to their parent or guardian’s policy — the only requirement is that they share the same permanent address. You can stay on your parents’ auto insurance for as long as you live in their house.

While a teen gets a better insurance quote on their family’s policy, it may still cause overall rates to increase. However, the teen driver still can access certain discounts like multiple drivers or car discounts. It’s always helpful to compare new driver insurance quotes online before deciding.  

The good news is that insurers offer several discounts for students and teen drivers. Rates also improve over time with safe driving, as insurers tend to lower rates at age 25, assuming a clean record.

Foreign Nationals and Immigrants

Insurance companies still consider you a new driver even if you have experience driving in another country. Therefore, auto insurance for foreigners costs more regardless of how old you are. Insurers only consider domestic driving records when determining rates. 

The same rule applies to credit history, which they use to calculate car insurance rates. It’s good to note that certain states don’t allow insurance companies to use credit when crafting auto insurance rates, including California, Hawaii, Massachusetts, and Michigan.

When renting a car, the easiest option will likely be to use the rental car company’s insurance, especially without a valid driver’s license or international driver’s permit. Otherwise, you may have trouble obtaining rental car insurance.

You’ll need a United States driver’s license for the state you plan to stay and drive in. States like California allow you to have a driver’s license no matter your immigration status. Once you get your license, shop around and compare auto insurance quotes to find the best rate and coverage.

Drivers With a Gap in Insurance Coverage

If your license expires for reasons like spending time abroad or not needing to drive for a long period, insurers will still consider you a new driver once you get your license back. Without proof of continuous coverage, a car insurance company can assume you’re a high-risk driver and increase your rates.

Even with some driving history, you’ll likely pay more for insurance if you have a coverage gap, so you should shop for the best rates. Some companies make an exception for military deployment — check with your insurer to see if that applies to you.

Since continuous coverage is one of the most important factors insurers consider, some may not accept your application if you’ve had gaps between policies. If that’s the case, you can look for high-risk auto insurance companies that accept lapses in coverage or companies specializing in coverage for people having difficulty getting insured.

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First-Time Drivers’ Insurance Cost on Average

A first-time driver’s age gets considered when setting auto insurance rates. A quote for a 16-year-old is $3,343 per year on average. Policies are almost always the highest for teenagers compared to other ages.

On a good note, safe drivers will see a drop in their rates by approximately 12% to 20% once they turn 25.

Best Auto Insurance for New Drivers Under 25

Allstate offers the lowest-priced minimum auto insurance coverage rates for new drivers 25 and lower. First-time drivers pay $2,743 on average for car insurance annually. Allstate, on the other hand, costs 56% less than the average at $1,205 per year.

First-time drivers can find the best rates on State Farm auto insurance for full coverage. A full coverage auto insurance policy with the company costs $3,308 per year or $276 monthly. The average quote is $6,527 yearly, double State Farm’s rate.

Best Auto Insurance for New Drivers Over 25

New drivers over 25 can find the most affordable minimum coverage with Allstate for auto insurance. Allstate charges $395 yearly, which is 62% less than the national average auto insurance quote for this group of individuals.

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Best Auto Insurance for New Drivers on a Family Car Insurance Policy

Teen drivers can obtain notably better rates by using their parent’s policy — this may also work for an older relative if allowed by the insurer. Allstate, State Farm, and Geico rates are all more affordable than average.

However, Geico auto insurance has the cheapest out of the three, averaging $1,419 per year. 

Auto Insurance Rates by Credit Rating and Age

A poor credit score can increase your rates in most states, so building a good credit score before driving is a great way to get more affordable auto insurance as a new driver. Here is a good estimation of how credit and car insurance rates correlate.

As you can see, the better the credit, the cheaper your rates are. Auto insurance for drivers with bad credit almost always comes with a higher price.

Tips to Get Lower Auto Insurance Rates for New Drivers

Still looking for ways to lower your monthly car insurance premiums? Read over the tips below to see if you could save more.

Shop Around for Auto Insurance Coverage

Every auto insurance company has a unique way of coming up with rates, so there may be cheaper options than the first quote you receive. Therefore, you should get at least three to five quotes from different companies before purchasing car insurance coverage. 

For new drivers, you should also consider options the insurer provides alongside its rates. Eligible discounts and reputation matter when choosing the right car insurance company. So even after buying a policy, it’s always good to keep looking for the best options.

Lower Coverage Amounts

To lower your risk factors and rates, purchase only as much insurance as you need. If you struggle to find affordable auto insurance, you can also research the minimum auto insurance required in your state and shop for a policy from there.

If you decide you don’t need things like collision insurance or comprehensive insurance, you could save a lot on your monthly rates. You can also say no to additional coverage add-ons like rental reimbursement insurance and roadside assistance.

Increase Your Deductible

One easy way to lower your rates is to get a higher auto insurance deductible. Your deductible is the amount you must pay if you file a claim. The larger your deductible, the cheaper your premium.

However, avoid choosing a deductible you can’t afford to pay out of pocket.

Maintain Safe Driving Habits

As a new driver, the best way to lower your rates is to drive safely and avoid getting moving violations and car accidents. Having a few years of safe driving will lower your rates over time.

These tips are great ways to lower your rates if you’re a new driver. Each one can significantly help you save money.

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The Bottom Line on Auto Insurance for New Drivers

Finding the best car insurance for new drivers can be challenging — there aren’t many ways to get around a higher rate. Car insurance discounts are the easiest way to lower your rates.

Here are the most common car insurance discounts a new driver can obtain:

• Multi-policy discounts
• Defensive driver discount
• Equipment discount
• Safe driver insurance discount 
• Profession/occupation discount 
• Good student discount

Make sure you’re researching and discussing these discounts with multiple insurance companies to get the best insurance for new drivers at a reasonable rate.

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