Car Insurance companies often use a person’s driving history to measure the amount of risk in a potential client. They’d be able to accurately calculate vehicle insurance premium, rates, and the best policy for the driver.
Inversely, the risk may be high for people with little to no driving history or record-like a new driver, a young driver, or a teen who just got their license. Because of this, car insurance rates for new drivers and young drivers can be expensive during the first couple of years of insurance coverage. There’s a multitude of factors that can determine the best new driver car insurance policy, such as how often they’ll be driving and their age.
A teenage family member may have received their driver’s license after graduating from a learner’s permit, or an older relative who hasn’t driven a considerable amount or never before decides to get a driver’s license. Car Insurance companies offer affordable new driver and teenagers coverage and are willing to take on the risks associated with them.
New drivers and why First-time drivers need Auto Insurance?
New driver insurance doesn’t refer to the coverage itself. There’s no special policy. A new driver would be added to a new or existing vehicle insurance. It’s the rates and premiums of that auto insurance that are subject to increase. Even new drivers and young drivers have to meet the state minimum car insurance coverage requirements and get insured.
New Drivers that are classified as such and could have higher annual vehicle insurance rates are:
- Teen with a driver’s license. The most common of new drivers for car insurance companies. Often, teens will get their driver’s licenses while still in school and be added to their parent’s auto insurance policy. High risk is associated with this group because they are more likely to be in an accident while driving their vehicle.
- Adults with a new driver’s license. Some people may start driving later on in life and receive their first license around then. With no driving history to assess, the car insurance company will label them as high risk and give new drivers a more expensive pricing and deductible.
- Driving history gap. For whatever reason, suspended driver’s license or canceled car insurance, a person may have spent significant time away from the wheel. If the history gap is big enough, the car insurance company may label the driver high-risk.
- Foreign drivers. Drivers that are new to the U.S. are labeled first-time drivers by car insurance companies since traffic laws may differ in their home country. Some immigrants may have to adapt to driving on the other side of the road. Driving records are national.
What kind of Car Insurance are new drivers and teens required to get?
Minimum car insurance coverage varies from state to state. Policyholders will often purchase more coverage than the required liability insurance.
The required liability coverage for drivers, both old and new, are:
- Bodily injury insurance per person. This bodily injury insurance covers another person in the event of an accident. How much you pay for your per person limit is how much their medical bill will be. The minimum amount required by law is $15,000 in most states.
- Bodily injury insurance per accident. This bodily insurance covers more severe accidents with multiple people involved. Instead of covering an individual medical bill, it would be the collective of the drivers injured. The minimum required amount is $30,000 in most states.
- Property damage insurance. This car insurance covers damage done to another’s property. That’s their car in this case. The law requires that you take financial responsibility for any property damage you cause in an accident. The minimum required amount is $5,000 in most states.
- Uninsured motorist coverage. Some states require that you have uninsured motorist coverage in the event you have an accident with someone with little to no coverage.
- Personal injury protection. Sixteen states require that you have car insurance coverage that will help you cover your own medical costs.
Why is there so much risk associated with new driver and young adult driver Auto Insurance?
The risk that comes with new drivers is universal to car insurance companies. Trackable driving history is what helps car insurance companies calculate your premium rates and deductible based on how safe your driving is. Without one, an insurer may not know what to expect when taking you on as a policyholder.
So, the high-risk association with new drivers, or immigrants is automatic. However, after a couple of years of safe driving and practice, you’ll notice your premium rates and deductible decrease as the auto insurance companies find you a less risky driver. A safe teen driver who got their driver’s license when they were 16 may see a premium decrease by $400 by the time they turn 25.
Aside from driving experience, another huge factor in new drivers getting insured is always age. A reported study finds that younger and older customers pay more money for their car insurance than those in their mid-life. Young drivers, usually in their teens, are associated with the highest level of risk due to their likelihood of becoming involved in an accident while driving their vehicle. Older drivers tend to be more careful, but they’ll still pay an above-average premium than other drivers on their auto insurance premiums.
Pricing factors in a first-time driver’s car insurance policy
There are a couple of other factors to take into account when considering car insurance for new drivers aside from age. While something as simple as gender or marital status may affect your car insurance quote, the auto insurance company may also look at your credit score. While not a driving record, your credit score demonstrates your ability to be financially responsible. That’s a desirable trait that all car insurance companies look for in first-time drivers who wish to insure their car.
Every state has its own car insurance regulations that factor in an area’s population and crime demographics. So, your insurance premiums would also be dependent on where you live. Above all, the auto insurance companies will look at what kind of car you drive or own.
For new drivers, and young drivers it’s more cost-effective not to drive a luxury or sports car. Pickup trucks may also result in higher premiums. The best cars for new drivers and teen drivers would be budget vehicles with low-tech safety features for the best rates. Lastly, the car insurance company may determine your auto insurance premium rates based on how much you drive your car or vehicle.
What are car insurance options for new drivers and teenagers?
The previous list is of the mandatory coverages by the states. There are several other car insurance plans that may cost extra money but would insure your vehicle and reimburse you adequately.
In the event of an accident you either caused or were a part of, auto insurance coverage options can include a:
- Comprehensive policy. It covers any and all damage done to your car or vehicle that’s circumstantial when you’re not driving. Examples would be weather-related damage, theft, or vandalism. Buying comprehensive coverage may increase your premium rates.
- Collision policy. It works the same as personal injury protection and, in some states, literally is. Since covering damages done to your own car in an accident you caused isn’t required by law in all states, it’s great to have the option of being reimbursed for your personal damages. Buying collision coverage may increase your auto insurance premium rates.
- Pay-per-mile policy. This unique car insurance coverage allows you to pay based on the miles you drive your car. A car insurance company may give you a device for your car which tracks your mileage. There’s usually a monthly charge of around $30, with additional cents added on for every mile you log.
Why would Pay Per Mile coverage make sense for new driver car insurance?
A pay per mile policy would make the most sense for a first-time driver car that doesn’t drive their car as much. Perhaps a teenager who gets their license doesn’t drive their car all the time. Maybe they don’t need to use it for school, and their bike commute is better. It’s best to cover young drivers by the limited number of miles they put on the car instead of a full-time or primary driver.
The same could also be said for young or new drivers heading to college. Campuses are always designed with the intention that the students would walk or not face a lengthy commute to class. Because of this, the time they spend in the car may be limited. Pay per mile insurance can save a customer up to 40% on their bill. There are specialized car insurance companies that offer such plans.
How to find the best and affordable car insurance coverage for a new driver or a teen?
A auto insurance premium for a new driver, a teen driver, or immigrants could range anywhere from $1100 to $1600 alone. Both national and local car insurance companies may offer different starting premium rates or discounts. However, smaller companies’ treatment may be more tailored. So, it’s best to get and compare quotes for your new driver.
To get the best quote for a first-time driver, a young driver, or a teenager car insurance you should:
- Remain on the family auto insurance policy. It isn’t economical to insure a new teen driver on their own car insurance policy. It can cost almost $3,000 for half of a year. Naturally, the best option would be to be insured as a new driver on the family vehicle insurance coverage since it’s the head of the household’s credit score and driving history being surveyed.
- Drive a modest Sedan-type car. As we have gone over, the car make and model directly affects your car insurance premiums. A luxury or sports car with the latest high-tech features can result in higher premium rates. Pickup trucks and other bigger cars can also raise your premium rates. The best car for a new driver auto insurance -wise is a modestly priced car with good safety features. In some cases, a used one is a smart, cheap alternative.
- Bundle to save. If you were to carry multiple insurance coverages with one company-like home insurance or renters, then you may be eligible for what is referred to as a multi-policy discount. Homeowner’s insurance may result in a larger discount since it is more expensive than renter’s insurance.
- Pay total directly and upfront. Paying your vehicle insurance premium monthly can result in being charged things like a convenience fee. If you’re able to pay your total car insurance coverage, you could pay it all upfront to save up to 10%.
- Multiple cars insured. If you were to insure a new car with an auto insurance company you already used for a previous vehicle, then the car insurance company may offer you a discount on your auto insurance premiums. This would be ideal for new drivers, teenagers, and their vehicles.
What are some additional discounts an auto insurance company can offer a new driver or a young driver?
Discounts are something to pay special attention to when shopping for new driver or teenager car insurance. We’ve discussed how an auto insurance company can offer discounts to recurring customers.
Here’s how a young first-time driver can qualify for discounts and save on car insurance for new drivers:
- Safe driving discount. Auto insurance companies love clean and good-looking driving records. Safe drivers literally are less risk and therefore subject to discounts and low insurance premium rates.
- Defensive driving. Taking a defensive driving course shows the auto insurance companies that you are attempting to become a safe driver.
- Safety feature discount. Safety features like theft deterrents or a stolen vehicle recovery system can qualify you for a small discount if the car insurance company finds them installed on your car.
- Good student. Students or new drivers on the honor roll or with a GPA of 3.0 can qualify for a good student discount on their vehicle insurance premiums. Transcripts should be shown every six months to show continued academic achievements.
- Accident forgiveness. If you’ve only had one minor accident that you were able to handle, then you can qualify for an accident forgiveness discount on your auto insurance premiums.
- Occupation or military. Doctors, educators, police officers, and the military are occupations that car insurance companies offer discounts for. Insurers may ask for proof of employment or a business degree.
- High deductibles. Paying high deductibles will result in lower insurance premiums. In comprehensive and collision insurance, lower deductibles can raise your car insurance premium rates. Choosing to pay the higher deductible will be cheaper than paying the insurance premiums.
What does car insurance for new drivers and young drivers typically cost?
It helps to know the national average for the cost of new driver car insurance so that when you receive a quote, you’d be able to tell if it’s accurate.
Let’s say that a twin brother and sister turned 16 and got their licenses. Naturally, they would be on their parent’s car insurance coverage. The brother’s insurance premiums would be around $2,783, and his sister’s would be $2,280. The difference in male and female insurance premiums is $100-$400 less for female drivers.
Around the age of 18, they would be able to take out their own car insurance policy outside their parent’s. The insurance premiums would be $5,727 for the brother and $4,983 for the sister. By the time they turn 21, their insurance premiums may decrease by $2,000 to $2,600. These are averages, so your own car insurance premium rates may differ depending on your personal and vehicle circumstances.
Auto insurance companies don’t frown upon taking in new drivers. More business is always good. It’s the amount of risk associated with new drivers, young drivers and immigrants. To a degree, it’s every new driver’s responsibility when first looking at car insurance to stress to the auto insurance company that they are worth covering despite the associated risks. At the same time, everyone always wants to save money. By now, you’ve learned to do both.
Insurance Navy knows how to help you getting an affordable car insurance policy for new drivers!
Get your free online car insurance quote for your new driver today with Insurance Navy.