You’ve had your driver’s license for a few months. But your insurance is still sky high. You are beginning to wonder if you will ever see lower rates and reap the benefits your good driving habits should bring.
Every motorist needs the right insurance to be legal. Do you know where to start when you first get your license? Finding the right auto insurance can be confusing.
If you get the wrong kind, you might end up paying too much or not having enough coverage. Keep reading to learn everything you need to know about coverage before you get behind the wheel.
What is New Driver Auto Insurance?
It consists of policies for first-time drivers. It is called “high-risk” coverage in the industry. Although high-risk policies are not just for those who are new and inexperienced, anyone with little to no experience behind the wheel will be seen as a higher risk. And that’s because these people tend to get into more accidents than those with some experience on the road.
You may also fall into the “young driver” category, which is another high-risk subset of motorists to insurers. Teenagers tend to have more accidents, get more tickets and therefore, file more claims, than older, more mature folks.
So, if you are a teenager who just got your driver’s license, you have a double whammy when looking for affordable coverage.
How Much is High-Risk Insurance?
It depends on where you live, among other factors. Nationwide, the average monthly cost for full coverage is $148. The minimum for state-required liability averages $47 monthly. It’s important to understand that these prices are for an established motorist with a clean driving history.
For someone new, that cost can be doubled or even tripled. For example, in Los Angeles, a 16-year-old male will pay on average $352 per month for the minimum coverage required by law in California. If they have financed a vehicle and therefore need to purchase full coverage, that averages $1,054 monthly.
On the other hand, a 45-year-old male in Los Angeles will pay on average $77 for the state-required minimum and $238 monthly for full coverage.
You can see that your premium will go down as you get older and/or gain more experience. At this point, the law – and your insurer – view you as a child.
No matter how long you’ve been driving, it’s important to know ways to lower your premium.
How Long Are You Considered a New Driver?
The good news is that someone is only considered this while they have no driving history. So as soon as you begin driving, you are no longer in that category.
The bad news, though, is that you simply go from that to being known as an inexperienced driver. And you’re still going to pay more.
How Long is Someone Considered Inexperienced?
Generally speaking, your experience will be measured in terms of either your age or your time driving. So if the insurance company goes by age, you will likely be considered lacking experience (and paying higher prices for coverage) until you are in your early-to-mid 20’s.
If your insurance company goes by driving experience, you may need to wait until you have driven for at least three years. Some insurers consider you lacking in experience for far longer, though, so make sure to ask so you can get a direct answer.
How Can I Become a Good Driver?
In most cases, practice makes perfect and that’s true for learning how to be good behind the wheel and how to drive defensively. But you don’t want to be on the road for any longer than is absolutely necessary. So, there are a couple of things you can do to help get the skills you need.
1. Take a defensive driving course. These courses are not expensive and many of them are available online. You’ll learn how to anticipate and avoid situations that are dangerous. And bonus – many insurers will give you a car insurance discount for successfully completing a course.
2. Use an online driving practice tool. There are a variety of driving simulators and games you can access online. Some are free and some will cost, but this is a good (and some might say, fun) way of getting better at driving.
How to Find Affordable Quotes
If you are a new teen driver, it’s important to look for ways to get the cheapest car insurance possible, since teenage drivers typically see some of the highest car insurance premiums. But you do have some options and it’s a good idea to pursue them. Keep in mind that not making a claim against your carrier is the best thing you can do to have those rates come down as you get older. Here are some other avenues to pursue.
Money-Saving Discounts
Every carrier offers discounts to their customers. As a teenager, you won’t be able to access most of those, but there are some that you can use to your advantage.
- Good student discount – If you are a high school or college student, many car insurance companies will reward you for maintaining a GPA of B or above. The thinking is that students who get good grades are more likely to be responsible as a teen driver. This credit for good grades simple involves you submitting your report card to your insurance company.
- Safe driver – Another way to save money is to be a safe behind the wheel. You cannot get this discount as soon as you start your career as a teen driver, but you can ask for it after you’ve been on the road for a few years. Since your rates are not really going to go down until you are no longer a teenager and well into your 20s, this can be particularly helpful as you near the age of 20. Most insurance companies give these rate decreases to people who maintain a clean driving record for 3 or so years.
- Defensive driving class – We know. Teens don’t want to spend anymore time in a classroom than they have to, but taking a defensive driving class is a good way to get a decrease (it works for your parents, too). And there are plenty of them online, so you don’t have to go to a physical classroom!
Finding Cheap Car Insurance on Your Parent’s Policy
Another method teenagers can use to save some money is to get on their parents’ policy, if that’s possible. If they’ll let you, they may get a price reduction for insuring another vehicle on their policy (multi-vehicle policy). Of course, that isn’t going to offset the amount you will add by joining their package as their child. Overall, especially if they have good driving records (and have possibly been with the insurer for some time), this is a great way to find a lower price.
Establishing a Credit Score
It’s not something that most teenagers are thinking about, but establishing and maintaining a good credit score will help you in many more ways than just finding a lower car insurance premium. If you are working, see if your parents will help you get a low-limit credit card and commit to paying it off every month. Although the practice of using a credit score to assign rates is falling out of favor (and has been outright banned in some states), having a good credit score will serve you well in many different aspects as you get older.
An added bonus here is that you’ll have a credit history, which opens many doors as you get older.
What You Drive Makes a Difference
It’s understandable that as you get behind the wheel as a new driver, you want to drive something cool. But keep in mind that it will greatly affect the type of policy you need to buy. Although you may not like the idea of driving something a little older and a little safer, there are really good reasons to factor this in to your choices. Obviously, if your insurance carrier looks at your auto as a safer ride, you will get bonus points for that. And if it doesn’t cost as much to repair it in the event you do file a claim, that will also be a factor. So, a used, but dependable Honda, will be cheaper than a flashy Chevy Corvette.
Also, if you outright purchase a vehicle without getting a loan, you are already ahead since you’ll be able to access the cheapest car insurance available to you. This is the state-required minimum, which is the amount that your state says everybody must have and it typically consists of some bodily injury and property damage liability limits. If you finance an automobile, however, your lender is most likely going to require you to carry full coverage (liability plus comprehensive and collision). Let’s look at some examples of average monthly prices for 16-year-old males in the U.S.
| City/State | Full Coverage | Minimum State-Required |
| Miami, FL | $1,052 | $434 |
| Dallas, TX | $634 | $221 |
| Chicago, ILL | $726 | $303 |
| Lincoln, NE | $566 | $228 |
As you can see, rates vary greatly by where you live and whether you purchase just the state-required minimum or if you have to buy full coverage.
Factors That Go Into Underwriting
Underwriting is the process your insurance company goes through to decide what premium you will pay. There are a lot of factors that go into this process and since everyone is slightly different, you’ll be hard pressed to find identical rates. As we discussed, your choice of vehicle and where you live play a big part. Additional information includes your age and official driving record. Here are some of the other factors that may be used to come up with your premium.
- Zip code – Yes, we already talked about your state’s required minimums, but your zip code of residence plays a part. In fact, you may live in a zip code that has a high collective rate of claims in the form of accidents and crime, such as car theft. Your neighbor may live in a different zip code that has a lower rate of claims. Guess who will be playing more for their policy?
- Gender – Unfortunately, males tend to pay higher prices than females when it comes to their policy. As a group, males are more likely to exhibit reckless behavior behind the wheel, accumulate more tickets and have a higher risk of motor vehicle crashes.
The Importance of Avoiding Accidents
Obviously, everybody should avoid accidents whenever possible. But it is particularly important to drive safely and avoid accidents when you are new or inexperienced.
That’s because your rates always go up after an accident. And an accident will likely cause you to pay higher rates for at least three years. Considering that you are already paying a higher rate for being new, this can cause your rate to really skyrocket.
The Challenge of Finding the Right Insurance
As we noted above, you are likely to pay a higher rate for several years when you are a newbie. And that rate will stay high as long as you are considered “inexperienced,” regardless of how safe your driving record is.
If you want to get a better rate, the answer is simple: you need to shop around and get quotes from a variety of different car insurance companies. This gives you enough comparison information to ensure you are getting the best possible deal.
Most people pay by the month, which means you don’t have to wait to switch and start insurance carriers to begin paying a lower rate. And since you will be considered an inexperienced driver for several years, switching can help you save hundreds or even thousands of dollars over time.
Advice for Parents of a Teen
The Highway Safety Insurance Institute says not only is it important to make good choices when it comes to your teenagers vehicle, knowing the reasons behind why some cars are better for newbies than others is equally critical. In fact, the HSII puts out a list of recommended vehicles, which leans towards heavier ones. Parents have influence when it comes to putting their children behind the wheel. They’ve nurtured this child from birth on, so phasing them safely into getting on the road is no different. A child also looks to a parental figure to exhibit safe driving techniques so they can start working on their own clean driving record when the time comes.
Some parents do not allow their children to have their own car before a certain time. The Highway Safety Insurance Institute actually believes this is a good idea. Letting your child drive your vehicle or one that belongs to a family member will help defray some of the costs of insuring your child, but also give them valuable experience with less freedom to make mistakes.
Get the Best New Driver Auto Insurance Today!
Now you know how long you are considered new. But do you know where people of all experience levels can get the best car insurance?
Freeway offers the most affordable coverage. We can easily get you started with a quote online. But if you’d rather visit in person, you can always come to one of our local offices. Or, if you’d rather just use the telephone, you can always call us at (800) 777-5620 for a quote today!
