Tips for First Time Car Insurers
First time getting car insurance? Here’s what you should know.
With hundreds of options for insuring your vehicle, it can be difficult to know where to start. Let's break down the basics of getting your first car insurance policy. We’ll talk costs, types of coverage, and ways to get discounts to help you get the best policy possible.
What to Expect from Your First Car Insurance Policy
Let’s get the bad news out of the way: your first car insurance rates are going to be more expensive than rates for people who have a longer driving history. The less the insurance carrier knows about your driving, the riskier you are for them to insure. Rates are particularly high for teen drivers (ages 16 - 19). Insurance companies take into account a teen driver’s lack of experience and national accident data, which shows that teen drivers are four times more likely to get into a fatal accident. The average annual rate you can expect to pay varies based on age because of this data. 16-year-old drivers see an average premium, or payment, of $3,192 annually ($266 per month). The average annual premium for a 25 year old is $815, and a 45 year old pays $671 annually.
Age isn’t the only factor insurance companies take into account when creating your auto policy. They will also consider how far you drive each year, your gender, the make and model of your vehicle, your credit score*, where you live, and your state’s car insurance requirements. The coverage you choose will also affect your premium. Understanding your coverage options will help you build the best policy for you.
*California, Hawaii, Maryland, Massachusetts, Michigan, and the territory of Puerto Rico do not allow insurance companies to take credit score into account when determining car insurance rates. Additionally, Root Insurance has pledged to remove credit scoring from its car insurance pricing model by 2025.
Understanding Coverage
While it varies by state, almost every state in the U.S. has a minimum requirement for car insurance. The most common baseline is liability coverage, which protects against damage and injuries you cause during an accident. You can learn more about your state’s insurance requirement here, but your insurer will make sure to include those requirements in your quote.
You may also want to consider coverage beyond what is required to take care of yourself, your car, and your passengers. Some other coverages to consider, if not required in your state, include:
- Collision - Covers the costs to repair or replace your vehicle after a crash, whether that’s a crash with another vehicle or an object like a telephone pole or guardrail
- Comprehensive - Covers damage to your vehicle from a non-collision accident like hail damage, theft, a fallen tree, vandalism, hitting an animal, etc.
- Uninsured motorist - Covers your damages if you are in an accident with a driver who isn’t insured
- Personal injury protection - Covers your medical bills and other losses like lost wages after an accident
- Med Pay - Covers medical payments of you and your passengers if injured during an accident
- Roadside Assistance - Covers the service cost in case of a roadside event like a flat tire, dead battery, lockout, mechanical malfunction, or stuck vehicle
Ultimately, the level of coverage you pick is up to you, your budget, and your desired level of protection. You can always add coverages to your policy in the future.
Tips on getting your first policy
The next step after coverage selection is getting quotes. A quote is the estimated cost of an auto insurance policy based on the information you provide to the insurer and the coverage you choose. You’ll want to get quotes from different insurance providers to compare rates. You should aim for three different quotes. As previously mentioned, first-time car insurers will likely have higher rates than drivers with a longer driver history. However, there are some things you can do to help decrease the rates in the quotes you receive.
- Ask for discounts - You may qualify for a discount to your policy. Many insurance carriers offer discounts like a good student discount, a drivers education course discount, a multi-policy discount, military or occupation discount, and safety equipment discount
- Take a defensive driving course - Many state have a defensive driving course, some even available online, averaging 4 - 8 hours per course
- Try usage based insurance (UBI) - UBI monitors your driving behavior through a device installed in your car and offers discounts for safe driving. This may not be the best option for everyone, especially those who drive a lot or have long commutes.
Once you’ve selected three options for quotes from your selected carriers’ websites, you’ll need to gather the requisite materials. To begin a car insurance policy, you will need to provide the following information:
- Your age
- Your marital status
- Your garaging address (where you keep your car at night)
- Your vehicle's VIN, year, make, and model
- Your vehicle's mileage
- Possibly your driving record (you can request this from the Department or Registry of Motor Vehicles online in many states)
Once you’ve selected your insurance provider and enacted your policy, make sure to download your insurance carrier’s app for 24/7 access to your policy information available. With your carrier’s app, you can access policy information, report a claim, or request roadside assistance in a matter of clicks.
Looking ahead
With years of good driving, you should see your premiums decrease over time. However, it’s best practice to continue to shop for quotes every year to make sure you are getting the best rates. An accident or claim on your insurance may increase rates for a period of time. These typically decrease in three to five years in the absence of any other claims. As you begin to rent or own a home, consider bundling your renters insurance with your auto insurance for better rates. Good driving and time will be your biggest ally.
Car insurance is crucial for protecting you and other drivers on the road. Now that you're armed with this knowledge, get started by comparing quotes from different insurance providers to find the best rate for your needs!
