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UPDATED: Mar 13, 2020
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Testing to becoming a licensed driver for the first time can be nerve-wrecking and exciting all at the same time. You need to answer a percentage of questions correctly, get behind the wheel, and then pass the skills test with a stranger who is critiquing your every mistake on paper. Only after you do this will you finally be a new driver with a state-issued driver license.
No matter how exciting it can be when you are licensed, it is not so exciting when you start to find out just how much it will cost to buy insurance as a first-time driver.
Unlike experienced drivers, you do not have a driving record or an accident history that the insurer can view to see that you take your driving privilege and safety seriously.
Safety behind a 2-ton hunk of metal is extremely important, and drivers in specific groups have proven to be riskier customers than other groups. Unfortunately, one of the many groups of high-risk drivers that pose a threat to insurers is first-time drivers who have a newly acquired license.
If you are shopping for state-mandated coverage or a broader and more protective policy, it is important to compare pricing. Drivers on restrictive budgets and budget-conscious consumers who do not want to pay too much should all understand the importance of comparison shopping.
This guide is dedicated to helping you find the cheapest car insurance quotes even if you are a first-time driver. Read on, and you can learn when you need coverage, why coverage may be expensive, and how you can save money with little driving experience.
Be sure to use the FREE comparison tool below to start your search instantly!
When do first-time drivers need to be insured?
There is a lot of confusion behind when a driver needs to be added to an existing insurance policy, especially when the driver is young.
In most states, drivers have the option to get their permit so they can gain behind-the-wheel experience while they are with a licensed adult.
A permit is not a driver license and has its limitations.
Typically, a student driver with a permit cannot drive during between 10 pm and 5 am. They also are not allowed to drive around with other minors unless an adult is present.
Many parents assume that having a permit means that it is time for their child to added to the car insurance policy.
These parents want to follow all of the rules to avoid accidents that are not covered.
While this is the smart and honest thing to do, most companies will not add drivers who only possess a learner’s permit.
This is purely because of the fact that only licensed drivers can be listed drivers on a car insurance policy.
It is not until the person with a permit earns their license that they will need to be added. When this happens, the insurer will start to charge for the new and risky operator.
Will a permitted driver be covered in my car?
If a car insurance carrier will not add a driver with a permit to your plan, you may be hesitant to let your child learn in your car. Do not fret, in your policy terms and conditions you will see that coverage follows the vehicle even if it is not being driven by you.
Any household member or permissive driver who is operating your vehicle is covered, especially when it is a driver with a permit that you support. The only time that coverage would not extend to a teen or household member is when you have signed a driver exclusion to exclude a named person from coverage.
How much more will my insurance be with a new driver?
By avoiding the charge while your teen has a permit, you can save up some money for that first month you add him or her to your plan. Even if you only add a new driver and not a vehicle, your rates are going to go up.
In fact, adding a teen under the age of 20 to a policy can double your annual premiums in many states. How much your premiums will just depends on the state that you live in and other factors that also go into determining rates. There are states that do not allow exorbitant increases and others that do.
Why is insurance so high for the newly licensed driver?
It can be disheartening to go from being so excited about a license to so concerned about costs. The costs of getting licensed can be high, and there is a reason for this when it comes to the car insurance marketplace.
Insurance, no matter what type of market you are in, is directly related to risk.
Companies are arguing to extend coverage to you to pay for specific damages or expenses, and in exchange for your money they are giving you a promise. The company gets the money no matter what, but you only receive benefits if you experience a covered loss.
This is why insurance companies use very detailed reports, claims trends and other data to assess risk and to identify when risk is more likely present.
There are several different factors that can make you appear to be more of a risk to a provider, but being a first-time driver is one of those factors that sticks out like a sore thumb.
Teens and other drivers who just barely got their license are not seen to be “insurance friendly” because they have not developed the skills to be defensive drivers and to avoid traffic collisions.
In fact, statistics show that the risk of a teen between 16 and 19 crashing is three times higher per mile than drivers who have experience.
Young drivers also account for 58% of vehicle injury costs for males and females even though they make up just 14% of the population. When an age group is more likely to have a crash and more likely to sustain injury, the insurer must collect by charging premiums that are higher than usual.
Is age different than driving experience?
You may be asking if you will pay less for your coverage if you got your license later in life. The answer to this question is: it depends. Some states will rate drivers based on their age and others have a system in place where every driver is rated based on experience.
If you were licensed at 30 and another driver was licensed at 21, the other driver will have more experience than you when you hit 31. This accounts for something when it comes to rating based on risk.
If you are asked when you were licensed, the company will charge you for the inexperience. There are other companies that will simply run a motor vehicle report and give you credit for the years in the state. This is why you should always ask if your years of licensing experience are important when you have had a license in another state.
How to Get Cheap Insurance When You Have a New License
Just because you are a high-risk driver right now does not mean that you always will be. If you continue to maintain a good driving record, you will see your rates drop year after year until you become a standard risk.
This will happen when you are 25 or have about 9 years of experience. Until this happens, you will need to be resourceful to save money. Here are some valuable tips for first-time drivers and their parents:
You might be tempted to separate your car insurance from your teen’s insurance, but this is an expensive decision. When you combine policies, your teen will get multi-car, multi-policy, loyalty and other discounts that you receive.
This could cut costs down 50, 60 or even 70%.
Enroll in a Driver Education Course
Most insurers offer a discount when young drivers take a voluntary education course to learn how to drive safely.
Find an approved course and enroll in it for a savings that will last 3 years.
Get Good Grades
Teens who are under 25 and who are enrolled in school can receive a Good Student Discount if they maintain an acceptable grade point average (GPA). The GPA that is required differs from insurer to insurer, so ask the company for details and order your transcript early.
The best way to keep your rates low, aside from staying accident-free, is to do a car insurance rate comparison.
By doing this, you can see which companies are more than happy to offer new drivers good rates and which would like to stay priced out of the high-risk market.
Until you review the charges and how a teen affects your rates with various companies, you will never really know if you are paying too much. Use a quote tool, such as the FREE one at the bottom of this page, and enter your ZIP code to get started.