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UPDATED: Mar 13, 2020
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As a new driver, the thought of buying insurance for the first time can be very intimidating. With so many carriers to buy from and so many coverage options to select, comparison shopping can be a daunting task.
For a driver with very little experience behind the wheel, the key is to familiarize yourself with coverage offerings and products.
Rates for new drivers can be exorbitantly high, especially when you are purchasing a policy that includes high limits and optional coverage. If you need help translating the industry language and navigating the marketplace, here is a guide designed just for new drivers who want the best insurance.
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Understanding Why New Drivers Cost More to Insure
If you have a clean driving record, it’s fair to assume that you will pay low rates to insure your vehicle. Unfortunately, having a conviction-free and accident-free record doesn’t always guarantee that you’ll pay low rates. Insurance companies use dozens of rating factors to calculate how much they need to charge each household.
The industry uses driving experience as one factor in determining your cost. Since companies spend a lot of money hiring actuaries to review statistics, it’s important to understand that the data shows being an inexperienced driver makes you more likely to file a claim.
As you gain more experience, your rates will fall as long as you keep your record clean.
How much more do inexperienced drivers pay?
The costs to insure a newly licensed driver are staggering.
Since car crashes are the leading cause of death in drivers between the ages of 15 and 19, teen drivers are undoubtedly more risky to insure than their experienced counterparts.
How much more you’ll pay for insurance depends on more than just your age and years of driving experience.
Age and gender are tied together when rating a driver. As recent surveys show, a 16-year-old will increase premiums by around 92 percent, and a female driver in the same age group increases premiums by 67 percent.
While these jumps are high, the actual difference in premiums depends on your location, the vehicle that you drive, and other discounts on the policy.
Building the Best Policy For You
The most efficient way to find the best rates is to shop around. While all companies have a higher gross rate for inexperienced drivers, some companies have rates that target young drivers. If cost is most important to you, you need to find the companies that are priced for your segment in the market. The only way to do this is to compare quotes.
Price is important, but you should always aim to buy the best level of protection that you can afford. It would be easy to keep your rates low if you elected to carry the minimum coverage that’s required under state law, but that’s not realistic. You can carry minimum state requirements, but that’s never recommended.
As a wise consumer, you should shop around to find competitive rates for comprehensive policies that include extra protection. Before you can build an insurance policy, you must understand what each coverage pays for. Here’s a breakdown of the coverage options that make up a full comprehensive insurance policy:
Pays for injury or death claims made against you when you’re at fault in a car accident. Your insurer will pay on a per person and a per accident limit. While state minimum requirements vary, most experts recommend that you carry at least $100,000 per person, $300,000 per accident.
Pays for the cost to repair or replace property that someone else owns when you are at least 51 percent at fault for the loss. While Bodily Injury is only required in tort states, Property Damage is a coverage that’s required in every state. The minimum limit requirements can be as low as $5,000 in some states, but it’s best to carry at least $50,000 to $100,000 in coverage.
Comprehensive is an optional coverage that pays for first-party vehicle repairs. If you want protection against perils like fire, theft, vandalism, explosion, flood, hail, windstorms, and falling objects, comprehensive is a must-add coverage.
Your policy will pay up to your car’s Actual Cash Value of your vehicle, so it’s wise to research the value of the car before you spend the money on the coverage.
Collision coverage is an optional coverage that will pay to repair your vehicle or replace it with a similar model when it’s damaged in a collision. The coverage will kick in regardless of who was found to be at fault in the loss. If you’re not negligent for the incident, you won’t have to pay your deductible.
Uninsured Motorist Protection
Did you know that approximately 12.6 percent of drivers in the nation are uninsured? While this number has gone down in the last two decades, it is still very high. In some states, the rate of motorists without insurance is as high as 19.6 percent.
Since uninsured drivers put everyone on the road at risk, it’s important to consider carrying Uninsured Motorist Protection. This coverage pays for your medical bills if someone hits you with no insurance. While it’s required in some states, UM is typically considered an optional or supplemental coverage.
Medical Payments or Personal Injury Protection
Medical payments coverage is offered in tort states, and Personal Injury Protection is required in no-fault states. It’s important to understand what type of system your state operates under when you’re buying coverage.
While both are forms of coverage that pay regardless of fault, Medical Payments is limited in its benefits. It pays strictly for the cost of medical treatment.
Personal Injury Protection is required in each of the 12 no-fault states. It pays for your medical bills, rehabilitation costs, lost income, and other related expenses. While it is a requirement, you can raise your limits for more protection in most states.
All insurance policies extend coverage to a rental car, but not all policies provide coverage that provides you with a rental. If you’re in an accident, and you need a temporary substitute, having rental car coverage will help you pay for the fees.
If you need help changing a flat, or you’re locked out of your car, your insurance company will come to your rescue if you have roadside assistance coverage. If you are already a member through an association, you might want to forgo the premiums.
Tips to Save Money on the Best Insurance
As a new driver, you might not know how policies are rated. There are ways to drive your rates down without buying a basic policy. It’s your responsibility as a consumer to take advantage of all of the savings that you can. Here are some money-saving tips:
- Add yourself as a driver on your parent’s policy if you still live in the household.
- If you have experience in another state, let your agent know for more experience credits.
- If you need physical damage coverage, take higher deductibles to keep premiums lower.
- When you’re a student, provide your grades to your insurer to see if you’re eligible for a Good Student Discount.
- If you can walk, bike, or carpool to work, do it. You can save a lot of money with a pleasure rating.
- When you find affordable insurance, stay with the same carrier so that you can earn loyalty discounts.
- Always take advantage of low mileage discounts if you drive less than the average driver.
The only way to ensure that you’re paying the best rates is to shop around. If you want to use technology to shop rates faster, enter your zip code into our FREE comparison tool and get instant auto insurance quotes in just a few minutes. Enter your zip code to get started!