How To Save On Car Insurance For New Drivers (2022 Guide)

Who is considered a new driver?

Each state sets its own minimum auto insurance requirements, and car insurance for new drivers will look the same as any other driver’s policy. While a lack of driving experience doesn’t change how much insurance you need, it will impact the price. Here are some examples of people who could be considered new drivers:

  • Teens
  • Older individuals without a driving record
  • People who immigrate to the U.S.

There’s no specific auto insurance policy for new drivers. You’ll be expected to purchase at least your state’s minimum required coverage, which typically includes bodily injury and property damage liability car insurance. Some states also require and personal injury protection.

What influences the price of insurance? 

Car insurance companies review a number of factors when giving estimates for coverage. Some center on the auto policy itself, but many others have to do with a driver’s demographics and driving record. Age and driving experience are two factors that insurers weigh heavily, as they’re key indicators of how likely a driver is to get into an accident.

Here are some of the main factors that influence

Here are some of the main factors that influence car insurance quotes:

  • Age
  • Gender
  • Marital status
  • Location
  • Vehicle make, model and mileage 
  • Credit score
  • Driving history  
  • Coverage limits

Car insurance rates by age and credit rating

Because having a poor credit score can make your rates go up, building good credit before you start driving is a smart way to get cheaper car insurance as a new driver. Here’s how car insurance rates compare between two age groups and across three credit ratings, according to our cost estimates.

How to save when adding a teen driver

Insurers charge higher rates for teens than for any other group of drivers, but teen driver discounts and other measures can help lower costs significantly. In particular, driving behavior programs, good student discounts and telematics can help provide reductions in premiums. Here are a few discount opportunities to explore:

Good student discount

Is your kid a star student? It’s common for car insurance companies to offer discounts when teens are in high school or college and earning top grades. For instance Allstate offers a good student discount to unmarried drivers, under 25 years of age, who have at least a B- average. The good student discount can significantly impact your premiums too. For example, State Farm offers up to 25% savings for students with good grades, up to age 25 or your last year of school.

Enroll in a safe driving course

Accidents on a teen’s driving record can cause rates to increase substantially, especially compared to drivers in other age groups. Many insurers now promote driver safety courses as a way to teach young, inexperienced drivers the rules of the road — and provide teen driver discounts. Geico, State Farm, Allstate and Travelers are all examples of carriers that reward drivers with a premium discount upon completion of required driver safety training courses.

Distant student discount

If your young adult driver lives away from home to attend college and leaves their car parked in your driveway, they might be eligible for a distant student discount. Most insurance companies provide a discount if your student lives a specified number of miles away (typically 100 miles or more). This is a great discount to have when combined with the good student discount.

Low-mileage discounts

Similar to the distant student, if your teen drives the car a low number of miles each year, then ask about a low-mileage discount. For example, Nationwide offers the pay-per-mile option through its SmartMiles program, providing coverage with a premium that changes each month, depending on the number of miles actually driven.

Consider the teen’s car

Most teen drivers may hope or dream for a fancy, new car, like a Ferrari or Porsche. But it’s far more likely that their first vehicle will be a gently used or modest sedan. Buying a broken-in car for a teen driver may save you quite a bit on insurance.

However, newer cars can also contribute to insurance savings too. For example, newer cars have some safety features — such as anti-theft devices, airbags and anti-lock braking systems — that can net lower premiums or make you eligible for specialty discounts. Older cars may not have all of these features.

Take advantage of telematics

Modern technology makes it easier than ever to keep an eye on your teens when they take to the road. Several insurers offer electronic devices that allow you to monitor teen driving habits. For instance, with Allstate families can enroll in the Drivewise program, in which a small device is installed in the vehicle. The information that’s gathered includes the number of miles the car travels, how fast it’s driven, the hours that the car is on the road and how often the brakes are applied hard.

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Frequently asked questions

Country Financial , a regional insurer, offers the cheapest overall rates we found for teen drivers, while State Farm had the lowest rates for national insurers. Auto-Owners had the lowest rates for parents with teens on their policies.

Teen drivers with their own policy pay an average of $4,917 per year. However, the increased cost of adding a teen to a parent’s plan is only $1,809 per year.

Insurers often provide discounts to teen drivers for getting good grades , taking an additional training course beyond basic driver’s education and being away at school, where you won’t be using your parents’ car much. Going on a parent’s or guardian’s policy can lower rates by more than 60%.

How much does car insurance cost drivers under 25?

Drivers 25-years-old and younger typically pay the highest auto insurance premiums. The average cost of car insurance for drivers under 25-years-old is $285 per month.

Whether it’s a full-coverage car insurance policy or minimum coverage, young drivers tend to pay more than drivers with more experience. The main reason for this has to do with the number of years behind the wheel. Younger drivers haven’t been driving for as long and are more likely to have an accident.

Factors such as location, coverage type, driving history, and vehicle will also play a role in determining the final rate. Young drivers may be eligible for various discounts to help decrease their monthly costs, like good student discounts or bundling with renters insurance. Drivers over the age of 25 will have generally lower rates from each of these companies.

Farmers

Farmers is Insurify’s top pick for the cheapest car insurance for drivers under 25. At $89 per month on average, young drivers can get excellent coverage from a reputable company. Farmers also has motorcycle, renters, homeowners, and condo policies available.

A few of the discounts that Farmers offers to young drivers include:

  • Good student discount
  • Multi-car discount
  • Anti-theft device discount
  • Bundling discount
  • Automatic payment discount
  • Paperless discount

USH&C

United Security Health and Casualty (USH&C) is a regional insurer. You can get a policy from them only if you live in Arizona, Arkansas, Illinois, Indiana, Missouri, Nebraska, Oklahoma, and Texas. The company specializes in personalized service and competitive pricing.

A few of the discounts that USH&C offers to young drivers include:

  • Safe driver discount
  • Telematics discount

Kemper

Drivers under 25 can get a great rate from Kemper. Their auto policies include 24/7 roadside assistance as a standard coverage option. The company also offers auto, home, life, and health insurance for one-stop-shopping.

A few of the discounts that Kemper offers to 25-year-old drivers include:

  • Good student discount
  • Military discount
  • Defensive driving course discount
  • Paid-in-full discount
  • Multi-car discount

Novo

Specializing in car insurance, Novo streamlines the process to get you the coverage you need. The company rounds out Insurify’s top five cheapest auto insurance companies for drivers under 25 with rates that average $184 per month.

Novo doesn’t offer policy discounts – they have built-in savings that provide affordable coverage for everyone. However, you can get special savings for multi-vehicle and multi-driver policies.

How to lower rates for teen drivers

There are several key ways that young drivers can lower the price of their auto insurance and save money.

The first is by qualifying for discounts, as most major insurers offer discounts young drivers can take advantage of.

Discount How you get it Good grades discountMaintaining good grades, usually at least a 3.0Safety course discountsTaking a defensive driving course approved by your insurerAway at school discountLetting your insurer know when a teen is at school and doesn’t have access to a carSafe driving discountAvoiding accidents and speeding tickets

You can also see if your insurer offers accident forgiveness at a reasonable price. It will cost more in the short term, but young drivers are prone to getting into accidents, and the savings will be significant if that happens.

Another significant way to reduce costs is by omitting coverages — such as collision insurance.

Collision insurance is costly for teen drivers because this demographic is statistically more likely to get into an accident and file an insurance claim than more experienced drivers.

It’s important to remember that if a teen driver is at fault in an accident without collision coverage, they will have to pay for repairs themselves. Unless your car is older and valued at only a few thousand dollars, we recommend you maintain collision insurance.

Tips for Cheaper Car Insurance

If you’re under 25, finding the cheapest car insurance might seem like an impossible task. Follow these tips to save money on insurance and cut your premiums.

Shop Around for Car Insurance

The best way to save money on your car insurance is to shop around. When you’re under 25, many insurers will charge an extra premium just because of your age. It’s smart to get quotes from several different companies. Free online quote-comparison tools like Insurify make this process easy.

Remain on Your Parents’ Policy

Since most of us want to keep our costs down, remaining on mom and dad’s policy until we can afford our own is a quick way to save money on car insurance. You’ll need to have the same permanent address as your parents to make this work. Staying on a parents car insurance policy helps young drivers keep rates reasonable.

Drive an Older, Safer Car

Convertibles and flashy sports cars are tempting to buy, but don’t do it. Instead, drive an older, safer car, they’re much cheaper to insure.

Select a High Deductible Plan

If you’re looking for cheap car insurance, choosing a higher deductible policy could be your best bet. Generally, the higher your deductible, the lower your premium.

Keep a Clean Driving Record

Maintaining good driving habits and keeping a clean driving record will save you money on your car insurance policy, no matter your age. If you rack up points on your license for careless driving (e.g., speeding, running red lights), auto insurers consider you riskier and charge accordingly. It’s not worth it. Save yourself some cash by being a good driver.

Maintain a Good Credit Score

Many insurers use your credit score as an indicator of your overall trustworthiness. A poor credit score can end up costing you more for car insurance coverage. Work on building up your credit rating to lower your premiums and increase your peace of mind. Drivers with a good credit score benefit from lower average rates.

Best Cheap Car Insurance for Teens FAQ

No. It’s usually cheaper to keep a teen driver on a parent’s policy. There are some cases where a separate auto insurance policy can be cheaper. For example, if a parent has a sports car on the policy, and the insurance company matches the teen driver with the costliest vehicle (some do), then the combination of the car and novice teen driver could push rates sky high.

For national averages, we found the cheapest rate for a family with a teen driver from American Family, Geico, Nationwide, State Farm and USAA. Our rankings also factor in complaints and collision repair scores.

You normally need to add a teen to your insurance when they get a driver’s license. Most insurance companies will cover the teen with your policy while they have a learner’s permit. So if they spend two years learning to drive with a permit—for example, from ages 16 to 18—you can enjoy those two years before high rates kick in.] However, some companies, like USAA, request that you add the teen as soon as they get their permit. With this in mind, don’t assume your teen with a permit is covered. Instead, ask your agent when the young driver must be added (during the permit stage or when fully licensed).

Our methodology

Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best car insurance companies. We collected data on dozens of auto insurance providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the insurers that scored the most points topping the list.

Here are the factors our ratings take into account:

  • Cost (30% of total score): Auto insurance rate estimates generated by Quadrant Information Services and discount opportunities were both taken into consideration.
  • Coverage (30% of total score): Companies that offer a variety of choices for insurance coverage are more likely to meet consumer needs.
  • Reputation (15% of total score): Our research team considered market share, ratings from industry experts and years in business when giving this score.
  • Availability (10% of total score): Auto insurance companies with greater state availability and few eligibility requirements scored highest in this category.
  • Customer Experience (15% of total score): This score is based on volume of complaints reported by the NAIC and customer satisfaction ratings reported by J.D. Power. We also considered the responsiveness, friendliness and helpfulness of each insurance company’s customer service team based on our own shopper analysis.

*Data accurate at time of publication.

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