Tips on Buying Car Insurance for the First Time

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Updated: May 20, 2024

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A foundational understanding of key terms like premiums, deductibles and coverages equips you to make an informed and cost-effective decision. Ensure that your chosen policy meets your individual needs and aligns with your state's minimum car insurance requirements.

While an exclusive or independent agent can offer personalized guidance to find the best policy match, visiting a company's website can provide quick — albeit potentially less precise — quotes.

Car insurance for first-time drivers is generally more expensive because of their lack of experience on the road, but stacking discounts can help lower costs.

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Key Takeaways

Don't settle for the first quote you receive. Shop around, compare rates from different providers and check customer reviews to ensure you're getting the best value and service.

Assess the type and amount of coverage you need based on your car's value, your driving habits and any loan or lease requirements. It's key to strike a balance between adequate protection and affordability.

Many insurance companies offer discounts for safe driving, bundling policies or even good grades for student drivers. Inquire about available discounts to reduce your premium.

We ensure that MoneyGeek's content meets our highest editorial standards by carefully scrutinizing it. Throughout each stage, our team writes, checks facts, edits and reviews the content produced to generate accurate information.

How to Get Car Insurance for the First Time

Your insurance needs depend on your car's value as well as who drives it and where. Keep legal requirements in mind, especially for out-of-state trips. When looking for insurance, get several quotes from agents or online, and ask about discounts and policy specifics to get the best deal.

Research and Understand Your Coverage Needs

Reflect on factors like your vehicle's make and model, your driving frequency and your location to inform your decision.

Here's a closer look at what to consider:

Your Car's Make and Model Your vehicle's make, model, age and value can significantly influence the cost and type of coverage you might need. Typically, newer luxury cars might have higher premiums, while older models might cost less to insure. Some makes and models are more prone to theft or have higher repair costs, influencing the insurance rate.

Your Driving Frequency How often you hit the road matters. If you're a daily commuter covering many miles, you might require more comprehensive coverage. In contrast, an occasional driver might opt for a more basic plan that only includes liability-only coverage.

Risk Level of Your Area Your area's risk of accidents, vehicle thefts or natural disasters can impact the type of coverage you might want to consider. For instance, if you reside in an area prone to floods or hail, getting comprehensive coverage may help pay for weather-related damage.

Interstate Driving Planning on road trips or have work that takes you across state lines? Each state has its own insurance requirements, and your policy is based on the regulations in the state where your car is registered. You're not legally obligated to change your policy if you drive in other states, but if you're frequently driving in another state, you may want to ensure your coverage aligns with any additional risks you might encounter.

Car insurance isn't a one-size-fits-all solution. It's a personalized protective measure molded by your unique lifestyle, needs and circumstances. After figuring out how much insurance you need, find out how much your state requires you to have.

Know the Basics of Car Insurance

It's important to understand the basics of car insurance before purchasing a policy. This foundational knowledge ensures you select the right coverages, avoid overpaying and safeguard your financial wellbeing. By grasping key terms and how they impact your protection, you can make informed decisions that align with your driving habits and personal circumstances.

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    Premiums are essentially your car insurance bill. It's the amount you pay the insurer to keep your coverage active. Imagine it as a subscription fee, much like your monthly Netflix or gym membership, but instead, it's for your car's protection. Auto insurance premiums are usually paid on an annual or bi-annual basis

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    A deductible is the amount you're responsible for before your insurance benefits kick in. If your deductible is $500 and repair costs after an accident are $2,000, you'll pay the first $500 and the insurance company will cover the remaining $1,500. Optional collision and comprehensive coverages are subject to separate deductibles, while liability coverage has no deductible.

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    Insurers offer many discounts, including some that act as incentives for particular behaviors or choices that reduce risk, such as taking a defensive driving course. However, you may also be eligible for savings on your premium if you bundle your car and home insurance, opt for paperless billing, pay you policy in full and more.

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    Coverage refers to the various types of protection your insurance policy provides. Liability coverage takes care of damages you cause to others, whereas comprehensive coverage could help repair your car if, say, a tree branch falls on it.

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    A claim is a formal request to your insurance company seeking coverage of a vehicle loss based on the terms of your policy. If someone breaks into your car and damages a window, you'd file a claim to get compensated for that repair, assuming you have comprehensive coverage.

In addition to the policyholder, a car insurance policy may also cover other drivers who drive the owner’s car with permission under the provision of permissive use. In contrast, excluded drivers, even with the permission of the owner, will not be covered by the policyholder’s insurance.

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    Insured/Listed Driver

    The insured or listed driver is the primary individual named on the insurance policy. They are covered when driving the insured vehicle. Listed drivers may also include other people you add to your policy, such as household members or a live-in caretaker who regularly drives the owner's vehicle.

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    Excluded Driver

    An excluded driver is someone specifically not covered by your car insurance, even if they use the vehicle. For example, let's say Mark has a history of multiple speeding tickets. To avoid a spike in premiums, his family might choose to exclude him from their car insurance policy. This means if Mark drives and gets into an accident, the family's insurance policy won't cover the damages.

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    Permissive Use Driver

    A permissive use driver is someone who isn't a listed driver on your policy but has your permission to drive your car occasionally. Most insurance policies will extend coverage to permissive drivers, but the level of protection might vary.

    Let's say Sarah lends her car to her friend, Jake, for the weekend. Jake becomes a permissive use driver. If Jake gets into an accident while using Sarah's car, Sarah's insurance might cover the damages, but the specifics will depend on her policy's details.

Knowing who is and isn't covered under your car insurance policy can prevent unexpected surprises and financial pitfalls. It's all about tailoring your coverage to your specific needs and understanding how each driver category affects your protection. Always read the fine print and ask questions if you need any clarifications.

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Auto insurance is expensive, but what you get from a solid auto insurance policy is worth what you pay in premiums. Depending on the type of coverage you get, your car insurance can help replace a totaled car or pay for damages in weather-related accidents.

Review State Requirements and Optional Coverages

When buying car insurance for the first time, you will need to find out what type of car insurance coverage you need. You will come across two different categories of coverages: state minimum car insurance requirements and optional coverages.

State-Mandated Car Insurance Coverages

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    Liability-Only Coverage

    This is the most basic form of car insurance, covering damages and injuries you cause to others in an accident where you're at fault.

    What It Covers:

    • Bodily Injury Liability (BIL): Covers medical expenses for injuries you cause to someone else.
    • Property Damage Liability (PDL): Covers damages to someone else's property, typically their car, but can also include structures like homes or fences.
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    Uninsured/Underinsured Motorist (UM/UIM) Coverage

    This coverage comes into play if you're in an accident with an at-fault driver who either doesn't have insurance (uninsured) or doesn't have enough insurance to cover the damages (underinsured).

    What It Covers:

    • Medical expenses
    • Pain and suffering
    • Hit-and-runs
    • Lost wages for you and your passengers
    • In some states and policies, property damage is also covered
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    Personal Injury Protection (PIP)

    Often referred to as "no-fault insurance," PIP covers medical expenses and, in many cases, lost wages and other damages, regardless of who is at fault for the accident.

    What It Covers:

    • Medical expenses
    • Rehabilitation
    • Funeral costs
    • Lost wages and services you can't perform due to injuries like childcare or house cleaning
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    Medical Payments Coverage

    A type of insurance that covers medical or funeral expenses due to a car accident, irrespective of who's at fault.

    What It Covers:

    • Medical bills, surgeries, X-rays
    • Sometimes funeral costs for you and your passengers

Only two out of 50 states and Washington, D.C. do not require drivers to carry liability car insurance. Also, not all states mandate drivers to carry uninsured motorist coverage, personal injury protection or medical payments coverage. For example, drivers in Maine and Pennsylvania need to have medical payments coverage, while states like North Carolina and Connecticut mandate uninsured/underinsured motorist coverage.

Make sure to check with your state and insurance agent to get the right kind of coverage. In most states, you need to present proof of insurance when you register your car with the DMV. The DMV agent, should your state require insurance coverage before car registration, will also make sure you have adequate coverage that satisfies state regulations.

Even if you’re not legally required to carry certain coverage, like uninsured motorist coverage, you should consider stacking it in your policy. If you live in a state where many drivers don’t carry enough insurance, your policy may be able to help you pay for your medical bills if you get into an accident with an uninsured or underinsured driver.

Optional Car Insurance Coverages

Car insurance providers also offer other optional coverage beyond those mandated by the state.

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    Comprehensive Coverage

    This covers damages to your vehicle caused by events that typically do not involve a collision.

    What It Covers:

    • Theft
    • Vandalism
    • Cracked windshields
    • Natural disasters (like hurricanes, tornadoes, wildfires, floods and earthquakes)
    • Fire
    • Falling objects
    • Civil disturbances (including riots and protests that turn violent)
    • Impact with animals (like hitting a deer)
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    Collision Coverage

    This covers damages to your vehicle resulting from a collision with another vehicle or stationary object, such as a tree, building or light pole, regardless of who's at fault. This also covers rollover accidents and pothole damage.

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    Gap Insurance

    If your car is totaled and you owe more on your loan or lease than the vehicle's depreciated value, gap insurance will cover the difference. This is especially beneficial for newer cars that can depreciate quickly. Adding gap coverage to your existing policy is typically much more cost-effective than purchasing the coverage from a car dealer.

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    Rental Reimbursement

    If your car is being repaired as part of a covered insurance claim, this coverage helps pay for a rental car or other transportation costs.

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    Roadside Assistance

    Provides assistance if your vehicle breaks down, covering services such as towing, jump-starting a battery, changing a flat tire or locksmith services.

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    Custom Equipment

    If you've added custom features to your car, like specialized sound systems, aftermarket modifications or custom wheels, this coverage will provide protection against theft or damage of those additions.

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    New Car Replacement

    If a new car gets totaled within a certain time frame after purchase (typically three years or less), this coverage ensures you can replace it with another new car of the same make and model.

While these coverages are optional, they can add layers of financial protection and peace of mind, depending on your individual circumstances and the potential risks you might face. Always assess your situation and consult with insurance professionals when determining which coverages are right for you.

Gather Necessary Documents

To speed up the process — and possibly get insurance on the same day you begin shopping — prepare all important documents and information car insurance companies will need.

Insurance providers will likely ask for details on listed drivers, including their:

  • Full legal name
  • Date of birth (to verify age)
  • Gender
  • Social Security number
  • Current address
  • Occupation or status (e.g., student, employed, unemployed)
  • Marital status

Keep important documents handy, like:

  • A valid driver's license (with the license number and issue date)
  • Details about the vehicle to be insured (make, model, year, Vehicle Identification Number)
  • Information about the vehicle's primary use (e.g., commuting to school or work, leisure)
  • If applicable, details about driver's education or training courses completed
  • Driving history or record, if any (including any past accidents or violations)
  • Details of any previous car insurance policies, if applicable, especially any proof of no claims bonuses

Whether you're a new driver or someone with a bit more experience behind the wheel, remember that insurers are looking to gauge risk. By providing accurate information and understanding what's needed, you're on the right path to getting a policy that suits your unique needs.

Shop Around

When shopping for car insurance, it's important to do your research and compare quotes from multiple companies in order to get the best deal.

Here are some tips for how to shop for car insurance as a first-time driver:

  • Collect at least three quotes from different companies. This will give you a good idea of the range of prices available.
  • Consider using a car insurance estimate calculator. These can make it easy to compare quotes from multiple companies at once.
  • Be sure to compare quotes for the same coverage levels to ensure that you're comparing apples to apples.
  • Ask about car insurance discounts. Many car insurance companies offer discounts for things like good student status, anti-theft devices and safe driving habits.

Consider working with an insurance agent. An agent can help you understand your options and find the best policy for your needs.

Exclusive Agent vs. Independent Agent vs. Company Website

There are three main ways to shop for car insurance: through an exclusive (or captive) agent, an independent agent or the insurance provider’s website. An exclusive agent works for a specific insurance company, while an independent agent represents multiple companies. A few clicks on the company website can get you an instant — albeit inaccurate — quote.

Exclusive agents typically have more knowledge about the products of their own company, but they may not be able to offer as many options.

Independent agents can provide more choices and quotes for you to choose from.

Many car insurance companies offer instant quotes on their websites. This is a convenient way to get an idea of your rates without having to talk to an agent. However, it's important to note that these quotes likely will not be as accurate as quotes from an exclusive agent or independent agent.

Ultimately, the best way to shop for car insurance is the way that works best for you. If you're comfortable doing your own research, then you may be able to save money by going directly to the company website. But if you want more personalized service, then an insurance agent may be a better option.

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There’s no limit to how often you should shop around for car insurance. You can browse even before your current policy expires. Shopping around once a year can help you find better, more affordable deals. And with the cost of insurance reducing with each year you gain more experience on the road, shopping around regularly can help you keep costs low.

Ask About Discounts

Car insurance discounts can significantly reduce your premiums, and it's always a wise move to be aware of them. Here's a list of some of the most common discounts in the industry:

Description & Eligibility

Safe Driver Discount

  • Definition: This discount rewards drivers with a clean driving record, free of any at-fault accidents or traffic violations.
  • Eligibility: Drivers with no accidents or violations for a specific period (usually 3-5 years).

Good Student Discount

  • Definition: A reduction in premiums for students who maintain good grades.
  • Eligibility: Full-time high school and college students who have a certain GPA or rank in the top percentile of their class. Typically, the benchmark is a B average or better.

Multi-Policy (Bundling) Discount

  • Definition: A discount for holding multiple insurance policies with the same company.
  • Eligibility: Policyholders who bundle two or more types of policies, such as home and auto insurance, under the same provider.

Multi-Car Discount

  • Definition: A discount for insuring multiple vehicles under one policy.
  • Eligibility: Households with more than one car insured under the same policy. Most insurers will allow a maximum of four or five vehicles on the same policy.

Defensive Driving Course Discount

  • Definition: A discount offered to those who have completed an approved defensive driving or driver's education course.
  • Eligibility: Drivers who have completed a qualifying course; some companies may restrict this to certain age groups.

Car insurance is generally more expensive for first-time drivers, so knowing how to stack discounts can help you pay less for the most coverage.

Each insurance provider may have variations on these discounts or offer additional ones not listed here. Always inquire with your chosen provider or your insurance agent to ensure you're maximizing potential savings.

Buy Your Policy

Once you've found a policy that fits your needs, there are a few more steps to take to finalize it.

Review the policy details

Ensure that all information is correct: your personal details, the vehicle details and the coverages you've selected. Any mistake can affect the validity of your policy or a future claim.

Understand the coverage limits and deductibles

Confirm the limits for each coverage type, and understand the associated deductibles. A lower deductible usually means a higher premium and vice versa. Ensure it aligns with what you're comfortable paying out-of-pocket in case of a claim.

Clarify exclusions

Every policy has exclusions. Ask your agent to clarify any points of confusion.

Discuss payment methods

Most providers accept various payment methods such as credit/debit card payments, checks, bank drafts or electronic fund transfers (EFT). Some insurers offer discounts for autopay.

Sign on the dotted line

Once everything looks good, you'll sign several forms to make the policy active. Digital signatures are becoming more common, so don't be surprised if the process is electronic.

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Buying car insurance directly from a car dealership might seem convenient, especially when you're eager to hit the road in your new vehicle. However, it's typically not the most informed choice. Dealerships often have partnerships with specific insurance providers, which could limit your options and potentially inflate prices due to added commissions.

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Rates updated:

Jul 22, 2024

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Always Keep Proof of Insurance

Ensure you have a temporary or permanent proof of insurance card or document. This is mandatory to have when driving. Many companies also provide digital proof of insurance. Still, always keep a physical copy in your car, especially if your state requires it.

Keep it in your glove box or above the driver’s seat — it’s a good idea to have it within arm’s reach as local law enforcement may ask to see proof of insurance at any time.

When to Shop for Car Insurance for First-Time Buyers

There are a few times of year when it's a good idea to shop for car insurance when buying for the first time:

Before you buy a car

This is the best time to shop around and compare quotes from different companies. You'll need to have car insurance in place before you can drive your new car off the lot, so it's important to get quotes and buy a policy before you make your purchase.

When you're renewing your policy

This is a great time to compare quotes from other companies to see if you can get a better deal. Your insurance rates may have changed since you first bought your policy, so it's important to shop around and see if you can save money.

After a life event

If you've recently gotten married or bought a new car, your insurance rates may change. This is a good time to shop around and see if you can get a better price. If you've moved to a new state, you must change your insurance policy as rates and coverage requirements are different in every state. You may be able to keep the same insurer, but the policy will need to be changed.

How Much Is Insurance for a First-Time Driver?

Car insurance for teen drivers is generally more expensive than car insurance for older first-time buyers. Teenagers, especially those in the 16-19 age range, are statistically more likely to be involved in accidents than older drivers. Insurance premiums are based on risk assessments, and younger drivers are often deemed higher risk due to their inexperience on the road and the higher accident rates associated with their age group.

While older first-time buyers may pay more than seasoned drivers, their rates are generally lower than teens'. Rates can also vary based on driving records, vehicle types, location and other factors.

Average Car Insurance Rates for First-Time Drivers
$3131Monthly Premium$261
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Ensure you're getting the best rate for your auto insurance. Compare quotes from the top insurance companies.

Best Car Insurance for First-Time Buyers

Based on MoneyGeek's comprehensive analysis, which evaluated claims processing, coverage options, customer satisfaction, financial stability and affordability, USAA, Travelers and Progressive emerge as top picks for people buying car insurance for the first time.

USAA stands out as the premier choice for current and former U.S. military members and their families, offering a blend of exceptional service and value. If you're not eligible for USAA, Nationwide is a strong alternative and stands out for its blend of comprehensive coverage and unique benefits. With its strong industry reputation, it's a favored choice for drivers seeking dependable protection and personalized service on their journeys. Travelers, on the other hand, provides drivers with robust coverage and tailored options. Its long-standing reputation and dedicated support make it a top choice for people prioritizing reliability and personalization on the road.

All three providers are committed to delivering quality car insurance and prioritize customer care, striking a balance between reliability and affordability. For those venturing into the car insurance market for the first time, these providers offer a trustworthy and financially savvy starting point.

USAAAnnual Premium$2,402Monthly Premium$200MG Best Score (out of 100)98
NationwideAnnual Premium$2,138Monthly Premium$178MG Best Score (out of 100)97
TravelersAnnual Premium$3,351Monthly Premium$279MG Best Score (out of 100)97
State FarmAnnual Premium$2,977Monthly Premium$248MG Best Score (out of 100)97
AllstateAnnual Premium$2,790Monthly Premium$233MG Best Score (out of 100)97
GEICOAnnual Premium$3,195Monthly Premium$266MG Best Score (out of 100)96
ProgressiveAnnual Premium$4,110Monthly Premium$343MG Best Score (out of 100)96
FarmersAnnual Premium$5,412Monthly Premium$451MG Best Score (out of 100)95

Why Is Car Insurance Expensive for First-Time Drivers?

If you're purchasing car insurance for the first time, you might notice that rates seem particularly steep. Here are some of the reasons why:

  • Experience. Car insurance is, at its heart, all about assessing risk. First-time drivers, regardless of age, lack the on-road experience that longer-term drivers have. In the eyes of insurers, less experience can translate to a higher likelihood of causing accidents and thus, a higher risk of claims.
  • Lack of a Track Record. Seasoned drivers have a driving record that insurance companies can scrutinize — whether they've had accidents, made previous claims or garnered any traffic violations. First-time drivers, however, present an unknown risk, leading insurers to err on the side of caution with higher rates.
  • Age Factor. Many first-time drivers are young, often in their teens. Statistically, younger drivers tend to be involved in more accidents than older age groups. Insurers set premiums based on these statistics, and unfortunately for younger drivers, this can lead to steeper rates.
  • Premium Discounts. Longer-term drivers may have had the chance to earn various discounts that can lower their premium, such as a no-claims bonus or multi-policy discounts. First-time drivers haven't had the opportunity yet to avail of these.
  • Vehicle Type. First-time drivers, excited by the prospect of their first car, might choose a model that's more expensive to insure. Sportier cars or brand-new models can increase premiums.

Car insurance is a balance of probabilities. Until you've built up a history of safe driving, insurers default to viewing you as a higher risk. The good news? As you gain experience and maintain a clean driving record, your premiums will generally decrease over time.

Always shop around, take advantage of any applicable discounts and consider courses like defensive driving to possibly reduce your initial rates. As you drive more, you'll be paving the way to more affordable coverage in the future.

Frequently Asked Questions

Below, we answered some of the most frequently asked questions about tips for buying car insurance for first-time buyers.

What do I need to know before buying car insurance?
Do you buy insurance before or after the car?
Why is car insurance so high for first time drivers?

About Mark Fitzpatrick

Mark Fitzpatrick headshot

Mark Fitzpatrick has analyzed the property and casualty insurance market for over five years, conducting original research and creating personalized content for every kind of buyer. Currently, he leads P&C insurance content production at MoneyGeek. Fitzpatrick has been quoted in several insurance-related publications, including CNBC, NBC News and Mashable.

Fitzpatrick earned a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He is passionate about using his knowledge of economics and insurance to bring transparency around financial topics and help others feel confident in their money moves.

  • Centers for Disease Control and Prevention. "Teen Drivers." Accessed August 3, 2023.