UPDATED: Jan 25, 2019
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First-time drivers face very high auto insurance rates; it is a challenge to find good coverage from a reputable company at an affordable rate. Shopping for your first insurance policy is confusing and overwhelming, but there are ways to make it easier.
Before you buy a policy, it is important to understand why you need insurance and what coverage you really need. That will allow you to make an informed decision on the best policy for your needs.
The Basics of Insurance for New Drivers
As soon as you become a licensed driver, you are required by law to carry a basic amount of liability insurance. This legal minimum varies from state to state, and it is designed to make sure that all drivers are financially responsible for any damage caused in an accident where they are at fault.
All states require drivers to carry liability coverage to pay for bodily injury as well as property damage. Some also require other coverage, such as uninsured/underinsured motorist coverage or personal injury protection. Every policy sold in your state will provide at the very least this legal coverage.
In addition to what the law requires, if you have a loan on your car your lender will also have requirements. You will need to carry comprehensive coverage and collision coverage to pay for the damage to or loss of your car in an at-fault accident. Lenders require these things to protect their interests in your vehicle. They may also have a limit on how high your deductible can be to ensure you can afford to pay your share; check with your lender on their rules before you shop for insurance.
It is vital for new drivers to understand that while the state minimum may get you on the road legally, it is not always sufficient in the event of an accident. In fact, most state minimums are not enough to cover you in a serious accident; insurance experts recommend carrying higher liability limits even though it is costlier.
Specifics of Auto Insurance for New Drivers
While there is no specific coverage outside what is required by law for all drivers, first-time drivers do have a few things to consider.
The first is the discounts offered to new drivers. Most insurance companies will offer a discount for completing a driver education course. They may also have their own new driver program you can complete for an added discount.
For new drivers who are also students, there are discounts for maintaining a good grade average. This applies to both high school and college students in most cases, so ask about it when getting quotes.
As always when recommending insurance companies, one of our top priorities is choosing companies that have a good reputation. This is especially vital when you are shopping for new driver insurance, as it can be easy to choose a cut-rate insurance company in order to fit your budget only to find out they are not there for you when you have a claim.
That said, we also took into consideration the company’s rates. Due to the fact that new driver insurance is so expensive, finding a company that offers lower premiums in addition to good service is the crux of the matter.
Our top picks for new driver insurance offer good discounts to help keep rates down, and they are a good value even if you are a new driver seeking insurance on your own and are not able to take advantage of the discounts offered by joining the policy of a parent, guardian, or another family member.
Finally, while great rates can be had from companies that have eligibility requirements, such as those offered to military members by USAA, we chose companies that are open to everyone and sell their products across the nation.
Our Top Recommendations
All three of these companies meet our criteria for rates, service, and new driver-friendliness.
It is not a surprise to see Geico in our list, as they make most lists where budget is a factor. Across the board, Geico has some of the best rates around, and that is not any different for new drivers. Geico offers good student and driver education discounts to make their rates even better, and they have an easy to use mobile app and straightforward approach that will not confuse people new to insurance.
Geico also has a good reputation for customer service and ranks highly in claims satisfaction surveys; it is no wonder they have reached the number two spot in market share across the country.
From the number two insurance company in the nation, we come to the number three. Like Geico, Progressive has lower rates than most companies for all drivers and does well for new drivers as well.
Progressive offers a slew of discounts, including those aimed at new drivers, and tools to help get your coverage within your budget. They also come with a good reputation for customer service and, again, an easy to use mobile app and online system.
Esurance is not one of the biggest companies, but they are owned by one of them; as an Allstate company, they have the financial backing to pay claims. They are the online-only Allstate company, which makes them competitive for rates with Geico and Progressive.
In our rate comparisons, they perform well even for new drivers who are seeking insurance solo, which is a big plus and means that as you qualify for more discounts you can expect rates to get even better.
Shopping for Insurance for New Drivers
The first instinct of many new drivers when they take a look at the insurance rates is to select a bare-bones legal minimum policy. Certainly, if that is all you can afford, it is better than having no coverage, but in the event of a serious accident, you could find yourself responsible for thousands of dollars in damages. Statistically, new drivers are at a higher risk of that happening – so be aware of the chance you are taking.
You may or may not need comprehensive and collision coverage; if you do not have a loan and drive a low-value car, you may be able to manage without them. Skipping them means that there is no recourse for you, however, if your car is stolen or damaged in an at-fault accident. Be sure you can handle the financial fallout of those events.
If you are able to add your car to the existing policy of a parent, guardian, or another family member, that is by far your best plan. Even students away from home at college can still be insured on a parent’s policy at most insurance companies. This will let you take advantage of the discounts they have earned, as we as multi-policy discounts.
Even if you are unable to add your car to another driver’s policy, there may still be a way to take advantage of multi-policy discounts if you rent a home. Many insurance companies offer a discount for taking out a renter’s policy. While that may seem like an extra expense, the discount can be so good that you wind up paying less for both policies than you would have paid for auto alone.
Finally, shop around as much as you can. Make sure that every quote you get meets your needs for coverage, and then compare as many companies as possible. Rates vary from state to state and even zip code to zip code, so the company that’s best for one new driver may not be the best for you.
The Bottom Line
New driver rates are high, but there are a lot of ways to make your insurance more affordable. Take the time to compare rates while making certain that you are buying a policy that gives you good value, not just a cheap premium.
Remember that as you prove yourself to be a safe driver, those rates are going to get better; it is vital in these first few years to be cautious, avoid tickets, and earn the discounts that insurance companies offer to good drivers.
For a list of companies that we recommend, visit our Best Insurance Companies page.