How Much More Do New Drivers Pay for Insurance?

What Factors Into the Insurance Cost for First-time Drivers?

In auto insurance, the term “new driver” refers to a person who doesn’t have any driving history or record of insurance. These drivers include newly licensed teenagers, those new to the country, or those who got his or her driver’s license later in life.

Several factors and the type of insured vehicle factor into the cost of car insurance for a first-time driver. The average price for new drivers will be higher than that for more experienced ones. It’s important to remember, though, that insurance costs vary widely. Some of the factors that insurance companies take into account when calculating the cost of a policy include the following:

  • Driver’s age
  • Driver’s driving history including accidents or violations
  • Driver’s credit score
  • The vehicle’s make and model
  • Driver’s address

Of these factors, two carry the most weight: your driving record and where you live. If you compile speeding tickets, DUIs, or accidents, your rates will increase exponentially. In addition to fines, these tickets can remain on your driving record for three to five years. Avoiding violations can save you thousands of dollars.

Similarly, where you live plays a role in the costs. If you live in an area with a high rate of theft, your insurance rates will increase to offset those costs. Also, if you live in a place that has a lot of traffic, the accident rate will increase—and so will your premium.

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Whats the bottom line when it comes to new drivers?

New drivers pay more for coverage because they have less experience and driving history than more seasoned drivers. The less driving history you have, the higher your rates will be. Additionally, the younger you are, the more you’ll likely pay. However you still want to play it safe. Don’t just look at the cheapest companies – compare prices across the board in order to find coverage and annual premiums that would fit into your budget.

Ready to buy car insurance for a new driver? Enter your ZIP code to get free car insurance quotes for new drivers so you can start your car insurance comparison today.

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How to find the best car insurance rates

Buying car insurance doesn’t have to mean breaking the bank; there are ways to save. Discounts are one of the best ways to lower your premium. Most major car insurance carriers offer discounts. Here are some of the most common insurance discounts in the U.S.

  • Claims-free: Drivers who have no auto claims on their record for the past several years typically qualify for savings.
  • Bundling insurance policies: You can often reduce your auto insurance premium when you bundle your car insurance policy with a home insurance policy or another type of policy offered by your insurer, earning discounts on both policies.
  • Good student discounts: Many auto insurers offer discounts for young drivers who earn good grades in high school or college.
  • Paying in full: If you can afford to pay your car insurance premium in full, versus monthly or quarterly, it may reduce your premium.
  • Telematics: Most car insurance companies offer telematics programs where you can allow them to track your driving habits with an app or device for possible savings.

Because every auto insurer offers a different suite of discounts, speaking with your insurance agent or company representative may be the best way to learn about savings opportunities.

Additionally, getting quotes from several car insurance companies can help you compare rates. Each company sets its own rates, so the same level of coverage can cost vastly different amounts with different providers. Comparing quotes might help you find the lowest price for the coverage you need.

How much car insurance rates cost by age and gender

Auto insurance quotes also vary depending on the driver’s age and years of experience. Young and inexperienced drivers tend to get in more accidents behind the wheel, which is why young drivers have higher auto insurance rates.

For example, an 18-year-old driver pays more than three times as much as a 25-year-old driver for auto insurance, with all other factors equal.

Average rates gradually decrease each year until a driver reaches age 25.

Ensure you are selecting the right car insurance coverage

Auto insurance is something that most people don't think about very frequently. While there are several factors that drive people to look to change auto insurance carriers, it is important to educate yourself in order to ensure you select the right coverage for you. The right coverage means not paying for coverage you don't need and not foregoing coverage that would make sense for your personal situation. While price is a major factor, we also consider other factors such as customer service and the claims process when choosing what we think are the best auto insurance providers.

Car insurance for teenagers

It can be exciting for a teen to start driving on their own for the first time, but the cost of car insurance for new drivers is typically high. As mentioned, age is one of the main factors insurance companies consider when calculating prices.

Part of the reason insurance companies hike rates for younger drivers is the increased likelihood of an accident. Car crashes are the second-highest leading cause of death for teenagers in the U.S., according to the Centers for Disease Control and Prevention. Additional reporting from the Insurance Institute for Highway Safety shows that nearly two out of every three teenagers killed in crashes in 2019 were males.

How to get cheap car insurance for new drivers

Usually, the best way for young drivers to get cheap car insurance is to stay on their parents’ policies. Car insurance companies typically offer families several discounts to save money on insurance coverage, including:

  • Safe driving discounts
  • Good student discounts (must have B average grades or higher)
  • College student and student-away-at-school discounts
  • Defensive driving course discounts

Young drivers can’t purchase their own policies unless they own their own cars and no longer have the same permanent address as their parents. Keep in mind that drivers under the age of 25 usually pay much higher rates. Adding a young driver to an insurance policy will still increase your premiums substantially, but the amount will depend on your insurance company, the vehicle and where you live.

Choose the right car and insurance policy

Your new driver may have their heart set on the car of their dreams, but it’s important to remember that a luxury car is likely going to cost you more in insurance. Your best bet when buying a teen’s first car is to find one that is safe and reliable, as this is often less of a risk on the road or your wallet.

However, if your teen does have a luxury vehicle, it may be cheaper for them to be on their own car insurance policy, since chances are the insurance premiums will be significantly higher than other cars within your policy. It may also make more sense for them to purchase their own policy if either parent has any DUIs or multiple moving violations, as adding a teen driver can make the current policy cost even more.

In most cases though, it’s generally cheaper to add your teenager to your household car insurance policy. While doing so will increase your insurance rates, your policy’s coverage and deductibles will also apply to your teen. You may also be able to save money by signing up for a multi-car insurance policy.

A higher auto insurance deductible may lower the rate, but could mean more out-of-pocket expenses after an accident. If the vehicle is older or has very high mileage, liability coverage may be a better option than collision or comprehensive – though it will not cover damages to the car after an at-fault accident. Getting the right coverage that best fits your needs is important for saving money on your teen auto policy. Learn more about Nationwide’s auto insurance coverage types today.

Factors That Affect First Time Driver Insurance Cost

Now let’s look at the factors that make up the rate you can expect to pay as a new driver. The possible combination of these factors is almost infinite, so we can’t give you an exact number, but we can tell you what insurers will be looking at.

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How much does car insurance cost by state?

Answering, “How much does car insurance cost?” is a bit complicated, as it varies based on multiple factors, including the state where you live. In addition to individual rating factors, location is important. Traffic volumes, accident and claim reporting rates, as well as theft and vandalism rates, vary in every city.

Cost of living can also impact car insurance premiums. When it comes to repairing a vehicle, the expense of labor and parts can cause repair costs to skyrocket, further increasing premiums in some locations compared to others.

Based on Bankrate’s analysis of 2022 data from Quadrant Information Services, the five most expensive and cheapest states for full coverage car insurance, on average, include the following:

Top 5 most expensive states for car insurance

  • New York: $2,996 per year — 69% above national average
  • Louisiana: $2,864 per year — 62% above national average
  • Florida: $2,762 per year — 56% above national average
  • Nevada: $2,426 per year — 37% above national average
  • Michigan: $2,345 per year — 32% above national average

Top 5 cheapest states for car insurance

  • Maine: $876 per year — 51% below national average
  • Vermont: $1,000 per year — 44% below national average
  • Idaho: $1,065 per year — 40% below national average
  • New Hampshire: $1,182 per year — 33% below national average
  • Ohio: $1,200 per year — 32% below national average

  • State Average annual premium for full coverage insurance Alabama $ 1,760 Alaska $1,770 Arizona $1,743 Arkansas $1,806 California $2,190 Colorado $2,019 Connecticut $1,533 Delaware $1,963 District of Columbia $1,948 Florida $2,762 Georgia $1,985 Hawaii $1,206 Idaho $1,065 Illinois $1,548 Indiana $1,242 Iowa $1,254 Kansas $1,802 Kentucky $1,954 Louisiana $2,864 Maine $876 Maryland $1,931 Massachusetts $1,296 Michigan $2,345 Minnesota $1,692 Mississippi $1,701 Missouri $1,861 Montana $1,795 Nebraska $1,538 Nevada $2,426 New Hampshire $1,182 New Jersey $1,891 New Mexico $1,489 New York $2,996 North Carolina $1,392 North Dakota $1,225 Ohio $1,200 Oklahoma $1,902 Oregon $1,371 Pennsylvania $2,002 Rhode Island $1,847 South Carolina $1,464 South Dakota $1,542 Tennessee $1,383 Texas $1,868 Utah $1,449 Vermont $1,000 Virginia $1,340 Washington $1,313 West Virginia $1,527 Wisconsin $1,249 Wyoming $1,510

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Tips to save money on car insurance for new drivers

There’s no one surefire way to find the best price for auto insurance, but there are a few things you can do to get a lower car insurance premium. We recommend using the following strategies if you’re purchasing car insurance for new drivers.

Compare companies

No two insurance companies will give you the same price. Taking time to compare car insurance quotes will give you a baseline idea of what you can expect to pay when adding someone to an existing policy — or how much you could save by switching providers.

When you’re deciding between two companies, it may also help to read comparisons like our Allstate vs. Progressive review or State Farm vs. Geico review. These break down each company’s discount offerings and customer reviews side by side.

Look for discounts

Several car insurance companies offer discounts for young drivers and students, but you can save money through other means too. Bundling policies like homeowners insurance with your auto coverage can lower your premium, so check to see if your insurer offers a multi-policy discount.

Here are some common discounts offered by insurance providers:

  • Safe driver discount
  • Multi-policy discount 
  • Multi-vehicle discount
  • Military discount
  • New vehicle discount
  • Vehicle safety feature discount

Adjust your coverage

If you’re looking to save and have a new driver on the road, adjusting your current auto policy might give you a better rate. Opting for a higher deductible usually leads to lower premiums, but it does mean paying more up front if you file an insurance claim.

Another option is dropping coverage you don’t need. If one of your cars is older and you own it outright, you can likely stop paying for collision insurance and comprehensive coverage. In most states, you’ll still have to pay for liability insurance if you decide to drop the rest of your full coverage policy.

Why is car insurance for new drivers so expensive?

Car insurance for new drivers may be more expensive because of the level of risk. When determining your car insurance premiums, auto insurance companies look at things like your driving record and insurance history. This also includes how many years you’ve had your driver’s license.

If you recently turned 16 and got a license or just moved to the U.S., you don’t have a track record to show yet. 

How many years of experience you have as a driver can be more important than your age. Some people think that your car insurance rate will go down automatically once you reach a certain age, but it’s not true; that’s just a myth. 

Another reason car insurance may also be more expensive is if you can’t demonstrate a track record of safe driving or continuous insurance coverage over time. Driving discounts are typically connected to a verified driving history. 

Also, if you’re a teenager or immigrant, you might not even have an established credit score just yet — which some insurance companies use to determine your rate.

The bottom line

It can feel like a big step to get your license and be free to drive but you may be discouraged by the high cost of car insurance for new drivers. New drivers can consider pay-per-mile coverage as a way to lower costs if driving less while gaining more experience on the road. Remember, car insurance is based on many factors and you won’t always be considered a new driver. To find the best car insurance for first-time drivers, get a free quote with Metromile.

Defensive driving class discount

A Nationwide discount is applied when your teen successfully completes an approved defensive driving class. This may help you get more affordable car insurance.

Methodology

We collected quotes across all 50 states and the District of Columbia for 37 insurance companies. Although 37 insurance companies were included in the analysis, insurance company rates were only included in our company lists if the company was one of the larger insurers nationally.

Our base driver was a 30-year-old man who drives a 2015 Honda Civic EX, and quotes were drawn from all available ZIP codes in each state. The driver was profiled as having average credit, according to our data source, Quadrant Information Services.

When our driver had a full-coverage policy, we gave him coverage limits slightly above any one state’s minimum requirements.

Full-coverage policy

Coverage type Study limits Bodily injury liability$50,000 per person/$100,000 per accidentProperty damage liability$25,000 per accidentUninsured/underinsured motorist BI$50,000 per person/$100,000 per accidentComprehensive and collision$500 deductiblePersonal injury protectionMinimum, when required by state

Our rates for minimum-coverage policies represent the average cost of a policy that meets any state’s minimum required auto insurance coverage.

ValuePenguin’s analysis used insurance rate data from Quadrant Information Services. These rates were publicly sourced from insurer filings and should be used for comparative purposes only — your own quotes may be different.

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