Auto Insurance
7 min read

The Ins & Outs of Car Insurance for New Drivers

Published on
July 14, 2022

There is nothing quite as exciting as getting your driver’s license for the first time. It is a rite of passage that signals newfound freedom, new experiences, and unfortunately, new expenses.

If you are a new driver or the parent of a new driver, it is time to get serious about how you can get the best car insurance coverage without spending a small fortune.

If you aren’t sure where to begin, read on as we explain everything you need to know about car insurance for new drivers and how you can get the best deal on your policy.

Why Is Car Insurance So High for New Drivers?

When auto insurance companies are setting their rates for their customers, they take many factors into consideration. No matter how your insurance agent spins it, a young, inexperienced driver is always a higher risk to insure than someone who has been behind the wheel for years.

Unfortunately for you (or your parents), that means a higher premium for a few years. One you get some experience along with a clean driving record, you will likely see those rates start to come down.

So why is car insurance for new drivers higher than insurance for drivers who are older? It is because statistically speaking, inexperienced drivers tend to cause more accidents than drivers who have been on the road for years.

You can also read what our Head of Underwriting, Jonathan Seibold, had to say about why new drivers get charged more for their car insurance.

“Newly licensed drivers have less experience behind the wheel and are still developing their situational awareness and response times. As a result of this, they represent a higher risk than a driver who has more experience.”  

You can also be a new driver who is older, but if you are a new or inexperienced driver, you can expect to pay a higher premium too.

Who Is Considered a New Driver?

Jonathan also added,

“A “new driver” is a driver who usually has less than five years of licensed driving experience, usually these are also young drivers, but this rating can also be used for drivers who obtained their license at an older age. While a 40 year old who just got their license last week is usually is not a safer driver than someone who was licensed 20 years ago, they are still usually a safer driver than a 16-18 year old.”

Why Are New Drivers Considered a Risk?

The statistics for young drivers speak for themselves. Automobile accidents were the second leading cause of death among teenagers in 2019.

According to the Centers for Disease Control, teenagers between the ages of 16–19 are the most likely age group to be involved in motor vehicle accidents and are almost three times as likely to be killed in one than older, more experienced drivers.

The Insurance Institute for Highway Safety’s 2019 report indicated that out of the teens killed in crashes that year, almost 2 out of 3 were males.

teenage driver

How Can a Teen Driver Save Money on Car Insurance?

Whether you are a teenager (or the parent of one), or an inexperienced driver for another reason, you will be paying more for your car insurance.

Even though you will be paying more, there are still ways to save. Read on for our best tips on how to lower your monthly premiums.

Compare Rates

Not all insurance companies are the same when it comes to their rates. Even a small difference in your monthly premium can add up to significant savings over the course of a year.

Take Advantage of Family Policy Rates

Often, insurance companies will offer their policy holders discounts when they have multiple people insured on the same policy. When you start shopping around for insurance rates, always consider this option first over a standalone plan. It may be your best bet when it comes to getting more savings.

Watch for Discount Programs

Insurance companies commonly offer specialty discount programs that young or inexperienced drivers can take advantage of. Be sure to ask potential insurers if they offer any of these. These may include discounts for being a great student, active military or a veteran, multi-policy deals, or for drivers with installed safety equipment on their vehicle.

What Factors Influence the Price of Insurance?

While you know that your lack of experience will be the main consideration in your rate quote, there are other factors that will come into play. These include:

Demographics

Insurance companies will consider things like your age, gender, and your marital status.

Coverage Options Selected

The more coverage you choose on your policy, the higher your premium will be. Consider this when choosing the type of policy you want.

The Car You Drive

Like it or not, insurers will consider certain types of vehicles more of a risk than others (and therefore more expensive) to insure. Luxury vehicles and sportier models are more likely to see higher rates. It’s always best to do research on how your car model usually gets rated before making a purchase and if you already own a car, it helps to know how the vehicle is affecting your premiums.

Geographic Location

Each state sets its own specific requirements for car insurance that will affect your bottom line. Other factors like the population and crime rate in your area will also affect your premium.

Your Credit Score

To an insurance company, drivers who have a poor credit rating are considered a higher risk. That translates to higher rates. If you are a resident of Massachusetts, California, or Hawaii, bad credit won’t hurt you. Those states don’t allow insurance companies to use credit ratings when offering insurance quotes.

Jonathan Seibolds also commented on the rating factors mentioned above,

“Statistically less experienced drivers represent a higher risk for accidents than drivers who are more experienced, so insurance companies assign a higher rate for these drivers than they would for more experienced drivers. However, being a company that also uses telematics to score how you drive, at renewal of your policy we will have the ability to rate you based on how you drive more than how statistics say you most likely drive. Come to LOOP where you can get fair pricing for the driver you are over the driver your insurance company rates you as.”

What Are the Cheapest Car Makes/Models to Insure for New Drivers?

It’s true that certain makes and models of cars are more expensive to insure, but on the other side of the coin, there are makes and models that are statistically less likely to be stolen or involved in a crash.

Below is a list of the top 10 vehicles that are the least expensive to insure (from 2021 data) for inexperienced or young drivers according to NerdWallet.

  1. Subaru Outback
  2. Subaru Forester
  3. Honda CR-V
  4. Jeep Wrangler
  5. Hyundai Tucson
  6. Mazda CX-5
  7. Ford Escape
  8. Honda Pilot
  9. Chevrolet Equinox
  10. Ford F-150

As you can see, there are ways to find some savings even though you will pay the increased costs from being a new or inexperienced driver.

Get a Free Quote From Loop to Insure Your Vehicle Today

Being a new driver is one of the most exciting milestones in a teenager’s young life. Being a parent who is shopping for car insurance for a new driver is less exciting. Fortunately, Loop has made that process as simple as possible.

We offer the best car insurance for new drivers and want to help you find a policy that works for you and your budget. Call us at 1-844-544-5667 or fill out your info today for your free quote.

FAQ About Insurance for New Drivers

Here are some other commonly asked questions about insuring young drivers:

Do Non-Custodial Parents Have to Pay for Car Insurance?

If you are divorced and sharing custody of your teenage child, chances are they have access to both your vehicle and your former spouse's vehicle. For that reason alone, it would be wise for both parents to make sure the teen driver is covered on each policy.

Can I Use My Parents' Address for Car Insurance?

The car’s policy must have accurate information. That means that the address for the policy should be listed as the same place where the car is garaged, or kept full time. Should you attempt to use the address of your parents but you don’t live there, then you may be denied coverage if and when you need it.

Should Parents Pay for Car Insurance?

This, of course, is a personal decision that each family must make together based on their financial situation.

You don’t need a good credit score to have great car insurance!

Check out how much you could save today.

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