Advertiser Disclosure

Getting Cheap Car Insurance for New Drivers

Young drivers, immigrants and those who haven't driven recently will all have a difficult time getting cheap insurance, but there are some ways to get better rates.
Sept. 11, 2020
Auto Insurance, Insurance
Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own.

Most new drivers are young people getting behind the wheel for the first time, but to auto insurers, anyone without a recent driving record or insurance policy represents the same risk.

Who needs new driver insurance?

Although there isn’t a special kind of insurance called “new driver insurance,” auto insurers generally categorize the following types of people as new drivers:

  • Teen drivers who just received a driver’s license.
  • Older drivers who have never driven.
  • Immigrants and foreign nationals.
  • Drivers of any age with a gap in driving or insurance coverage.

Insurance rates for new or first-time drivers are usually higher than rates for more experienced drivers. Because new drivers are seen as a bigger risk to insure, car insurance companies charge them higher rates.

» MORE: The best cheap car insurance for 2020

Car insurance for new drivers: Teens

Auto insurance companies can justify higher charges for teenagers because they’re more likely than any other age group to cause accidents. For a new driver in their teens, the best way to get cheap insurance is to stay on their parents’ policy for as long as they have the same permanent address.

» MORE: Finding the cheapest car insurance for teens

Beware that “cheap” is relative — adding a teen to a married couple’s policy is likely to (at least) double their rate, according to NerdWallet analysis. However, going it alone is likely to be more expensive; always compare multiple new driver insurance quotes online to be sure.

Car insurance rates for a couple with a new teen driver and two cars

Some good news: Insurance companies offer plenty of discounts for students and young drivers, and rates will get better over time with safe driving. Insurance rates become a lot more reasonable at age 25 on average, provided you have a few years of experience under your belt.

Once you reach your early 20s, you may benefit from buying your own insurance policy depending on your age, location and gender. Getting your own policy is relatively straightforward if your permanent address is different from your parents’. If you live in the same house but want separate policies, you’ll have to work with an agent to make sure this is clear on both your policy and your parents’ policy. When you’re ready to get your own insurance, you can ask your parents’ carrier for a quote, but also get a couple of others to be sure it’s a good price.

» MORE: Cheap car insurance for young drivers

Car insurance for immigrants and foreign nationals

Even if you have a long history of safe driving in another country, insurance companies consider you a new driver when pricing a policy in the U.S. for the first time. Since they access domestic driving records only when setting rates, your driving history in the U.S. is what counts. This also goes for your credit history, which is also used to help calculate auto insurance rates in all but three states, California, Hawaii and Massachusetts.

» MORE: Financial guide for immigrants in the U.S.

Without a valid U.S. driver’s license, you’ll have a hard time getting an insurance policy from any company, even if you have an international driver’s permit. In that case, if you’re renting a car, the easiest option may be to use the rental car company’s coverage.

If you plan on staying and driving in the U.S., it’s best to get a driver’s license in the state where you live. Some, such as California, will issue a driver’s license to an undocumented immigrant. Once you have your license, get at least three auto insurance quotes so you can choose the best rate and coverage.

» MORE: How to get a new driver’s license

Car insurance after a driving or coverage gap

Maybe you spent some time abroad or your license expired because your lifestyle just doesn’t require any driving. Without a driving history to check, insurers can still consider you a new driver. And without continuous auto coverage, they can consider you a high-risk driver, which has similar effects on car insurance rates.

Even if you have some driving history to reference, it’s important to shop around for your next policy since you’ll likely pay more just for having a gap in coverage. There’s an exception for military deployment from many companies, so be sure to ask if that applies to you.

Since continuous coverage is one of the most important factors insurers consider, some may not accept your application if you’ve had gaps between policies. If that’s the case, you can look for nonstandard insurance companies that specialize in coverage for people having a hard time getting insured.

» MORE: Compare car insurance rates

Pricing factors in a car insurance quote

New drivers have some of the highest car insurance rates, but other factors that go into pricing may be more within your control.

» MORE: Car insurance quotes, what you need to know

Factors that affect your quote include:

  • Personal characteristics. This includes your age, gender and marital status.
  • The coverage you choose. The more coverage you have, the higher your insurance rates are likely to be.
  • Your vehicle. Your car’s make and model, safety features and likelihood that it’ll be stolen all affect your rate.
  • Your location. Every state has its own minimum car insurance requirements, and factors like your neighborhood’s crime rate and population density will affect your insurance price.
  • Your credit score. Drivers with poor credit typically have higher car insurance rates. Insurers use a credit-based insurance score, which is different from your regular credit score, to determine the likelihood you’ll file a claim. California, Hawaii and Massachusetts have banned insurers from using credit scores when calculating car insurance rates.

How to find affordable car insurance as a new driver

Shop around. Rates can differ tremendously depending on the insurer you use. To make sure you have the best price you can get, consider shopping around every year. After all, just because you had the cheapest rates a year ago, doesn’t mean you still do.

Stay on a family auto insurance policy. If you have the same permanent address as your parents, remember to compare rates for a stand-alone policy versus staying on your family’s insurance. Depending on your situation, this might give you the cheapest auto insurance rates.

Consider the car you drive. More expensive vehicles, those stolen most often and sports models typically result in higher car insurance rates. Consider one of the cheapest cars to insure if you want to get the lowest rates.

» MORE: How to estimate car insurance before buying a car

Take advantage of discounts. Many auto insurers offer discounts that new drivers can take advantage of, including:

  • Good student discount.
  • Discount for young drivers who take a defensive driving course.
  • Student away-from-home discount (if you are on your parents’ policy).
  • Multipolicy discount if you have renters or homeowners insurance.
  • Military or occupation discount.
  • Safety equipment discount.

Methodology

Couples in our analyses were 50-year-old men and women with good credit and clean driving histories averaged across all ZIP codes. The policy includes:

  • $100,000 bodily injury liability per person.
  • $300,000 bodily injury liability per accident.
  • $50,000 property damage liability per accident.
  • $100,000 uninsured motorist coverage per person.
  • $300,000 uninsured motorist coverage per accident.
  • Collision coverage with a $1,000 deductible.
  • Comprehensive coverage with a $1,000 deductible.

To see rates for families with a teen, we added an 18-year-old licensed two years ago, averaging rates for male and female teens. For couples and families, we used a 2016 Toyota Camry LE and a 2016 Nissan Rogue S to create a two-car household.

In all cases, a paperless discount, e-signature discount and electronic funds transfer discount were automatically applied. These are rates provided by Quadrant Information Services. Your own rates will be different.

About the author