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Choosing the right coverage and knowing how much you need can be a challenge — but it doesn’t have to be. Here’s a step-by-step guide to buying car insurance for the first time.
Published June 29, 2021|10 min read
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Buying car insurance for the first time can be tricky: there are multiple types of coverage that make up a policy, and knowing how much you need can be hard. Plus, first-time drivers tend to pay more for car insurance because of their lack of experience, so finding an affordable policy can take some extra work.
But you have options: you can buy a car insurance policy on your own or you can have an insurance broker guide you through the process and help you compare quotes from multiple companies at once. You also must buy your car insurance policy before you buy a car, that way your car’s insured when you’re ready to take it home.
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But be ready to pay a little more than an experienced driver would for a policy. Taking out your own policy could cost you thousands of dollars a year, while adding yourself to an existing policy will also raise the policyholder’s rates (but may still be a more affordable option).
You can purchase car insurance directly from an insurance company or you can go through an independent insurance marketplace like Policygenius
When buying car insurance, you’ll choose your coverage types, limits and deductibles
It’s usually cheaper to add yourself to an existing policy than it is to take out a new one as a new driver
You should buy a car insurance policy before you buy a car, because you’ll need car insurance to drive your new car off the lot
The first step to buying car insurance for the first time is deciding how you want to buy it. You can purchase car insurance directly from an insurance company or you can go through an independent insurance marketplace like Policygenius. The benefit of comparison shopping with an independent broker is that you’ll only have to fill out one application to get car insurance quotes from multiple companies. An expert can help you compare these quotes to decide which company is offering the best coverage at the lowest price.
If you decide to get quotes on your own, you’ll have to go to each insurance company’s website and fill out their application one-by-one. This means the process can be time-consuming, and not every company offers online quotes.
If you already have a homeowners or renters insurance policy, you may be able to save by bundling your new auto insurance policy with the same insurer. Most major insurers offer discounts for purchasing multiple policies. If you already have an auto insurance policy and want to add a new car to your existing coverage, you’ll be able to do so easily through your insurer. You may even be able to add a vehicle to your policy online.
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One of the most important steps when it comes to buying car insurance is deciding which coverages you need and where to set your limits. A “full-coverage” car insurance policy isn’t actually a type of policy, it’s just a term for a policy that includes comprehensive and collision coverage in addition to liability. That means that damage to your vehicle is covered, in addition to damage or injury you cause in a car accident. Here’s a breakdown of what a full-coverage policy includes:
|COVERAGE TYPE||WHAT IT DOES|
|Bodily injury liability||The part of your liability coverage that pays for medical bills if you've injured someone in an accident|
|Property damage liability||The other part of liability coverage, covers the cost of property damage you've caused in an accident|
|Personal injury protection||Covers medical expenses for you or your passengers after an accident|
|Uninsured/underinsured motorist||Covers the costs if you're in an accident caused by a driver with little or no car insurance|
|Comprehensive||Covers damage to your car that happens when you're not driving|
|Collision||Covers damage to your car after a car accident, no matter who was at fault|
You can purchase additional insurance for even more protection. Supplemental coverage options may include:
Roadside assistance - Covers emergency services when you’re stranded on the side of the road
Gap insurance - Pays the difference between your leased or financed car’s depreciated value and the amount you still owe on it if it’s totaled
Rental car reimbursement - Covers the costs of renting a replacement vehicle after an accident
New car replacement - Pays to replace your totaled car with a comparable new one
Most states have a minimum required amount of car insurance that drivers must purchase. Your minimum is just a starting point for coverage, though, and not enough to sufficiently cover you in the event of an accident, so you should set your limits well above the minimum.
Let’s say your state mandates a minimum of $25,000 in property damage liability and you cause $35,000 of damage in an accident. If you only have your state’s minimum amount of insurance, you’ll be on the hook for the remaining $10,000 of damage, which you’ll need to pay out of pocket. If you can’t afford to pay for the damage, your assets could be at risk.
Whether you go through an insurance marketplace like Policygenius or decide to get quotes on your own, you will need some personal information on hand about you and anyone else you plan to list on the policy:
Names and birthdays
Driver's license numbers
Social Security numbers
Vehicle Identification Numbers (VINs) or make and model years for all vehicles
An address for the insured (both where you live and where the car is garaged, which is usually the same place)
Once you’ve gathered all your information, it’s time to get your quotes. Many car insurance companies offer coverage “tiers,” often a basic policy with low coverage limits, a standard policy with average coverage limits, and a premium option with high coverage limits. It’s generally a good idea to have higher coverage limits, as long as you stay within your budget. Here’s what we recommend as a starting place:
|BASIC COVERAGES||POLICY LIMITS|
|Bodily injury liability||$50,000 each person, $100,000 each accident|
|Property damage liability||$50,000 each accident|
|Medical expenses||$5,000 each person|
|Uninsured/underinsured motorist||$50,000 each person, $100,000 each accident|
Your quotes may also include supplemental coverage that you don’t actually want. When you get your quotes, you should look carefully at your options, and decline or lower any coverages you don’t need.
A deductible is an amount of money you need to pay out of pocket in order for your coverage to kick in. Comprehensive and collision coverage both require deductibles, usually of either $500 or $1,000. The higher you set your deductible, the lower your car insurance rates will be, so if you go with a deductible of $1,000, you could be looking at lower rates. But keep in mind that you may need to actually pay that deductible one day, so you should set it to an amount you can actually afford.
Comparing quotes from multiple companies is the best way to get quality coverage at an affordable price. You may find that one insurer charges much less than another for identical coverage. But be sure to do your research on different carriers; Company A may charge you slightly higher rates than Company B, but if it has significantly higher claims satisfaction ratings, then it may be worth the extra cost.
Every car insurance company offers liability coverage, as well as comp and collision, but supplemental coverage options and perks vary based on your insurer.
The last step in the insurance-buying process is to pick a car insurance company, finalize the details and pay your premium, putting your policy in-force. Most companies offer discounts if you pay your premium in full upfront, but you can also pay your premium monthly.
All but two states require car insurance by law. Even if your car is brand new, you’ll need insurance in place before you can take it home. But which comes first, the car insurance or the car? Don’t worry, it’s easy to set up a policy to start right when you need it, even if you don’t have a car yet.
If you have your eye on a specific vehicle and you’re ready to purchase, you can ask the dealership or seller for the vehicle identification number (VIN) so you can buy car insurance ahead of time. You can even set your policy to begin on the same day you’re finalizing the purchase of your car, even if it’s days or weeks away (in fact, most dealerships will require you to show proof of insurance as part of the car-buying process). That way you can make sure you’re covered before you take your car home.
If you don’t know what specific vehicle you want to buy, you can still get quotes using the make and model of a car you have in mind to get an accurate estimate, and explain to your broker that you don’t have the exact vehicle yet. You should still be able to get every other part of the policy ready, and then once you actually buy the car, all you’ll need to do is call to put the policy in-force. Whatever you decide to do, just make sure your policy is in-force before you take your new car home.
As we mentioned above, you should not drive your car until it’s protected by insurance. It’s illegal in most states to drive without coverage and plus, you’ll want to be covered in case you get into an accident. Otherwise, you could end up paying thousands of dollars for damage that could’ve been covered.
If you’re caught driving without car insurance in a state where it’s required, you could end up with tickets and fines, or you could lose your driver’s license and vehicle registration. Even in the two states that don’t require car insurance (New Hampshire and Virginia), drivers are still financially responsible for any damage they cause in an accident. So if you cause an accident and you don’t have car insurance, you could be looking at thousands of dollars in medical expenses or vehicle repairs for the other party.
Car insurance premiums are essentially based on how much of a risk you would be to insure. Young adults and inexperienced drivers are seen as riskier to insure and more likely to file a claim, so they’ll see higher rates than more experienced drivers.
Adding a teenage driver to a car insurance policy can raise a premium by up to 129%, according to our sample quotes. The exact cost will also vary based on address and ZIP code, the other drivers on the policy, and how long each one has been driving, but generally, car insurance costs will increase significantly if a young driver is added to a policy.
Let’s take a single mother, age 31, with a history of safe driving and a 2014 Toyota Camry. For a full-coverage policy, her average annual rate was $1,416, based on quotes from three major insurance companies. But when a teen driver was added to her car insurance policy, the average annual rate increased to $3,204 — that’s over twice as much as what she would be paying for herself alone.
But adding a teen driver to an existing car insurance policy is still less expensive than having them take out their own policy. We quoted an 18-year-old woman with no accidents on her record, and her average rates came out to $4,682 a year for her own policy.
|Driver Details||Average cost of a 1-year policy|
|31-year-old woman with a 16-year-old driver||$3,204|
It may be difficult to find affordable car insurance for new or teen drivers, but there are some measures you can take to get covered for less. New drivers can save on car insurance by taking the following steps:
Keep your rates as low as possible by adding yourself to an existing car insurance policy, assuming you live with other drivers. Their premiums may be higher if you’re included, but it will still be cheaper than taking out a policy on your own. As long as you’re a member of the same household, you can be added to someone else’s policy.
As a new driver, you may not have a driving history yet, but driving safely for years can save you in the long run; most companies tend to look at the last 3-5 years of your driving history when calculating your rates, so accidents and violations eventually fall off your record. As you become a more experienced driver, every year of safe driving can help lower your rates. And most companies offer a discount if you drive a certain number of years accident-free.
If you’re a new driver ready to buy a new car, you can save by choosing a safe, affordable option. A car with good safety features and high crash test ratings can help you keep your insurance costs low. If you’re buying a car for a teen, you can consider an older, reliable car for lower rates.
A minimum amount of liability insurance is required in almost every state, but comprehensive and collision coverage are always optional. If you’re buying a car for a teen driver, you can go for a cheaper, older car and drop comp and collision coverage. You can save a significant amount this way, but it means that you won’t get any money or repairs if your car is damaged or totaled in an accident.
The best way to ensure you’re getting the lowest rates on car insurance is to shop around and compare quotes from multiple carriers. When you’ve gotten enough quotes, you can compare them side-by-side and choose the carrier that offers the most coverage at the cheapest price.
You can shop around and get quotes from each carrier one-by-one, or you can go through an independent marketplace where an expert will help you through the process. An experienced broker can help you decide which coverages you need, how high to set your limits, and which company is right for you.
Most major insurance companies offer a range of discounts, and those discounts can be applied to your policy in order to lower your rates. Check with your insurer to see which discounts are available. These are some of the most popular:
Student discounts for full-time students who earn a certain GPA
Driver’s education discounts for completing a defensive driving course
Discounts for being affiliated with certain groups, like the military
Safe driver discounts if you’ve gone a certain number of years without an accident
Low mileage discounts for spending less time on the road
Bundling discounts for purchasing car insurance along with a home or renter’s insurance policy
Some companies are friendlier to new drivers than others. State Farm, for example, offers ways to lower the cost of adding a teen or young adult to a car insurance policy. Its Steer Clear program, which tracks driver’s behaviors through an app and includes quizzes and videos to help you learn how to become a safer driver, is one example. Once drivers have completed the program, they can earn a discount that lasts until they turn 25.
You can get cheap car insurance by comparing quotes from multiple insurance companies and choosing the policy with the lowest rates. You can also save by adding yourself to an existing car insurance policy rather than buying your own, or purchasing less coverage and choosing higher deductibles to lower your rates.
Car insurance companies can deny you coverage for any reason except those forbidden by law. A history of unsafe driving and tickets and violations are some of the main reasons a car insurance company may deny you coverage. While first-time drivers don’t have to worry about that, you may still be denied coverage based on other factors, including being a brand new driver.