Auto Insurance: New Driver Rates

How Much is Auto Insurance for a New Driver?

Auto insurance for new drivers is more expensive than for experienced drivers. The average cost of car insurance for new drivers ranges from $150 to $633 a month, depending on age, location, and other factors. New drivers are considered a higher risk by insurance companies due to their lack of driving experience and are therefore charged higher rates. The good news is that there are ways to save on auto insurance for new drivers, such as comparing quotes from multiple companies, taking advantage of discounts, and staying on a family policy.

How much is auto insurance for a new driver under 25?

Auto insurance for new drivers under 25 can be expensive. New drivers are considered high-risk due to their lack of driving experience, and this is reflected in their insurance premiums. The cost of insurance for this age group will depend on several factors, including age, gender, location, driving history, and the make and model of their vehicle.

Average Costs

On average, new drivers under 25 pay around $544 per month for their own full-coverage insurance. However, this figure can vary significantly depending on the insurance company and individual circumstances. For example, State Farm offers full coverage for young first-time drivers at around $276 per month, while Allstate provides minimum coverage for new drivers under 25 for approximately $100 per month.

Factors Affecting Costs

One factor that influences insurance costs for new drivers under 25 is gender. Teenage boys tend to pay more for insurance than teenage girls due to their higher risk of auto accidents. A 17-year-old male typically pays about 196% more for insurance than a 25-year-old male, while a 17-year-old female pays around 103% more than a 25-year-old woman for a comparable policy.

The age of a new driver also impacts insurance costs. Premiums usually start to decline when individuals turn 25, but rates may remain high if the driver has a history of accidents or claims. Additionally, young male drivers between 20 and 25 years old pay an average of $386 more every six months than other drivers due to insurers considering them high risk.

The type of vehicle driven also affects insurance rates. Luxury and newer vehicles are typically more expensive to insure because they are costlier to repair or replace. In contrast, older, affordable, and safe cars are often cheaper to insure.

Ways to Save on Insurance

While insurance for new drivers under 25 can be costly, there are ways to reduce premiums:

• Staying on a parent's policy: Young drivers can benefit from their parents' driving history, claims history, and credit score, potentially saving thousands of dollars annually.
• Comparing insurance companies: Shopping around and obtaining quotes from multiple insurance providers can help identify the most competitive rates.
• Taking advantage of discounts: Various discounts are often available for new drivers, such as safe driver discounts, good student discounts, and defensive driver course discounts.
• Choosing the right coverage and provider: Opting for minimum coverage or increasing the insurance deductible can lower monthly premiums, but it's essential to balance cost and adequate protection.
• Improving credit scores: Building good credit can positively impact insurance rates, as those with better credit scores may pay lower premiums.
• Bundling insurance policies: Combining homeowners' or renters' insurance with auto insurance can result in multi-policy discounts.
• Taking a defensive driving course: Completing a recognised defensive driving course can lead to discounts on insurance premiums.

Cheapest Insurance Companies for New Drivers Under 25

According to MarketWatch, the cheapest insurance companies for new drivers include GEICO, USAA, State Farm, and Progressive. These companies offer competitive rates, excellent customer service, and various discounts for young drivers.

In summary, while auto insurance for new drivers under 25 can be expensive, understanding the factors that influence premiums and utilising cost-saving strategies can help mitigate these costs.

How much is auto insurance for a new driver over 25?

Auto insurance for new drivers over 25 is significantly cheaper than for younger new drivers. While the rates vary depending on the insurance company, car, location, and other factors, new drivers over 25 can expect to pay less than half of what younger new drivers pay.

Average Insurance Costs for New Drivers Over 25

According to QuoteWizard, the average monthly insurance cost for a new driver who is 25 years old is $286. In contrast, a 16-year-old new driver pays $633 per month, and an 18-year-old pays $592 per month. Similarly, ValuePenguin reports that new drivers under 25 pay an average of $544 per month for their own full-coverage insurance, while State Farm, which has the best rates for this age group, charges $276 per month.

For new drivers over 25, State Farm offers the cheapest full-coverage car insurance, with rates as low as $117 per month. Allstate, on the other hand, offers the cheapest minimum coverage at $33 per month.

Factors Affecting Insurance Rates for New Drivers Over 25

Insurance rates for new drivers over 25 can vary depending on several factors. Here are some key considerations:

• Driving experience: New drivers with little experience may receive rates similar to teenage drivers, but their premiums will decrease faster. While teenage drivers may need up to eight years to see significant decreases, new drivers over 25 can expect lower rates within three years.
• Gender: In some states, insurance companies charge different rates based on gender. For example, a 23-year-old male driver may pay 6.7% more than a female of the same age. However, this difference decreases with age, and by 25, males pay only 2.5% more.
• Vehicle: The type of car you drive can impact your insurance rates. Older cars with higher mileage are usually cheaper to insure, while newer vehicles with advanced safety features may qualify for discounts.
• Number of miles driven: The more you drive, the higher your insurance rates are likely to be, as more time on the road increases the risk of accidents.
• Claims history: If you have a history of filing insurance claims, your rates are likely to be higher. Avoiding claims, when possible, can help keep your insurance costs down.
• Marital status: Insurance companies often consider married drivers to be more responsible and, therefore, lower risk. As a result, married individuals may benefit from lower insurance rates.
• Credit score: A good credit score can positively impact your insurance rates. Many drivers experience a decrease in rates around age 25 due to an improved credit history.

Tips for Finding Affordable Insurance as a New Driver Over 25

To find the best insurance rates as a new driver over 25, consider the following strategies:

• Compare insurance companies: Shopping around is crucial to finding the most affordable rates. Different insurance providers weigh various factors differently when calculating premiums, so it's worth getting quotes from multiple companies.
• Improve your credit score: Building a good credit history can help lower your insurance rates. Paying bills on time and maintaining a strong credit score can lead to reduced premiums.
• Look for discounts: Many insurance companies offer discounts for safe driving, multiple vehicles, bundling policies, and good student performance. Ask about available discounts and take advantage of the ones you qualify for.
• Adjust your coverage: Evaluate your coverage regularly to ensure you're not paying for more insurance than you need. If your vehicle is older or has low market value, you may not need comprehensive coverage. Opting for a higher deductible can also lower your monthly premiums.
• Bundle policies: If you have other types of insurance, such as homeowner's or renter's insurance, consider bundling them with your auto insurance. Many companies offer discounts for multiple policies.

Recommended Insurance Providers for New Drivers Over 25

While rates can vary, the following insurance providers are commonly recommended for new drivers over 25:

• USAA
• GEICO
• State Farm
• Progressive
• Liberty Mutual
• Farmers

How can new drivers save on auto insurance?

New drivers typically pay more for car insurance than those with experience, but there are ways to save money on auto insurance. Here are some strategies to help new drivers reduce their insurance premiums:

• Shop around and compare rates: Obtain quotes from multiple insurance companies, including both online insurers and small local agents. Compare the rates and coverage options to find the best deal. Don't forget to shop around annually, as rates can change.
• Stay on a family policy: If possible, new drivers should consider staying on their parents' or guardians' auto insurance policy. This can result in significant savings compared to having their own policy. However, if the parents have a poor driving record, low credit score, or multiple claims, it might be more advantageous to have a separate policy.
• Look for discounts: Ask about new-driver discounts, such as safe driver discounts, good student discounts, and defensive driver course discounts. Additionally, ask about discounts for bundling policies, such as homeowners or renters insurance with auto insurance.
• Choose the right vehicle: Opt for an affordable, safe car that is a few years old rather than a luxury or new vehicle. Older cars are generally cheaper to insure and repair.
• Improve your credit score: Building a good credit history can positively impact your insurance rates. Paying bills on time and maintaining a good credit score can help lower your premium.
• Choose the right coverage and provider: If you have an older car, you may only need the minimum amount of auto insurance required by your state. Research insurance companies that offer affordable new-driver policies, and select a deductible amount that you are comfortable with.
• Bundle your insurance: If you have a homeowner's or renter's insurance policy, consider bundling it with your auto insurance. Many companies offer discounts for multiple policies.
• Enroll in telematics programs: Some insurance companies offer pay-as-you-drive insurance models that use tracking devices to monitor driving habits and offer discounts for cautious or low-mileage drivers.
• Pay your premium upfront or via electronic funds transfer: Paying your premium in full or through electronic funds transfer can eliminate billing fees and save you money.

What are the best auto insurance companies for new drivers?

Auto insurance for new drivers can be expensive, so it's important to shop around for the best rates and coverage. Here are some of the best auto insurance companies for new drivers:

State Farm

State Farm is a popular choice for new drivers as it offers reliable customer service and affordable quotes. It has been in the industry for over 100 years and has a highly-rated mobile app. State Farm also offers usage-based insurance options and discounts for students with good academic standing. According to rate data, State Farm provides the cheapest car insurance for new drivers. For new drivers under 25 with their own policy, the cost is around $276 per month for full coverage.

USAA

USAA is available only to military personnel, veterans, and their families. It offers lower-than-average rates and insurance designed specifically for active-duty military and veterans. USAA also has excellent customer reviews.

Geico

Geico is a good option for budget-conscious drivers as it offers competitively low rates and has a user-friendly mobile app. Geico's DriveEasy program incentivizes new drivers to maintain a good driving record by offering rate discounts.

Erie Insurance

Erie Insurance is available in 12 states and Washington, D.C. It offers a young driver discount, car safety equipment discounts, and reduced usage discounts. Erie also has a strong industry reputation and its Erie Rate Lock® helps prevent rate increases.

Liberty Mutual

Liberty Mutual provides discounts for good students and students away from home. They also have usage-based programs that allow young drivers to turn good driving habits into savings.

Allstate

Allstate offers the most affordable liability-only car insurance rates for first-time drivers under 25. On average, new drivers can expect to pay $100 per month for minimum coverage from Allstate.

Nationwide

Nationwide has solid products with competitive rates and helpful add-on coverage offerings. It also has low complaint levels and offers accident forgiveness, gap insurance, and new car replacement options.

Progressive

Progressive offers the cheapest rates for drivers with a DUI among the companies analysed. It also has a low level of complaints and provides accident forgiveness, gap insurance, and a vanishing deductible.

Westfield

Westfield has various family discounts, including discounts for teen drivers and adult children obtaining their own policies. It also has a very low level of complaints.

Auto-Owners

Auto-Owners is a good option for new car owners as it offers "purchase price guarantee" and "total loss to a new automobile" coverage. It also has low complaint levels and received a high grade for its collision claims process.

How does age affect auto insurance rates for new drivers?

Age is one of the most important factors in determining your car insurance rate. This is because younger drivers are generally more likely to have accidents or take risks on the road. In fact, drivers aged 16 to 19 get into almost three times as many fatal car accidents as any other age group.

Insurance companies understand that insurance premiums for young drivers can be daunting, and there are a few ways to get cheaper auto insurance for young drivers. For example, taking advantage of discounts can help bring down premiums. Most insurance companies offer good student and driver training discounts. However, the best way to ensure your rates remain low is by maintaining a clean driving record.

In general, car insurance rates will fall as you get older, until you reach middle age. This is because car insurance for teenagers tends to cost more than the same coverage for middle-aged drivers, as teen drivers get into more incidents. However, some people only start driving later in life. If you're a new but not young driver, you'll still pay higher rates than other drivers your age, but less than younger drivers with the same experience.

For example, in Texas, a 16-year-old driver pays more than twice what a 25-year-old new driver pays for a full-coverage policy, despite having the same level of driving experience. First-time drivers in their 30s, 40s, and 50s can expect to pay even less.

At Progressive, the average premium per driver tends to decrease significantly from ages 19 to 34 and then stabilise or decrease slightly from 34 to 75. At age 75, the average premium begins to trend upward.

In 2023, the average cost of car insurance was $2,014 per year for a full-coverage policy and $622 for a minimum-coverage policy. However, insurance is highly personalised, and your rate will vary depending on your individual rating factors.

Frequently asked questions