Lowering Insurance Costs For New Drivers: Expert Tips And Tricks

Car insurance for new drivers can be expensive, with young drivers deemed to be a bigger risk due to their inexperience. However, there are ways to reduce the cost of insurance for new drivers. One way is to take out telematics insurance, which bases your rate on your driving habits. New drivers can also name an experienced driver on their premium, drive a less powerful car, or pay for the entire year upfront. Additionally, insurance companies may offer discounts to new drivers who are good students or are away at school. Improving your credit score and shopping around for quotes can also help lower insurance costs.

Take a defensive driving course

Defensive driving courses are a great way to improve your skills and knowledge as a driver. They can help you to anticipate situations that may result in a collision and teach you techniques to recognize and react to danger. These courses are often geared towards younger and older drivers who tend to have higher insurance premiums, but they are available to people of all ages.

Taking a defensive driving course can also help lower your insurance premium. Many insurance companies offer discounts to drivers who complete an approved defensive driving course. The discount you receive may depend on your age, state, and insurer, and other factors. It's important to note that some companies only offer discounts to older or younger drivers. For example, GEICO offers a defensive driving discount to drivers over the age of 55. Therefore, it's essential to check with your insurance provider to see if you are eligible for any discounts before signing up for a course.

The cost of a defensive driving course can vary, but there are affordable options available. Some courses are offered online and can be completed in a few hours for as little as $25. When considering a defensive driving course, it's important to ensure that the course is accredited and recognized by your insurance company. You should also verify the associated discount to ensure that the savings outweigh the cost of the course.

In addition to potentially lowering your insurance premium, taking a defensive driving course can also help you reduce the number of points on your license. This can further contribute to keeping your insurance costs down. By improving your driving skills and maintaining a good driving record, you can avoid accidents and violations that would otherwise increase your insurance rates.

Overall, taking a defensive driving course can be a valuable investment for new drivers. It can help improve your skills, make you a safer driver, and potentially lower your insurance costs. However, it's important to do your research and compare different course options and insurance providers to find the best fit for your needs.

Improve your credit score

Improving your credit score is one of the most effective ways to save on car insurance. A higher credit score generally leads to lower insurance rates, and vice versa. This is because insurance companies consider individuals with higher credit scores to be less likely to file a claim.

• Pay your bills on time: Late and missed payments can significantly hurt your credit score. Setting up autopay can help ensure you never miss a payment.
• Keep your credit utilization low: Credit utilization refers to the amount of credit you are using compared to your credit limit. Aim to keep your credit utilization below 30%, and ideally, below 10%. You can achieve this by requesting a credit limit increase or reducing your credit card spending.
• Maintain old accounts: Closing old accounts can lower your credit score by shortening your credit history. Keep your old accounts open and use them occasionally to keep them active.
• Check your credit report: Review your credit report annually to identify any errors and take steps to correct them. You can obtain free credit reports from each of the three major credit bureaus in the US.
• Consider a secured card: A secured card is a credit card backed by a security deposit, which can help improve your credit score.

Drive fewer miles

Driving fewer miles is a great way to lower insurance costs, especially for new drivers. This is because the fewer miles you drive, the less likely you are to be involved in an accident and the less likely you are to file a claim. This means less cost for your insurance company.

Insurers take your annual mileage into account when calculating your premium, so driving fewer miles can result in a lower premium. Some insurance companies offer discounts to motorists who drive fewer miles per year than the average. These are known as low-mileage discounts and can be a great way to save on insurance costs.

To take advantage of low-mileage discounts, you should first calculate your current average mileage. To do this, set your car's odometer to zero and then note the number of miles driven over the next week. Multiply this number by 52 to get your current annual average mileage. Once you have this information, you can contact your insurer and ask for quotes to see if you qualify for low-mileage auto insurance. Some companies may offer a simple low-mileage discount, while others may offer usage-based insurance, where your driving habits are monitored and your rate is based on your mileage and driving behaviour.

It's important to note that even if you're a low-mileage driver, other factors can still affect your insurance rates. These include your age, gender, location, career, driving history, and credit history. Additionally, insurance rates can vary by state due to state insurance regulations. For example, in California, occasional drivers save more on insurance than infrequent drivers in Texas because California law requires insurance companies to rate policies based on annual mileage.

Choose a higher deductible

Choosing a higher deductible is an effective way to lower car insurance rates. A deductible is the amount you pay out of pocket before your insurance policy kicks in. For instance, if you have a $1000 deductible, and your insurance company approves a claim for $7000 to repair your car, the insurance company will pay $6000, and you will pay $1000.

The deductible amount you choose is one of the most important considerations when comparing auto coverage policies. Policies with higher deductibles have lower insurance rates but higher out-of-pocket costs if you file a claim. Conversely, policies with lower deductibles have higher monthly premiums. For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage costs by 15 to 30%. Going to a $1000 deductible can save you 40% or more.

When choosing a deductible, it's essential to consider your financial situation and driving history. If you have a history of accidents or engage in high-risk driving behaviours like speeding or rush-hour driving, you may be more likely to file a claim, and a low-deductible plan may be more suitable. On the other hand, if you are a low-risk driver who rarely files claims, a high-deductible policy may be more advantageous.

It's also worth noting that the deductible amount you choose should be based on the value of your vehicle. If your car is not worth much, it may not make sense to have a high deductible. For example, if your vehicle is worth $3500, a $1500 deductible may not be the best option. Before choosing a higher deductible, ensure you have enough money set aside to pay it if you need to file a claim.

Get good grades

Getting good grades can be a great way to lower insurance costs for new drivers, especially if they are young. Young drivers are often considered high-risk and charged higher insurance premiums, but good grades can help to mitigate this.

Most major insurance companies offer a "good student" or "good grade" discount, which can be a fantastic way to save money on car insurance. These discounts are based on the idea that students who are responsible in the classroom are more likely to be responsible on the road. Research has shown that students with lower grades are more likely to be involved in accidents, so insurance companies reason that good students are less likely to file claims.

To qualify for a good student discount, a driver usually needs to be unmarried, in high school or college, and between the ages of 16 and 25. They will also need to maintain a certain grade point average, typically a B or higher, or be in the top 20% of their class. Some insurers may also accept scores from national standardized tests or honour roll/dean's list designations. It's important to note that each insurance company will have its own criteria for these discounts, so it's worth checking the specific requirements.

To apply for a good student discount, you will need to provide documentation such as a current report card, transcript, or a form signed by a school administrator. Most insurance companies will require you to submit this proof each semester to maintain the discount. It's also important to remember that the discount will only be applied to the base premium, which is calculated based on factors like age, driving record, and location.

By taking advantage of good student discounts, new drivers can significantly reduce their insurance costs and enjoy more affordable coverage.

Frequently asked questions