What You Need to Know When Buying Car Insurance for the First Time

Adulting sneaks up on everyone at one point or another. If you just purchased your first car, congratulations and welcome to the club! Now, it’s time to deal with all the tedious aspects of driving your new car, like getting car insurance for the first time. First-time car insurance is as exciting as going to the dentist, but it’s necessary to protect yourself financially. If you feel overwhelmed or confused about how it all works, don’t fret. We break it down for you — especially first-time driver insurance cost.

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      How do I get car insurance for the first time?

      Getting car insurance for the first time starts with how much you need. Each state has different requirements. Most insurance companies will know how much you need depending on where you live. The requirements are typically labeled as 25/50/10 liability insurance. This means that you’ll need liability insurance just in case you were at fault in an accident. The 25/50/10 stands for:

      • $25,000 in bodily injury coverage to pay for each person’s medical bills/injuries if you’re at fault in a crash.
      • $50,000 in bodily injury coverage per accident. This means your insurance will only pay up to $50,000 in medical bills for others you hurt in an accident. 
      • $10,000 in property damage to cover the costs of repairs and replacement of cars, fences, poles and any property you struck and damaged.

      You can legally drive with the state’s liability minimums, but you may want to buy more than that. Think of the state’s requirements as the no-frills version of car insurance. The problem is that liability insurance only takes care of other people, also known as third parties. If your car was damaged or you were hurt, minimum liability insurance won’t cover you — you’d have to pay for them yourself.

      In addition, a state’s liability minimums are usually not enough if you cause a more serious crash. Think about it this way, if you rear-end a new Tesla, do you think a state’s $10,000 property minimum coverage is enough to fix the Tesla you hit? If the bill for the repair is more than $10,000, your insurance will only pay up to that limit and you’d have to pay the rest out-of-pocket.

      It’s best to shop around for car insurance by getting a few online quotes to find the best price. When you do, aim for liability coverage of 100/300/100. This should cover you in case of an accident with injuries involving newer, more expensive vehicles. Besides shopping around for liability insurance with the higher minimums, consider adding the following optional coverages:

      Comprehensive insurance

      As mentioned, liability insurance only pays for other people’s damages. Comprehensive will pay for repair or replacement of your car if it’s stolen, vandalized, lost in a fire or damaged by a falling tree limb or bad weather events such as hail and flooding. It also covers you if you strike a deer or animal while driving.

      Collision insurance 

      Add collision coverage to get reimbursed for repairs if your car is damaged because of the accident you caused. In addition to mandatory liability insurance, drivers typically buy comprehensive and collision coverage together. Comprehensive and collision car insurance join forces as wonder twin powers, also known as full car insurance. You’ll have coverage for the damages you cause to others and yourself.

      Gap insurance

      You probably know the moment you drove your sweet ride off the new car dealer you lost money. But if your car was totaled in a serious accident soon after you bought it, the trouble begins.

      Your car insurance company will cut you a replacement check for your lost car based on its current market value and not what you paid for it, which is probably less than what you owe on the car loan. Meaning, the $40,000 car you’re making payments on that’s destroyed may only be worth $32,000 months later because of depreciation. Your insurance company paid you $32,000 to go get a new car, but once you hand that check over to the finance company, you still owe them another $8,000. Gap insurance pays the difference between what you owe and what your car was worth at the time it was totaled. And the coverage is way cheaper than the shortfall you could get hit with.

      Do first-time insurance customers pay more?

      Just because it’s your first time buying car insurance doesn’t mean it’s more expensive. Your rate depends on your age, driving record, where you live and a handful of other factors. According to the Insurance Information Institute, younger drivers pay more for car insurance. If you’re between the age of 16 to 25, be prepared to pay a little extra for car insurance.

      The reason why first-time insurance may be higher for young adults is tied to the number of deadly accidents. The age group of 16- to 24-year-old drivers are responsible for 66.5% of fatal motor vehicle crashes. A lack of driving experience, more risk-taking, texting and drinking are some of the reasons young adults pose a higher risk of causing a serious crash. Therefore, drivers under 25 are more expensive to insure.

      [ See: What’s the Average Cost of Car Insurance in the U.S.? ]

      Where to find cheap car insurance for first-time drivers

      If the cost of first time insurance could be a dealbreaker on whether you can afford your first car, consider the following tips to find cheap car insurance for first-time drivers.

      Choose a more affordable car

      Some cars are cheaper to insure than others. For example, a Honda will cost less in car insurance than a Tesla or a sports car. Do your research on insurance costs before you buy a car.

      Stay on your parent’s car insurance

      You may get a better deal on your car insurance if a parent can add you to their existing auto insurance. They may have loyalty discounts and a long-standing relationship with an insurance carrier and adding your vehicle to their policy could be cheaper than a first time insurance policy.

      Shop around for quotes

      The best and easiest way to find the best cheap car insurance for first time drivers is to get online quotes from a few car insurance companies. You’d be surprised at how much your car insurance could vary in cost for the same coverage, from one carrier to another.

      Most insurance companies make it easy to get a quote. You’ll need an address, details about your car, such as make, model and year, and the type of coverage you’d like. Getting a quote is free and no-obligation. You’ll have an estimate to compare in just a few minutes.

      Take advantage of car insurance discounts

      Most car insurance companies entice new customers with discounts for a variety of reasons. The best part is, you can take advantage of more than one discount at a time. Some worth considering include:

      • Bundled coverage: Insure your car and your home or apartment with the same insurance company to get a discount on both.
      • Good student: If you’re enrolled in school, you could receive a discount on your car insurance while you study.
      • Military: Enlisted personnel get an automatic discount from most insurance carriers.
      • Telematics: Sign up for an insurance company’s driver tracking program and you could get as much as 25% off your car insurance premiums, based on your driving. You’ll need to download an app that monitors your mileage, speed and other factors to determine how safe of a driver you are and the size of your discount.
      • Defensive driving courses: Most carriers offer a decent discount of 10% or more if you complete an online defensive driving course. The courses can typically be completed over a weekend and can earn you savings over two to three years.

      [ For You: Eight Ways to Save on Car Insurance ]

      Compare Affordable Auto Insurance Rates

      Save money on auto coverage with our simple comparison tool.

      Matching you with providers.
      We found results in
      Click at least 2-3 companies to find the very best rate.

        How to buy your first car insurance policy

        Ready to buy first-time car insurance? Follow these steps to make sure you get it right.

        1. Get several online quotes: To find the best deal, get quotes from a few carriers and choose the one you like the best.
        2. Round up information: You’ll need your car’s Vehicle Identification Number (VIN) located on your title or on your driver side’s lower dashboard when looking from outside. Besides the VIN, have your vehicle’s mileage, driver’s license, contact information and home address ready. Have your bank information handy to set up automatic payments, as well as a debit or credit card to pay your first premium.
        3. Choose your policy: Enter details about the policy you’re buying, including liability insurance, dollar limits and add ons such as gap, comprehensive and collision coverage.
        4. Pick a deductible amount: The deductible is how much you’ll pay out-of-pocket in case of an accident or claim and before the insurance company steps in to pay the rest. A typical deductible is $500 or $1,000.
        5. Set an effective date: The effective date is the day your insurance starts. It can be as soon as the same day you buy the policy, although you should confirm it with the insurance company.
        6. Choose the length of your premium payment: You can pay your car insurance monthly or every six or twelve months. You could qualify for a small discount for prepaying six or twelve months or by signing up for automatic payments.
        7. Review your information: Make sure the policy, vehicle description and all the information you provided is correct.
        8. Pay for the policy: You can pay for your policy online using your banking information including routing number and bank account number. Or you could pay using a debit or credit card. Once you pay, your policy will be official, effective as of the date you chose. You’ll receive an insurance declaration page by email for your records, or you can download one.
        9. Print out your insurance card and place it in your vehicle: Print out a copy of the insurance declaration and digital insurance card and keep it in your vehicle. You may get a hard copy in the mail, but to be safe, print out a copy. You’ll need it in case of an accident or if you’re pulled over, to show as proof of insurance.

        We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

        Cynthia Paez Bowman

        Contributing Writer

        Cynthia Paez Bowman is a finance, real estate and international business journalist. Her work has been featured in Business Jet Traveler, MSN, CheatSheet.com, Bankrate.com and Freshome.com.

        She owns and operates a small digital marketing and public relations firm that works with select startups and women-owned businesses to provide growth and visibility. Cynthia splits her time between Los Angeles, California, and San Sebastian, Spain. She travels to Africa and the Middle East regularly to consult with women’s NGOs about small business development

        Reviewed by

        • Nashalie Addarich
          Nashalie Addarich
          Insurance Editor

          Nasha Addarich is an editor at The Simple Dollar and a former attorney who specializes in home insurance, auto insurance, life insurance, and savings. She is a former contributing editor to Reviews.com.