First Time Car Insurance: How to Get Cheap Coverage

June 14, 2013

Getting cheap first time car insurance is often done through a collective policy, where you're added to a family plan. But there are other alternatives.

Being a first time car insurance buyer can leave you feeling overwhelmed. With so many options to choose from, there is a good chance you will end up paying too if you are not a savvy shopper. Below you will find some helpful advice about buying car insurance and finding the best deals available.

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There's Power in Numbers
The best way to shelter a new teenage driver from sky-high insurance costs is to get them into a collective policy situation. Usually, this means adding them to a family insurance plan as an additional driver. However, first time drivers who don't have access to this kind of situation can also look for new auto insurance cooperatives or co-ops that may exist in their areas.

First Time Driver Incentive Plans

Some of today's big auto insurance companies see that first time drivers are struggling to afford the costs of getting on the road. That's why some of them are now offering discounts based on driver's education, or even on regular education. These kinds of community involvement partnerships can include "good student auto insurance discounts," where getting good grades in school can contribute to lower policy premiums. Look for these to get a helping hand for new drivers.

How Vehicles Are Rated

It's helpful to look at how insurance companies rate specific vehicles. A cursory glance at specific vehicle risk ratings will reveal that newer, more attractive vehicles come with their own additional insurance cost. Auto insurance companies use ratings from third parties, such as the Insurance Services Office (ISO). These third party estimators use statistics about desirability, theft, safety and value to come up with a risk rating for a car or truck. What all of this means is that your old car, according to how reliable it is, can represent the best value for helping a first time driver avoid high insurance costs. It also means that buying your new teenage driver the latest and best vehicle model can come with exorbitant hidden costs.

Avoiding Risk

The wisest first time drivers know that they need to be especially careful on the road for the first few years, in order to build up a healthy driving record. These individuals understand that any DWI/DUI convictions, speeding tickets, underage drinking charges, or any other similar liabilities can result in steep auto insurance policy payments, which will stick to them for many years. In addition to safe driving practices, young drivers may be able to secure temporarily lower rates by negotiating auto insurance products such as pay as you drive insurance, where the mileage that a driver may use a given time period is limited.

Figuring out How Much Insurance You Need

The minimum insurance required differs from state to state, but in general you have to purchase at least basic liability coverage. Liability covers things such as bodily injury, property damage, and uninsured motorists. Depending on your budget, it may also be wise to purchase other forms of insurance. Collision insurance covers damage done to your vehicle in the event of an accident, and may be a smart idea if you are an inexperienced driver. Depending on where you live, it may also be smart to purchase comprehensive insurance, which covers your vehicle against things like natural disasters or vandalism. Also, if you don't have health insurance, you may want to consider having medical payments included in your coverage.

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Shopping for Rates

Don't trust commercials. Every insurance company claims to have the best coverage at the best prices. The only way to know for sure is to collect quotes from different companies. Many insurance websites have online quote calculators to make this an easy and quick process. Search through all of your options and compare as many quotes as possible.

Another great resource is your state's Department of Insurance. They should be happy to offer you advice on finding a deal that fits your needs, and let you know if a particular company in your area has had a lot of complaints.

Typically the younger you are, the more you will have to pay for car insurance rates. If you are a high school student, your rates will most likely be high, due to a relative lack of driving experience. When purchasing teenage car insurance, ask about discounts for things like making the honor roll or participating in extracurricular activities. If you are in college, it may be wise to purchase insurance through your parent's plan. Student car insurance is significantly less if the driver attends school more than 100 miles away from the area where the vehicle is registered. Another option for new drivers is a low mileage discount. Most companies require that you drive under 7,500 miles per year to be eligible. This may be good for you if you are going away for college and not using your car, or if you only drive your car to school or work. Other discounts may be available if you are married, have children, or you wish to combine two policies such as your home and car insurance into one package. Keep checking back in the future, as well. Five years of safe driving may earn you a safe driver discount.

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Know What You Want
Some new customers may not really understand what they want and need on the road. First of all, almost all U.S. states require specific minimum liability insurance for covering any accidents that you may cause. This is mandatory insurance. Above the minimum, auto insurers along with many experts recommend much higher liability limits. This is up to you as a customer. Higher liability limits will cause you to pay more for your auto insurance, but will provide more coverage in case you cause an accident. You also have to consider extras like uninsured motorist coverage, as well as collision and comprehensive coverage for your vehicle.

Deductibles: The "Secret Weapon" of Auto Insurance Rate Cutting

First time owners may not know how insurance consumers use deductibles to balance their financial responsibility. A deductible is an amount that you agree to take on yourself in the case of an accident. The idea goes like this: you don't know how much an accident might cost you. To cover your theoretical costs, you take out a policy on your vehicle. But with the deductible, you can agree to pay the first 500, 1000 or 2000 dollars yourself, and drastically cut down the rates that you pay every month. The higher the deductible, the lower your premiums.

How to Deal with No Record Risk

The youngest new drivers run into a problem. They can't get good auto insurance rates because they don't have a driving record to show that they are good drivers. These drivers can seek out non-standard auto insurance, which consists of policies made for those with a lack of a good driving record. Drivers can also look into assigned risk pools, where the state forces insurance companies to carry a specific driver and vehicle.

Auto Insurance Brokers

A broker is in a good position to determine which insurance companies should be looked to for providing the cheapest car insurance. The broker will elicit all of the required information from the driver before contacting insurance companies to determine which will be able to provide the best deal.

Specialist Insurance Companies

Car insurance for young drivers is a specialist area, and accordingly there will be specialist insurance companies in existence. These insurance companies have the experience in providing coverage for first time drivers, and will be in a position to confirm what sort of premium you can expect to pay.

Advanced Driver Training

Though passing your test can be exciting enough to prompt a young driver into immediately buying a car, an advanced driver course should be considered as a way to obtain the cheapest car insurance policy. These types of driving courses are available in a variety of different scenarios, such as driving at night or in hazardous conditions, and will give you further experience which can be looked on favorably by insurance companies.

Car Selection

Every new driver wants to drive a great car. However, the nicer the car you drive, the higher your rates will be. You will have a lot of time to drive a nice car, but you may want to start out with an older, used car. These cars have lower insurance rates due to lower costs of repair in the event of an accident.

Declaring Modifications

If there have been any modifications done to a vehicle, you should always declare them. Undeclared modifications will eventually cost you more in repairs. If there has been no declaration of any modifications and without any type of modified car insurance on your vehicle, the policy can be deemed void.

Prices for insurance on modified vehicles vary greatly with different insurance providers. They can range from $50 to $400 more per year, depending on the modifications done and vehicle type. For someone purchasing new driver car insurance, the discounts might help offset any additional modification costs.

Why Companies Charge More
Insurance companies charge more for policies that include modifications done to the car for of two reasons. The first has to do with performance modifications. Special parts that enhance speed can lead to accidents. The second reason has to do with the aesthetic modifications. These are the spoilers, racing graphics, sunroofs, wide tires, and other additions that make your car more appealing to the eye. The problem with this type of modification is that your car is now more likely to be targeted by thieves.

Find Helpful Resources

Reputable resources can help you learn more about insurance and provide you with more information. Try such places as the DMV website, insurance providers' websites, and traffic schools to learn all you want to know about getting your first car insurance policy.