Your driving record is one of the most significant determiners of auto insurance rates. A bad driving record often translates to riskier drivers and higher insurance premiums. The opposite happens for drivers with a clean record. But what about drivers who have little or no driving records?
How much does car insurance cost for new drivers like teens or immigrants?
New drivers usually pay more for car insurance. According to a study by value penguin, the average annual premium for an 18-year old is $7,396. On the other hand, a 25-year old driver could pay $3,348 per year for auto insurance.
Fortunately, there are ways for new drivers to save on car insurance. This article will give you tips and steps you can take to lower your car insurance premium.
Start With the Car – Get a Less Expensive Model
One of the factors considered when calculating car insurance premiums is the car itself. The price of the vehicle, cost of repairing, and safety track record will significantly influence the premium.
The new Rivian R1S electric SUV is more expensive to buy, maintain and insure than a 2022 Honda HRV. The insurance premium for the SUV could be double the Honda. The reason is simple: the insurer faces more risk on the SUV.
Downgrading the vehicle can significantly reduce your car insurance rate.
Reduce Coverage Value for Older Vehicles
If you have purchased a second-hand vehicle, you could reduce the coverage value and thus, bring down the cost of premiums.
You could discontinue the comprehensive coverage for the vehicle and retain collision coverage.
Car insurance professionals suggest that if the value of your car does not exceed ten times the annual premium, a comprehensive cover might not be beneficial. For example, if the annual premium costs $2,500, your car should be worth more than $25,000. Otherwise, consider dropping the comprehensive cover.
Consider Pay-as-You-Drive Insurance
A pay-as-you-drive auto insurance policy is an excellent way to cut your car insurance bill. Since you are a new driver, chances are you will not drive that far or that often during the first few years.
With pay-as-you-drive car insurance, you will most likely pay a base rate, then pay regular premiums based on the agreed rate. The insurer will fit your vehicle with a telematics device and use it to determine the usage-based coverage.
However, if you suspect that you could be driving for long distances in your early days, pay-as-you-drive might not be an ideal money saver for you.
Take a Defensive Driving Course
Yes, you could have just undertaken a driving course, but there is more. You can take other driving lessons to improve your safety awareness like defensive driving and accident prevention courses. Ensure you inform the insurance broker or agent about the course before doing the paperwork.
Increase Your Deductible
Increasing your deductible will have a double effect on you – you are likely to be more careful on the road, and your insurance premiums will reduce.
A deductible is a fraction you are supposed to pay out-of-pocket before the car insurance company picks up your tab on a claim. The higher the deductible, the more you pay out-of-pocket, and thus the lower the premium. However, you should ensure that you have enough cash anytime you hit the road.
Shopping around is perhaps the oldest. But it is also the best tip you can get to reduce your car insurance bill. Fortunately, you can find the right car insurance company from the comfort of your home. You can compare car insurance rates according to the location, insurer, and many other factors. For example, Florida car insurance rates will differ from rates in New York.
Learn About Discounts You Qualify for
Car insurance is a competitive industry. Insurance companies often offer different promotional discounts to groups of drivers to attract and retain buyers. For example, you could qualify for a discount because you are a member of a particular association, a veteran, or a professional in a particular field (for example, medics). In many cases, you might never know about the discounts unless you ask and request them in your application.
Keep Your Premiums Low
As you continue to gain experience, your car insurance premiums will reduce. However, you must also keep your driving record clean. The above tips will help you save on car insurance even when you are an experienced driver. But there is more that you can do. For example, you can bundle policies to get a better deal or improve your credit score. You can do a lot to clinch an excellent car insurance deal and keep premiums low.