Are you concerned about the cost of getting auto insurance as an under 25 driver? If YES, here are 21 tips on how to get cheap car insurance as a new driver.
A new driver is usually defined as someone with no driving history or insurance record. These set of people can include newly licensed teenagers, people who got their driver’s license later in life, or drivers new to the US. Each of these classes of drivers face a similar challenge when it comes to finding cheap car insurance but today, we are going to discuss about new drivers who are basically teens or a little above that.
Car insurance is an expensive component of car ownership, and if you throw in a driver who is under the age of 25 into the mix, your premium would get over the roof. But despite this fact, it is possible to keep your rates low when applying for a car insurance as a driver who is under the age of 25.
How to Get Cheap Car Insurance for a New Driver Under 25
Young drivers are statistically more likely to have an accident and make a claim. This basically is the reason why insurance companies sell their car insurance premiums at a high cost to these set of people.
While it can be hard to get cheap car insurance if you are under 25, but there are things you can do to help keep the costs down. From picking the right car to increasing your excess, we are going to provide you tips on how you can get your car insurance at a cheap rate in the United States if you are under the age of 25.
- There are cars that get cheap insurance, pick those
When looking to get car insurance at a cheaper rate, the first place to look at typically is your car. Teh cost of insurance should be factored in during the buying process. All cars on the market belong to one of 50 different car insurance groups — the cheapest cars to insure for new drivers can be found in groups one to five. This is particularly important for young male or female drivers with fast cars, which are typically more expensive.
Look for something reliable yet affordable. You don’t want to be stranded on the side of the road in a beat up old truck, but at the same time, you don’t want to take out a loan on a fancy sports vehicle either. Depending on your price range, look for a car ranging in age from 6 to 10 years old that is still in excellent condition. Check for airbags and other safety features, and consider having a safety inspection.
Liability insurance on a car with airbags is cheaper than on a vehicle without because airbags reduce the potential for serious injury. If you are truly keen on getting cheaper insurance rates, then don’t buy a sports car. It would only increase your rates.
- Car modifications are a no no
Car modifications, such as alloy wheels and body kits, often appeal to young drivers wanting to personalise simple-looking hatchbacks or medium-sized cars. However, avoid them if you want to get the best insurance as a young driver. Modifications are often known to increase premiums by hundreds of dollars. You need to keep this in mind if you are a young driver.
If you are absolutely determined to modify your car, consider if you would be happy to replace the modified parts with cheaper ones, otherwise the costs of the premiums could be much higher.
- Telematics would go a long way
Telematics which is popularly known as Black box policies, is the use of an app or a small device installed in the car to monitor usage and driving behaviour. This type of policy can help to cut the cost of car insurance for young drivers as insurers are able to base premiums on actual driving behaviour rather than assuming every young driver is at risk of making a claim.
If there ever was a way to get the cheapest insurance for young drivers, then black box insurance is top of the list. In fact, drivers aged 17-21 with zero claims could save over a thousand dollars by choosing black box insurance over a standard policy.
- Pay premiums at a longer duration
With the average car insurance premium for young drivers run into thousands of dollars, it can be tempting to split payments rather than shelling out for the cover all in one go. That said, but you should know that it is usually much cheaper to pay for the whole year in advance rather than paying monthly, if you can afford to. You’ll avoid the monthly interest charges and that could save you a substantial amount.
- Top up your excess
Choosing to pay a higher voluntary excess on top of the compulsory excess you’re quoted — the amount you’d have to pay up front if you made a claim — can significantly reduce the cost of your car insurance. However, make sure you can afford to pay the excess if you do have an accident. It has been found out that young drivers with little money usually struggle to cough out $500 or more after a crash.
Furthermore, statistically speaking, young drivers are more likely to make a claim within the first year of driving, so beware that you could end up forking out the higher voluntary excess early on. Opting to pay a higher excess can reduce your premium, but you should make sure that you are able to afford it if you need to put in a claim.
- Do you really need the extra coverage?
Comprehensive car cover is normally the most expensive type of car insurance — it covers both your car and other vehicles if you have an accident. Third-party cover — the most basic level of cover — covers claims against you if you’re involved in an accident and injure someone. It also covers the cost of repairing or replacing the other person’s car, but not your own.
Assess how often you plan to drive, what you can afford to cover, and what type of superficial car damage you might be prepared to live with. If you cannot afford the extra coverage, then don’t get it. But you have to be extra careful so you don’t land yourself in a hole because of your decision.
- And don’t assume third-party is the best insurance for young drivers
One of the cardinal rules of buying insurance, especially for a new driver who is hoping to get something cheap is to compare quotes with different levels of cover before you buy. According to the Association of British Insurers, the average third-party, fire and theft premium is more expensive than comprehensive cover because it’s often chosen by younger drivers with a tendency to make larger claims.
Bear this in mind before you compare car insurance for young drivers. Also, don’t search for cheap car insurance for the price alone. You still need to assess what type of cover it is you need. Sacrificing quality of cover over the price could end up costing you more in the long term.
- Add a named driver, but those without points
As a new driver under the age of 25, you can reduce car insurance costs by adding an extra named driver to the insurance policy – especially if they’re older and more experienced on the road, regardless of whether they are male or female.
But you should make it a point to avoid those with points. You should also beware of what of is known as ‘fronting’. Putting the policy in a parent’s name, with the young driver as a named driver when they’re actually the main driver, is known as ‘fronting’, and it is illegal and can result in insurers rejecting claims.
If you add a named driver to your policy who is older and/or more experienced, the car insurance provider will likely offer cheaper premiums because they will assume that driving responsibilities will be shared and hence the riskier motorist will be spending less time behind the wheel. This often results in cheaper premiums.
- Add some security features to your vehicle
Adding extra car security features such as an alarm, tracker or immobiliser, can often help you get cheaper cover. Your car insurance can be cheaper still if you park your car in a garage or driveway overnight rather than leaving it on the street as insurers see this as a further way of minimizing risk. Your possible discount varies based on the type of device installed and the state in which the vehicle is garaged.
You will often be offered cheaper new driver car insurance quotes if the insurer believes that the vehicle is less likely to be stolen or vandalised. You can achieve this by simply parking the vehicle in a locked garage at night or at least off the road on a secure driveway.
- Get those good grades
Insurance companies have determined good students are, on average, better drivers. Most insurance companies offer a good student discount that can boost your savings, which generally applies to students making at least a B-average (3.0 on a 4.0 scale).
If you are a bright student, then you need to keep your result sheet ready to prove this to your insurers. If a 3.0 isn’t possible at the time you applied for your insurance, the discount can always be added on at a later date if the grade point average improves. If you are still a student, this can provide the needed academic boost.
- List as an occasional operator, if you are one
If you are a teen or someone who is generally under the age of 25, you can apply for car insurance as a shared operator. Sharing a car with a parent or someone older and more experienced is a great way to save some cash. Most carriers can list a young driver as a secondary or occasional driver. Make sure to mention it to your agent because it has the potential to bring down the premium you are expected to pay.
- Look to PLPD Coverage
Selecting the right coverage if you are driver under the age of 25 could potentially save you hundreds of dollars. If you followed the rules above about choosing the right vehicle, you are in an excellent position to insure your car with personal liability and property damage, PLPD, only.
To get PLPD only, you cannot have a loan on the vehicle, and you’ll want to be in the position where you can replace the car on your own if something were to happen to it. PLPD is the least amount of insurance you can purchase making it the cheapest.
Physical damage is the most expensive coverage for a young driver. Avoiding physical damage coverage such as comprehensive and collision can save you a lot of car insurance premiums.
- Chose a moderately priced vehicle
The value and other characteristics of your vehicle contribute to your insurance premium. Picking a luxury vehicle comes with an additional cost — higher insurance premiums. This is especially true for new drivers. An inexperienced driver with a new pickup truck or a Mercedes-Benz is a major liability to an insurance company. If you’re a new driver looking to save money, get your feet wet with an older vehicle, but not one so beat up that it falls apart easily.
- Pick the best insurance company for new drivers
At the end of the day, all the tips in the world won’t matter if you choose the wrong company. Some insurance companies will see your age and driving background as too great a liability and apply exorbitant premiums, without waiting to check on other parameters. You should do yourself a favour as a young driver and shop around every six months to ensure you’re getting the best rate for your driving profile.
- Keep rates low with Accident Forgiveness
Accidents happen to even the best young drivers. And if one does occur, insurance rates may rise as much as 30%. If you have an insurance company that provides you accident forgiveness as part of your car insurance package, your rates will not increase following the first at-fault automobile accident.
- Take a defensive driving class like Pass Plus
As well as improving your driving, insurers will look favourably on this extra experience and it may result in cheaper new driver car insurance premiums and or discounts. Most insurance companies can make this available for you.
- Reduce your mileage
One of the things insurers will look at is how many miles you estimate you’ll be covering over the course of the year. The less you are out on the road, the less of a perceived risk you are. Therefore, being accurate with your estimate mileage will avoid overpaying for miles you won’t use. And if you can reduce this by using public transport or getting involved in a car share, you may save money on your premium.
- Shop around
Never just accept the first new driver car insurance quotes you get. Shopping around and comparing prices will allow you to weigh up your options and get the most suitable and cheapest car insurance quotes available.
Discounts Available to Drivers Under 25 That Can Make Insurance Premiums Cheaper
As a young person under the age of 25 who is seeking to get cheaper car insurance, you have to note that insurance companies provide a couple of discounts that usually aim to make things cheaper for you. Note that not all car insurance companies offer all these discounts, so it would be in your best interest to look out for a car insurance company that would offer you a greater number. These discounts include;
- Good driver discount
The good driver discount is one of the discounts provided by insurance companies to keep premiums low for drivers under the age of 25. This discount is available if you have a clean driving record, that is if you have had no accidents or citations for a certain period.
This valuable discount is often added to your policy when your Motor Vehicle Report is pulled at the inception of your policy. If you’re convinced you have a clean driving record and are not receiving a discount, contact your insurance company and inquire about a good driver discount.
- Profession/occupation discount
This discount goes by several names, but the idea is simple. Some insurance companies will give you a discount based on your occupation. Statistically, occupations such as teachers, physicians, or police officers are less likely to file a claim. An insurer will typically require proof of profession — a photocopy of your degree is a common request for you to qualify for this discount.
- Good student discount
If you’re still under 25 and have the grades (typically a 3.0 GPA or better), speak with your insurance company about a good student discount. Normally, they’ll ask for a transcript every 6 to 12 months as proof of your continued good standing. This is too good a one to pass up.
- Multi-car discount
A multi-car discount refers to insuring more than one car with a single company. The discount is automatically added either at policy inception — if two cars were insured from the start — or upon addition of a second vehicle to the policy. To receive this discount, you may have to insure with a parent or relatives’ insurance company. Or wait for your siblings and lump the insurance together.
- Defensive driving discount
This discount entails taking a defensive driving course and presenting your insurance company with proof in the form of a receipt or transcript. The logic behind this discount is clear: defensive driving classes make you a safer driver, which makes you less risky, i.e., cheaper, to insure.
- Equipment discount
If your car comes with an anti-theft device, your insurance company may likely give you a discount. The discount tends to be smaller than a multi-policy or defensive driver bonus, but every little bit helps to reduce the cost you have to pay. Anti-theft devices are commonly built into modern vehicles. Just be sure any security devices are taken into account when your quote is generated.
- Multi-policy discounts
You can become eligible for a multi-policy discount by carrying multiple policies with one insurance company. Common policy combinations are home-and-auto or renters-and-auto. These discounts may be applied to both policies.
The discount you receive may vary depending on your coverage combination. For example, you’ll receive more of a discount for bundling homeowners and auto policies than by adding a renters insurance policy to your auto coverage. The logic is simple: a homeowners policy brings in much more revenue for an insurer than renters insurance.
- Resident Student Discount
A licensed young person who is under the age of 25, and is away at school still needs to be insured. Even when you won’t have access to a vehicle, insurance is usually still required because you will come home from time to time. An even deeper discount is available through most insurance carriers for students away at school. If you will be away at school as a young person under 25, make your insurance company gets to know about it.