Gianetta Palmer is a writer, copywriter, and essayist. Her work has appeared in EverydayHealth.com, Healthline, and The Dyrt Magazine. She is the author of Scrunchie-Fried and writes a lot about car insurance in her spare time.

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florid...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Feb 2, 2021

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Young adults and other inexperienced drivers will often pay higher car insurance premiums due to their limited experience behind the wheel.

While insurance rates are generally high for teens, young adults between the ages of 25 and 30 often pay more for their premiums.

Affordable Coverage for Newly Licensed Drivers

A lack of experience increases the risk of a car accident.

Here are the key considerations and takeaways.

Cheap Car Insurance for New Drivers - Quick Hits
1st-time drivers have difficulty finding cheaper car insurance, and new drivers are among the most expensive to insure, but there are ways to lower rates.
The premium price point for an 18-year-old is over $5,000, and a newly licensed driver in their 20s pays about $3,500 annually.
It's tempting to go with the cheapest car insurer for recently licensed motorists, but larger providers offer features, discounts, and telematics to get a lower rate.
The cost of a premium among new and used automobiles for 1st-time drivers varies by $2,000.
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According to the Insurance Institute of Highway Safety, drivers between the ages of 16 and 19 are three times more likely to be involved in fatal car accidents than those over 20.

Cambridge Motor Telematics recently revealed 52% of recently registered drivers’ crashes occurred because they were distracted by their cell phones. Usually texting while driving.

And the Center for Disease Control and Prevention stated car crashes were the leading cause of death for teens. Mostly from speeding.

If you are a teen driver looking for a good auto insurance policy, be prepared to see higher rates than expected.

When most 18-year-olds see higher rates, they usually opt to go on their parents’ policy.

The data below is from more than one zip code and reflects car insurance rates for an 18-year-old with an individual policy.

Premium – 18-Year-Old Male

Insurance Company*Potential Annual Premium
Allstate$6,139
Erie $5,196
Esurance$6,197
Farmers$7,154
GEICO$5,163
Liberty Mutual$6,913
Nationwide$5,181
Progressive$7,818
USAA$4,916
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*Auto coverage includes comprehensive and collision coverage with a $500 auto insurance deductible and uninsured & underinsured motorist coverage with no family member added to the auto policy. Your results will vary when you get a quote.

It can be challenging to find affordable car insurance rates for teen drivers with their own car and other young adults with minimal driving experience.

The second category of inexperienced drivers with their own car, older drivers that obtained their license later in life, shows the same pattern.

Again, the data is an average but will depend on your zip code. 

Premium – Lack of Insurance History

Insurance Company*Potential Annual Premium
Allstate$5,041
Erie $4,217
Esurance$5,371
Farmers$5,901
GEICO$3,972
Liberty Mutual$5,614
Nationwide$4,329
Progressive$6,184
USAA$3,725
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*Auto coverage includes comprehensive and collision coverage with a $500 auto insurance deductible and uninsured & underinsured motorist coverage with no family member added to the auto policy. Your results will vary when you get a quote.

The best way to determine the best insurance company is to compare quotes from multiple companies using comparison websites.

Before you start comparing, let’s go over the many factors that determine your premium price.

The more you know about what auto insurance coverage is needed and how your premium is calculated, the easier it will be to find the right coverage at the most affordable price.

What are the Best Companies for a New Driver?

While the price is often the most critical part drivers consider when taking out a new auto insurance policy, it is also good to look at the provider’s benefits.

Sometimes the discounts and features offered by a car insurance company can be worth paying the additional cost.

The following companies are considered the best options for drivers in their late teens based on our research of discounts and features they offer.

Liberty Mutual

Liberty Mutual offers several features that make it an excellent choice for recently registered drivers, including their Accident-Free feature and New Car Replacement.

With Accident-Free, your rates will decrease after one year of violation-free driving.

This can be very beneficial to newly licensed drivers who need to decrease their car insurance rates rapidly.

With New Car Replacement, if the driver buys a new car and is involved in a car accident within the first year of ownership, Liberty Mutual will make sure the driver receives enough money to purchase the same new car again.

Other car insurance companies usually only pay for a vehicle’s depreciated value, which can be thousands less than what the driver initially paid.

Other beneficial features:

— At Least B Average Discount, up to 30%

— Student-Away-At-School Discount for college students, up to 10%

And two programs offered by Liberty Mutual worth considering.

ProgramData collectedSavings
RightTrackCollects data on driving behaviors5 to 30%
ByMileTracks the number of miles you driveUp to $500
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Progressive

Progressive is a reliable online-based insurance provider that guarantees impressive discounts and high-quality coverage to their policyholders.

Progressive offers the Name Your Price Tool that helps drivers choose a car insurance policy based on their current financial situation.

It allows newly registered and experienced drivers to have more control over their premium, greatly benefiting teens and young adults.

Additional discounts offered by Progressive include

— Safe driving discounts

— Multi-car, multi-policy, homeowners, and renters

— Online insurance auto policy purchases

— Good grade discounts for teen drivers

— Distant student

Telematics

Note: The good student discount has been known to reach up to 30% in total policy premium saved.

It is offered by many carriers these days. If your recent registered driver has a documented A or B Average GPA, tell your quoting agent when you get a quote. 

Make sure to add this to your insurance quote, and you can save big.

Additional features

ProgramBenefitSavings
SnapshotRewards for safe drivingUp to $200 for a six-month policy
Small Accident ForgivenessWill not raise rate on claim less than $500No rate increase with claims less than $500
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Allstate

Allstate offers several features that make it easy for young drivers to get a reasonable quote.

They offer multiple discounts that would appeal to drivers recently licensed, including B average student and safe driving discounts.

According to Allstate, you have the following options:

Smart Student Discounts
They successfully complete TeenSMART driver education program.
A full-time student with good grades.
Attends school at least 100 miles away from where your car is garaged.
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Allstate also offers discounts if the driver chooses automatic withdrawal (EFT) from their bank account for their premium payments.

The company also provides discounts for the type of car you own.

Some vehicles are deemed safer than others.

Additional Perks

Your initial Allstate quote may be higher than competing insurers.

But, you can lower costs with the array of insurance products offered.

Insurance Perks Benefits
Safe driver bonusReceive 5% savings for every 6 months you drive without having an accident.
Deductible RewardsGet $100 off your collision deductible up to $500.
DrivewiseGet personalized driving feedback that can help improve safe driving habits and lower insurance costs up to 30%.
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What Are the Best Insurance Rates for a Teen Driver?

Sometimes the most affordable rates are offered by smaller insurance providers.

If you are only interested in saving money on your premium, it would be wise to go with one of these companies.

Illustrated below are regional auto insurers offering coverage with a slightly lower premium.

Regional Insurers

Company17-year-old25-year-old
Farm Bureau Insurance of Tennessee$4,329.11$1,947.19
New York Central Mutual $5,391.91$2,003.06
Texas Farm Bureau$4,551.71$2,218.63
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If you are interested in additional benefits and discounts and more coverage options, consider choosing a larger insurance company, even if they are higher priced.

So, how much does insurance cost for young drivers?

Here are the average annual premiums for drivers 17 and 25-years-old from some of the country’s top insurance carriers.

Of course, your premium will depend on your zip code. 

Average rates for 17 & 25-year-olds

Insurance Company*17-year-old25-year-old
USAA$4,759.32$2,046.53
State Farm$6,212.12$2,034.74
Progressive$8,049.01$2,315.70
GEICO$5,731.98$2,309.42
Allstate$6,551.18$2,857.51
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*Each policy with minimum insurance requirements, including bodily injury liability, property damage coverage, uninsured motorist coverage, personal injury protection, and comprehensive and collision coverage with a $500 deductible. Your results will vary when you get a quote.

Do You Need Full Coverage Insurance?

At a minimum, drivers lacking experience need to have liability coverage that matches their state’s minimum required liability insurance limits.

Auto insurance companies will often suggest a new driver and a young adult add full coverage insurance due to the potential risks.

However, when you consider recently licensed driver (fender bender) statistics, it makes more sense to take out full coverage.

Full coverage includes comprehensive and collision. 

Ultimately, it is up to the parent or the driver to decide if they want to add full coverage or liability-only coverage.

Illustrated below are car insurance quotes from more than one zip code for a 17-year-old for each premium.

The cost of liability coverage is in bold. 

Insurer*Liability CoverageComprehensiveCollisionTotal
Erie$2,490$1,607$3,020$7,117
Elephant$2,220$1,503$2,808$6,531
Auto-Owners$2,092$1,416$2,646$6,154
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*Includes bodily injury liability, property damage liability, but excludes uninsured motorist coverage. Your results will vary when you get a quote.

Plus, if your inexperienced driver is driving a financed vehicle, purchasing full coverage will be required by the contract.

The National Highway Traffic Safety Administration states the highest risk of a car crash occurs in the initial six months after obtaining one’s license.

And the CDC reports teenagers with a new driver’s license are more likely to drive above the speed limit, follow too closely, and drive without wearing their safety belts.

A new driver is also more likely to make critical errors such as texting and driving or misreading a traffic signal.

Keep in mind; full coverage won’t cost a fortune forever.

Remember, the longer a teen motorist is on the road gaining experience, the lower their car insurance rates will be over time.

Auto insurance premiums often drop each year following a driver’s birthday.

Illustrated is a premium for a 19-year-old male.

The price drops significantly, as long as he maintains a clean driving record.

Insurer*Liability CoverageComprehensiveCollisionTotal
GEICO$1,490$1,009$1,883$4,382
Farmers$1,269$862$1,589$3,719
Travelers$1,128$788$1,505$3,421
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*Includes bodily injury liability, property damage liability, but excludes uninsured motorist coverage. Your results will vary when you get a quote.

What Discounts Are Available?

There are several ways for teenage drivers to get money-saving discounts on their insurance premiums.

— Choose a Company that Offers Safe Driver and Student Discounts

Finding as many discounts as you qualify for can help you save your premium.

Many companies now offer good student discounts that reward teen drivers based on their excellent grades.

And most major providers offer safe driver discounts for drivers of all ages to help them save money while encouraging them to be safe on the road.

Here are examples of insurers with and without good and safe driving discounts.

Insurerwith Good Student Discountwithout discount
Allstate$5,340.17$7,417.23
Farmers$5,685.75$7,581.82
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— Enroll in a Driver Safety Course

If your auto insurance company offers discounts for driver safety courses, it would be in your best interest to enroll.

Completing a defensive driver course can help reduce your premium.

And you learn how to avoid at-fault accidents.

Some states even require auto insurance companies to give policyholders a discount for taking this course, such as New Jersey. 

Here are a couple of examples. 

Insurerwith Defensive Driving Coursewithout course
Nationwide$5,594.41$6,216.48
The Hartford$6,421.77$7,135.31
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— Choose a Lower Risk Reliable Car

If you want to reduce your premium cost, choose a used car that is considered reliable and safe.

This is true for all types of drivers, but especially for adolescent drivers.

While it may not be the luxury vehicle that some have in mind, a safer and more reliable car or SUV will get them where they need to be and keep your car insurance rates reasonable at the same time.

Below are examples of premium price differences between new and used vehicles for inexperienced drivers.  

InsurerUsed VehicleNew Vehicle
Nationwide$6,401.60$8,127.49
The Hartford$5,936.25$7,915.52
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What are the Best Vehicles?

Choosing the right vehicle could make a big difference in how much you pay for your auto insurance.

A sports car will cost much more than a family sedan or minivan.

Insurance companies look at how much of a risk your car is when they set your premium cost.

If you hope to have an affordable auto insurance premium, it would be best to choose a more reliable car.

Here are a few examples:

Honda CR-V

The Honda CR-V is one of the most affordable cars you can own and insure.

It has an average annual premium of $1,333 for experienced motorists.

And runs about $4,500 annually for those lacking driving history. 

Honda’s come with Sensing Technology Suite with the following features.

— Multi-angle rearview camera
— Forward collision warning
— Lane departure warning
— Collision mitigation braking system
— Road departure mitigation system

With the Honda CR-V, you should be able to get anti-theft and safety discounts.

They aren’t as much as a defensive driver bonus or good student, but every little bit helps. 

Toyota Tacoma

Rated as one of the most popular trucks in 2019, the Toyota Tacoma is also one of the most affordable to insure at around $1,405 annually.

An 18-year-old with their own policy will pay $4,900 annually for a Tacoma, and you can buy a used one for around $18,000.

Most of them come fully equipped with passive disabling and anti-theft devices. 

 Annual PremiumDiscount
None$4,900n/a
Electronic Stability Control$4,832$68
Audible Alarm$4,748$152
Tracking Device$4,735$165
Passive Disabling Device$4,730$170
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Hyundai Elantra

The Hyundai Elantra has a slightly higher premium than other cars on the list, but it is also a preferred car for many teenage drivers.

The average premium for this car is $1,680.

And a teen driver lacking experience who prefer their own car, an annual policy runs about $5,200.

The Elantra consistently makes the Insurance Institute for Highway Safety list for top safety.

Illustrated below is how much you could lower your premium.

 Annual PremiumDiscount
None$5,200n/a
Anti-theft devices$5,090$110
Safety Features$4,965$235
Defensive Driving Course$4,680$520
Good (College) Student$3,640$1,560
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Jeep Compass

The Jeep Compass, or any Jeep model in general, is a reliable vehicle with many built-in safety features to help keep your auto insurance rates low.

The average annual price for the premium for this model is $1,349.

For younger drivers looking for lower insurance rates, the cost to insure a Compass runs about $5,400 annually.

Features include:

— Adaptive Cruise Control system(ACC)
— Lane departure warning with lane keep assist
— Blind Spot Monitoring and Rear Cross Path Detection
— Full-Speed Forward Collision Warning with Active Braking System

A 19-year-old could get the following savings.

 Annual PremiumDiscount
None$5,400n/a
Security devices$5,280$120
Safety Features$5,150$250
Defensive Driving Course$4,860$540
Good Bonus$3,780$1,620
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Frequently Asked Questions

Why Am I Required to Get Other Insurance Like Personal Injury Protection?

Personal Injury Protection, or PIP, is not required in every state, only in no-fault states.

This product covers the cost of injuries regardless of the cause of the car accident.

This is good if you often drive with passengers who could hold you responsible if they were injured in a car accident with you behind the wheel.

It is also highly recommended for anyone with low health insurance limits or a high health insurance deductible.   

Depending on what state you live in, you can choose the amount of the required PIP you want to purchase.

What is the Best Car Insurance for New Drivers Under 25?

To sum it all up, the best insurance providers for young drivers under the age of 25 as far as features and discounts are concerned are Allstate, Progressive, and Liberty Mutual.

The cheapest are USAA, Progressive, State Farm, Geico, and Allstate.

To get the best rate, be sure to shop around and consider the insurance price along with features and discounts. 

Why Do Banks and Lending Institutions Require Me to Have Full Coverage Insurance?

If your car is not fully paid at the time of a severe crash that leaves it totaled, the bank or other lender wants to guarantee the vehicle will be paid for.

Banks and other financial institutions often require full coverage or collision insurance before you can finance a car.

Will a Low Credit Score Prevent Me From Getting Cheap Car Insurance?

In most cases, yes.

Unless you live in California, Hawaii, Massachusetts, or Michigan, using credit scores to underwrite a car insurance policy is disallowed.

Otherwise, no one can get low car insurance costs with a poor credit score. 

If you are young, enroll in your bank’s credit card program to build your credit. Then make sure to pay your bills on time. 

How Do I know What Type of Insurance Coverage is Affordable for 1st-Time Drivers?

To learn which type of car insurance coverage to choose and which providers offer the most affordable insurance for new drivers, compare top providers’ rates in the country.

You could call each company individually or visit their websites for a quote, or get a free quote from multiple sources simultaneously by visiting AutoInsureSavings.org.

At AutoInsureSavings, we offer fast and reliable auto insurance quotes from some of the country’s best carriers.

Save yourself time and eliminate the stress of searching for the most affordable rates by entering your zip code on our website for a free quote today.

To learn more about affordable insurance policies, contact the experts at AutoInsureSavings for a quote.

Our licensed insurance agents will be happy to answer any questions you have.

Sources

https://www.iii.org/issue-update

https://www.consumerreports.org/

http://www.naic.org/Releases

https://www.cdc.gov/motorvehiclesafety

Quadrant Information Services