The Best Cheap Car Insurance for New Drivers
The Best Cheap Car Insurance for New Drivers
Allstate offers the cheapest minimum-coverage car insurance rates for new drivers, and State Farm has the best rates for full coverage.
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Auto insurance companies consider a number of factors to determine rates, including driving experience. First-time drivers pay higher premiums because they're more likely to be involved in an accident. For insurance purposes, newly licensed teens, immigrants and foreign nationals, older drivers who have never had a license or those with a gap in driving or insurance coverage are all considered to be new drivers.
We collected tens of thousands of car insurance quotes from every ZIP code in Texas to find the lowest rates. Rates were for new drivers age 16, 17, 18, 21, 25, 35, 45 and 55, as well as a 16-year-old on the policy of his two 50-year-old parents.
Best car insurance for new drivers under 25
Allstate offers the cheapest minimum-coverage car insurance rates for first-time drivers under 25 years old. On average, new drivers can expect to pay $2,743 per year for insurance. However, Allstate's policy costs 56% less at $1,205 per year.
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New drivers looking to purchase full-coverage insurance can find the best rates with State Farm, where a policy costs $3,308 per year or $276 per month. The average for full-coverage insurance is nearly double State Farm's rate at $6,527 per year.
Company | Minimum coverage | Full coverage |
|---|---|---|
| Allstate | $1,205 | $4,493 |
| State Farm | $1,547 | $3,308 |
| Geico | $1,572 | $3,550 |
| Nationwide | $3,363 | $8,298 |
| Farmers | $4,495 | $9,555 |
| USAA* | $1,390 | $3,512 |
*USAA is only available to current and former military members and their families.
Minimum-liability policies are usually the cheapest form of insurance because they provide the lowest level of coverage you can legally carry in your state. Affordable rates might make minimum-coverage auto insurance seem like the best option, but if you're involved in an accident, you could end up paying more out of pocket in the long run.
For this reason, we recommend purchasing a full-coverage auto insurance policy rather than a minimum-coverage policy.
Best car insurance for new drivers over 25
First-time drivers over 25 years old can find the cheapest minimum-coverage auto insurance with Allstate. The company charges $395 per year, which is 62% less than the average of the quotes we received.
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Company | Minimum coverage | Full coverage |
|---|---|---|
| Allstate | $395 | $1,568 |
| State Farm | $589 | $1,398 |
| Geico | $950 | $2,011 |
| Nationwide | $1,058 | $2,852 |
| Farmers | $1,708 | $3,959 |
| USAA* | $712 | $1,896 |
*USAA is only available to current and former military members and their families.
State Farm has the lowest rates for a full-coverage policy. New drivers pay $1,398 per year, making a policy with State Farm $1,000 less than average.
Best car insurance for new drivers on a family policy
How long can you stay on your parents insurance?
There is no age limit for sharing a car insurance policy with your parents, so as long as you live in the same house, you can share a policy. Once you move out, you will need to get your own policy, unless you're still considered their dependent (for example: college students).
Young first-time drivers can get significantly better rates by sharing a policy with their parents or an older relative.
Rates from Allstate, Geico and State Farm are all cheaper than average. Geico charges the least to add another car and driver to an existing policy — $1,419 per year, on average.
Although State Farm charges more to add another car and driver, its overall rates are better than its competitors. On average, a full-coverage policy with three vehicles and drivers from State Farm costs $2,201 per year — $813 cheaper than average.
Company | Parents only | With 16-year-old | With 18-year-old | With 21-year-old |
|---|---|---|---|---|
| State Farm | $1,038 | $3,139 | $2,644 | $1,982 |
| Allstate | $1,520 | $3,478 | $3,478 | $2,281 |
| Geico | $1,641 | $3,243 | $3,092 | $2,843 |
| Nationwide | $1,925 | $4,439 | $4,392 | $3,289 |
| Farmers | $2,392 | $5,020 | $4,761 | $5,527 |
| USAA* | $1,089 | $3,427 | $3,180 | $2,502 |
Rates were calculated based on a first-time driver and two parents sharing a full-coverage policy with coverage for three vehicles.
Adding an additional car and driver onto an existing full-coverage policy costs three to five times less than purchasing a stand-alone policy.
Best insurance company for new drivers
It's important for first-time drivers to compare auto insurance quotes to find the lowest price, but choosing an insurance company with a great reputation is equally as important.
State Farm is our choice for best car insurance company for new drivers due to its superior rating from our editors, high financial stability marks from AM Best and top J.D. Power customer satisfaction score.
Company |
Editor's rating
|
JD Power
|
AM Best
|
|---|---|---|---|
| State Farm | 859 | A++ | |
| Geico | 843 | A++ | |
| Nationwide | 831 | A+ | |
| Farmers | 818 | A | |
| Allstate | 838 | A+ | |
| USAA | 890 | A++ |
Our editor's rating is determined by analyzing each company's rates in relation to its competitors, the policy coverages it offers and its customer satisfaction scores.
J.D. Power's Auto Claims Satisfaction Study is an annual nationwide survey that polls insurance customers about their experience filing claims with their insurer. Higher scores are better, and the best possible rating is 1,000.
AM Best's Financial Strength Rating is a letter grade that describes the overall financial health of an insurance company and its ability to pay out claims. The best score available is "A++". All of the companies we included have a Financial Strength Rating from AM Best of "A" or better, meaning they have an "excellent" or "superior" ability to pay out claims, even in difficult economic times.
How much is insurance for a new driver?
Who is considered a new driver?
- Newly licensed teens
- Older drivers who have never had a license
- People with a gap in driving or insurance coverage
- Immigrants and foreign nationals
On average, new drivers can expect to pay $1,582 per year for minimum-coverage and $3,867 per year for full-coverage insurance. However, car insurance rates vary greatly depending on your age, where you live and other factors such as your credit score.
How does experience affect car insurance rates?
Auto insurance companies consider a broad range of factors to determine rates, including driving experience. People with little to no driving history tend to be significantly riskier to insure, so they'll have to pay higher premiums during the first few years of their driving careers. However, as you spend more time behind the wheel, you'll see your insurance rates begin to fall.
Years licensed | Average annual premium | Percentage increase |
|---|---|---|
| 0 | $1,105 | 43% |
| 1 | $884 | 15% |
| 2 | $855 | 11% |
| 3 | $832 | 8% |
| 4 | $827 | 7% |
| 5 | $772 | 0% |
Percentage increase shows the difference in premium from a driver with five years of experience, which is when experience no longer affects rates, on average.
In Texas, a 30-year-old man with no driving experience can expect to pay $1,105 per year for a minimum-coverage policy. After one year of driving, his rates go down by $131. After having his license for five years, his rates are $333 cheaper.
Insurance companies only consider driving experience within the U.S., so immigrants and foreign nationals pay higher premiums as well, even with foreign driving experience.
How does age affect car insurance rates?
One of the biggest factors that raises new-driver rates is age. Teens, who tend to have a higher risk tolerance, cause more accidents on average than middle-aged drivers. However, some people do begin driving later in life. If you're a new-but-not-young driver, you'll still pay higher rates than other drivers your age. However, you'll see less of an increase than your younger counterparts.
Age | Minimum coverage | Full coverage |
|---|---|---|
| 16 | $3,097 | $7,229 |
| 17 | $3,021 | $7,079 |
| 18 | $3,107 | $7,450 |
| 21 | $1,747 | $4,351 |
| 25 | $1,198 | $2,984 |
In Texas, a 16-year-old driver pays more than twice what a 25-year-old new driver pays for a full-coverage policy, despite the fact that they have the same level of driving experience. Rates decrease even more for first-time drivers in their 30s, 40s and 50s.
How to save on car insurance as a new driver
Regardless of age, you will have to pay more for insurance if you lack driving experience. However, there are a few steps you can take to lower your monthly bill.
Frequently asked questions
How much is insurance for a first-time driver?
Minimum-coverage insurance costs $1,582 per year for first-time drivers, on average, while a full-coverage policy costs $3,867 per year. Young drivers may be able to save money by sharing a policy with parents or older family members.
What is the best insurance for first-time drivers?
We recommend full-coverage insurance for new drivers. Full-coverage insurance includes comprehensive and collision coverage, which pays for damage to your vehicle, regardless of fault — a feature that could be worth paying extra for, since first-time drivers are more likely to be involved in an accident. State Farm offers the best full-coverage insurance rates for most new drivers.
Does a new driver need insurance?
Every state requires you to have auto insurance or proof of financial responsibility in order to drive legally. Typically, you're required to purchase liability insurance, which pays for injuries and damage you cause to others and their property. In addition, you'll need to decide if you want to purchase additional coverage, such as collision and comprehensive insurance.
What do you need to get car insurance?
To purchase car insurance as a new driver, you will need to provide your personal information (full name, age, address and license number), vehicle information (make, model, VIN number, date of purchase and mileage) and your payment information (usually bank account or credit card).
How much does car insurance cost for a 16-year-old?
A full coverage policy for a 16-year-old girl costs $813 per month, and a 16-year-old boy can expect to pay $876 per month. However, insurance costs range from $313 per month to $1,141 per month, which is why it's important to compare quotes from multiple insurers in your area.
How much does car insurance drop when you turn 25?
A 25-year-old driver can expect an 11% decrease in car insurance costs, on average. However, rates decrease more between 20 and 21 years old (17%) and 18 and 19 (16%).
Methodology
We collected thousands of quotes from ZIP codes across Texas for the largest insurers in the state to determine the best rates for new drivers.
For our minimum-coverage rates, we quoted a policy with the minimum required limits in Texas. Minimum- and full-coverage limits are shown below:
Coverage | Minimum-coverage limit | Full-coverage limit |
|---|---|---|
| Bodily injury liability | $30,000 per person/$60,000 per accident | $50,000 per person/$100,000 per accident |
| Property damage liability | $25,000 per accident | $25,000 per accident |
| Uninsured motorist bodily injury liability | - | $50,000 per person/$100,000 per accident |
| Comprehensive deductible | - | $500 |
| Collision deductible | - | $500 |
The driver for the study was a 30-year-old man with average credit driving a 2015 Honda Civic EX. Characteristics were changed to reflect age and driving experience.
For difference in rates after adding a first-time driver to a family policy, quotes are based on a 16-year-old male sharing a policy with a married couple who are both 50 years old.
Insurance rate data for ValuePenguin's analysis was provided by Quadrant Information Services. Rates are publicly sourced from insurer filings and should be used for comparative purposes only. Your own quotes will differ.
Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.