When it comes to car insurance, most people want to pay for as little as they can get away with, typically purchasing liability-only insurance. This type of insurance will pay for the damage you cause to other people and their property, including any legal expenses if you get sued.
Because of that last part, it’s recommended that you do not skimp on liability coverage. It is often you’ll find that young people are the ones who seek the cheapest car insurance, and while that’s understandable – their incomes are yet to mature – they face a conundrum. Their risk profile is high, which means that their insurance rates are also high.
The Insurance Institute for Highway Safety in 2019 reported that teenagers (16 – 19-year-olds) have a disproportionately high level of fatal crashes per mile – almost three times the rate for those aged 20 and above.
The consequence is that quotes for teenagers are three times more expensive than for those in their mid-30s. Luckily this figure drops sharply when you get to age 25 by about 30% and will continue to decrease steadily before rising again when you hit 70.
And while age is certainly a big decider in your insurance premiums – it’s not the only one. Knowing more about how to get car insurance for a first time driver can certainly help lower your premiums. If you’re facing high insurance premiums, you’ll want to consider the things within your control, such as:
- Your driving record: Traffic violations and accidents will mark you as a red flag for any insurer. One accident can raise your rates for the next 3-5 years. Lack of an insurance track record can also contribute to high premiums.
- Mileage: The less time you spend driving. The less you are likely to get into an accident. People with daily commutes will pay more than those who only drive occasionally.
- Credit History: Poor credit can have surprising consequences. Those with poor credit pay on average over $400 more per year than those with good credit. While different countries measure creditworthiness differently, having a good relationship with your lender can impact your premiums. The United States, parts of Europe, and Canada use credit scores to gauge insurance rates.
- Location: Generally, the more high risk an area is, the more likely you are to pay. For example, if you live in a rural area where theft, vandalism, and crashes are rare, then you’ll likely pay less.
- Car Make and Model: Picking a vehicle popular with thieves and known for crashes or breakdowns is a recipe for high premiums. Unfortunately, this means going with safe and boring options like the Honda CR-V, Subaru Outback, and the Honda Fit instead of flashy options such as sports cars, high-end luxury vehicles, and electric vehicles.
Many of the factors that affect the rates quoted to you may be outside of your control, meaning the best way to get cheap insurance is to shop around. Shop around every six months – new drivers should especially be frequent shoppers and ask for discounts – the savings from this will likely be the biggest you’ll experience.