Reviews Report
- First-time and young drivers face higher premiums because insurers price for higher expected loss frequency and severity; stacking new-customer discounts (early quote/signing, paperless, pay-in-full, bundling) and enrolling in telematics can produce double-digit savings, and about one-quarter of U.S. auto customers now participate in telematics programs (J.D. Power; Progressive; Allstate; Travelers).
- Where allowed by state law, teen males often pay more than teen females; differences are typically in the high single- to low double‑digit percent range for teens, while several states prohibit using gender in auto rating, including California and Massachusetts. Some sources previously cited fixed differences such as 25% more, but actual impacts vary by state rules and profile (The Zebra; ValuePenguin).
- State minimum requirements set the legal floor for liability coverage, typically expressed as BI per person/BI per accident/PD per accident (e.g., 25/50/25). Recent updates include California 30/60/15 (effective 2025) and Virginia’s compulsory 30/60/20; see the IIHS state list for current minimums and PIP/UM/UIM requirements.
Buying your own auto policy comes with new choices and higher scrutiny of risk factors that directly affect price. Premiums reflect more than inflation: insurers set rates based on expected claim frequency and severity plus expenses, reinsurance, and a risk margin. Marketwide, the CPI for motor vehicle insurance rose about 19% year over year in late 2024 as carriers priced higher claim costs (BLS CPI; see premium fundamentals from NAIC and our car insurance guides).
Picking coverages you understand and limits that match your risk is essential. Below we outline how to shop your first policy, what drives premiums, and where verified savings are available from telematics, low mileage, and bundling—especially useful for first-time buyers.
How to Shop for Car Insurance for the First Time
Break your first purchase into a few evidence-based steps and line up discounts early. These four moves can secure the right protection at a competitive price.
1. Research state laws about car insurance
Every state sets minimum liability limits, often written as 25/50/25 (BI per person/BI per accident/PD per accident). Many also require first‑party benefits like PIP and/or UM/UIM. Use the IIHS state minimums index to confirm your requirements, and note recent changes such as California’s increase to 30/60/15 (effective 2025), Virginia’s compulsory insurance at 30/60/20, and Arizona’s 25/50/15. Michigan remains unique with required $1,000,000 Property Protection Insurance and PIP medical choices (Michigan DIFS).
Insurance minimums in the 25/50/25 format translate to $25,000 bodily injury per person, $50,000 bodily injury per accident, and $25,000 property damage per accident. Consider higher limits if you have assets or income to protect.
In no‑fault states, PIP is mandatory and covers your injuries regardless of fault; lawsuits for pain and suffering are restricted. The 12 no‑fault states are Florida, Hawaii, Kansas, Kentucky (choice), Massachusetts, Michigan, Minnesota, New Jersey (choice), New York, North Dakota, Pennsylvania (choice), and Utah (NCSL; III).
2. Get multiple quotes
Collect at least three to five quotes on the same day with identical limits and deductibles. Quote early to capture “early quote/early signing” discounts and stack digital savings: Progressive (Quote in Advance, Sign Online, Paperless), Allstate (Early Signing, EZ Pay Plan, Paperless), and Travelers (Early Quote) all advertise new‑business credits.
3. Apply every discount you can
First‑time buyers can often achieve double‑digit percentage savings by stacking: telematics enrollment (instant participation discount with potential ongoing savings), multi‑policy bundling (auto + renters/home), online/paperless and auto‑pay, plus driver education/student credits where eligible. See program details from Progressive (Snapshot), Allstate (Drivewise), State Farm (Drive Safe & Save, Steer Clear), GEICO, and Travelers (IntelliDrive). About one‑quarter of U.S. customers now participate in telematics (J.D. Power). The Insurance Information Institute also recommends bundling, higher deductibles you can afford, and verified low mileage where permitted.
4. Add insurance to your vehicle immediately
Have your VIN, garaging ZIP, and driver’s license ready. If you’re leasing or financing, expect to carry comprehensive and collision and to list the lessor or lender on your policy; leases often require higher liability limits (commonly 100/300/50), cap deductibles, and may include or require GAP protection (Progressive: leased car requirements; III: coverage basics; CFPB: GAP).
Bundling helps first‑timers who lack long tenure and claims‑free discounts. Pairing auto with renters or homeowners can lower both premiums, and some carriers provide a homeowner discount on auto even without bundling (State Farm; Travelers; Progressive). See our picks for New drivers to compare options.
Factors That Affect Car Insurance Premiums
How insurers price: Premium ≈ expected claim frequency × severity + expenses + reinsurance cost + risk margin. Younger age, more annual miles, high‑risk driving, and costly‑to‑repair vehicles raise expected losses; discounts and safer vehicles can lower them. Broadly, U.S. motor vehicle insurance prices rose about 19% year over year in late 2024 as claim costs increased (BLS CPI; fundamentals from NAIC).
- Driver profile
- Age, years licensed, annual mileage, garaging ZIP, and (where permitted) credit‑based insurance scores affect price (NAIC).
- Gender use varies by state. States prohibiting gender in private passenger auto include California and Massachusetts (Hawaii also prohibits it). Where allowed, teen males tend to pay high single‑ to low double‑digit percent more than teen females (The Zebra; ValuePenguin).
- Lower mileage can help; in some jurisdictions (e.g., California), annual miles are an explicit rating factor, and telematics can verify reduced exposure (California Insurance Code; J.D. Power).
- Vehicle
- Higher‑value cars and complex ADAS features can increase repair severity; conversely, proven crash‑avoidance tech reduces crash frequency. Front automatic emergency braking cuts police‑reported front‑to‑rear crashes by about 50% (IIHS).
- Theft risk affects comprehensive coverage. U.S. vehicle thefts surpassed 1 million in 2023, elevating comprehensive claim frequency and cost in many markets (NICB).
- Usage matters. Business/work use often carries higher exposure than pleasure use.
- Driving history
- Prior tickets, at‑fault accidents, and DUI raise rates. Premiums commonly increase after an at‑fault crash or when you file a claim—magnitude varies by state and carrier (more on accidents and premiums; see also reporting behavior insights here).
- Telematics programs can apply discounts or surcharges based on real‑world driving (hard braking, speeding, phone use) where allowed (NAIC).
Auto Insurance Terms You Need to Know
Key definitions and why they matter for first‑time buyers, with links to up‑to‑date requirements and research.
How Much Car Insurance Coverage Do I Need?
Use these checkpoints to tailor coverage to your vehicle, contract, and state rules—and to find savings without sacrificing essential protection.
- Leasing vs. financing: Leases typically require higher liability limits (often 100/300/50), comprehensive and collision for the full term, deductible caps, and listing the lessor as additional insured and loss payee; a gap waiver is commonly included or required. Financed cars usually must carry comprehensive and collision with the lender as loss payee, but lenders generally don’t require liability above state minimums (higher limits are prudent). Verify requirements before you sign (Geico; Progressive; III; CFPB on GAP).
- New vs. used: Newer cars with advanced driver‑assistance systems can cost more to repair, but proven features like front automatic emergency braking reduce crash frequency by about 50%—a safety benefit that supports carrying physical damage coverage on higher‑value vehicles (IIHS).
- State minimum: Always meet your state minimums and consider higher limits for better protection. Recent changes include California 30/60/15 and Virginia’s compulsory insurance. For a current map of minimums and PIP/UM/UIM rules, see IIHS.
- Dropping comprehensive coverage: If your car’s value is low relative to its premium and deductible, you may opt to carry liability only. Leases and loans typically require comp/collision until payoff (III).
- Medical payments limits: MedPay and PIP cover you and your passengers’ medical costs after a crash; PIP is mandatory in no‑fault states while MedPay is generally optional elsewhere (III).
- At-fault and no-fault states: Twelve no‑fault states require PIP and restrict some lawsuits: Florida, Hawaii, Kansas, Kentucky (choice), Massachusetts, Michigan, Minnesota, New Jersey (choice), New York, North Dakota, Pennsylvania (choice), and Utah. Learn how thresholds and benefits work via NCSL.
How Car Insurance Works During WFH
Insurers don’t offer a “WFH discount,” but fewer commute miles can qualify you for low‑mileage tiers, “pleasure use” classifications, or usage‑based/telematics credits. California explicitly requires mileage as a rating factor (Insurance Code Section 1861.02(a); Title 10 CCR 2632.5(c)(2)), which means reported and verified miles can directly affect price (California Insurance Code).
Remote/hybrid work remains elevated—roughly 28–30% of paid U.S. workdays were from home in 2024—so telematics and pay‑per‑mile products are natural fits for many WFH drivers (WFH Research; J.D. Power). Get odometer photos ready and be accurate; underreporting mileage can create claim issues.
Even as some individuals drive less, national vehicle miles traveled rebounded to near or above pre‑pandemic levels by 2024, and claim severity (repair, medical, litigation) remains elevated—key reasons premiums rose broadly despite persistent WFH (FHWA VMT; LexisNexis Trends; BLS CPI).
