First-Time Car Insurance Buyer? Here’s What Nobody Tells You

Got my first car insurance policy when I was 19. Walked into a State Farm office because it was closest to my apartment, said yes to whatever the agent recommended, and paid way too much for coverage I didn’t understand for the next three years.

Don’t be 19-year-old me.

Buying car insurance for the first time is confusing on purpose. The industry profits from people not understanding what they’re buying. So here’s everything I wish someone had told me before I signed that first policy—plus what I learned processing claims for six years afterward.

Why your first policy costs so much

Let’s get the bad news out of the way: your first car insurance policy is probably going to be expensive. Like, possibly more than your car payment expensive.

According to Insurance.com, the average 18-year-old pays around $5,470 a year for full coverage on their own policy. That’s over $450 a month. For insurance.

Why so high? Insurance companies base rates on risk. And statistically, new drivers—especially young new drivers—are risky. You don’t have a track record. No claims history. No years of incident-free driving to prove you’re not going to wrap your car around a telephone pole.

It sucks but it’s also kind of logical from their perspective. They’re betting on whether you’ll cost them money. And without data, they assume the worst.

The good news: rates drop significantly as you gain experience and prove you’re not a menace on the road. By 25, most people see a noticeable decrease. By 30, you’re usually in much better shape. You just have to survive the expensive years first.

The coverage you actually need

Every state except New Hampshire requires some form of car insurance. But what you’re required to carry and what you should carry are often very different things.

State minimums exist so you can legally drive, not so you’re actually protected. Most states require liability coverage only—which pays for damage you cause to OTHER people and their property. It does nothing for your own car or injuries.

Here’s what I’d actually recommend for a first-time buyer:

Liability coverage above the minimum. State minimums are usually embarrassingly low. Like $25,000 per person for injuries. Do you know how fast medical bills hit $25,000? About fifteen minutes in an emergency room. Go higher if you can afford it. 100/300/100 is a solid target—that’s $100k per person, $300k per accident for injuries, $100k for property damage.

Collision and comprehensive if your car is worth anything. Collision covers damage to your car from accidents. Comprehensive covers basically everything else—theft, vandalism, weather, hitting a deer. If your car is financed, your lender will require both anyway. If you own it outright and it’s worth more than a few thousand dollars, you probably still want them.

Uninsured motorist coverage. This protects you when someone without insurance hits you. And trust me, it happens way more than you’d think. In my six years adjusting claims, uninsured drivers were involved in maybe 20% of the accidents I saw. Some states require this coverage, some don’t. Get it either way.

What you probably don’t need

Insurance agents make commission. Not saying they’re all trying to oversell you, but their incentives aren’t perfectly aligned with yours. Here’s stuff first-time buyers often get talked into but probably don’t need:

Rental car reimbursement if you have another way to get around. This covers a rental while your car is being repaired after a covered claim. If you can borrow a car, take the bus, or work from home, skip it. It’s usually $3-5 per month which doesn’t sound like much but adds up.

Roadside assistance if you already have it through AAA or your car manufacturer. New cars often come with free roadside for the first few years. Don’t pay twice for the same thing.

Gap insurance if you made a decent down payment. Gap insurance covers the difference between what your car is worth and what you owe on your loan if the car is totaled. If you’re underwater on your loan (owe more than the car’s value), get it. If you put 20% down and have a reasonable loan, you probably don’t need it.

Low deductibles you can’t actually benefit from. A $250 deductible sounds nice until you realize you’re paying $40 more per month for it versus a $1,000 deductible. That’s $480 a year extra to save $750 if you file a claim. And most people don’t file claims every year.

Discounts you should ask about

Here’s where you can claw back some of that painful first-time-driver premium. Most companies offer these but don’t always advertise them:

Good student discount. If you’re under 25 and have a B average or better, you can save 10-15%. You’ll need to provide a transcript or report card.

Driver’s education discount. Completed a driver’s ed course? That’s often good for 5-10% off until you’re 21 or so.

Pay-in-full discount. Paying your whole premium upfront instead of monthly can save 5-10%. I know, paying $2,000 all at once is rough. But if you can swing it, you’ll save.

Usage-based programs. Companies like Progressive (Snapshot), State Farm (Drive Safe & Save), and others will give you a discount for letting them monitor your driving. If you’re actually a good driver, this can save 15-30%. If you brake hard constantly and drive at 2am, maybe skip it.

Bundling—but only if it actually saves money. Adding renters insurance to your auto policy often triggers a multi-policy discount. Renters insurance is cheap ($15-20/month usually) and the bundle discount on your auto might be more than that. Do the math.

The shopping process

Don’t just walk into the nearest insurance office like I did. Here’s a better approach:

Get quotes from at least five companies. Rates vary wildly between insurers. I’ve seen the same driver quoted $150/month from one company and $380/month from another. Same coverage. Same car. Same driver. The only way to know who’s cheapest for YOU is to compare.

Use comparison sites but also get direct quotes. Sites like The Zebra and Policygenius are helpful for ballpark numbers, but direct quotes from company websites are often more accurate—and sometimes cheaper.

Have your information ready. You’ll need your driver’s license number, the car’s VIN, your address, and basic info like your birthday and Social Security number for the credit check (yes, most companies check credit).

Compare apples to apples. Make sure each quote has the same coverage limits, same deductibles, same add-ons. A $100/month quote with $25,000 liability limits is not comparable to a $150/month quote with $100,000 limits.

Ask about ALL discounts. After you get a quote, specifically ask what discounts are available. Companies don’t always apply everything automatically.

If you’re staying on your parents’ policy

If you’re under 25 and your parents have decent insurance, staying on their policy is almost always cheaper than getting your own. Multi-car discounts, combined with their years of insurance history, usually beats anything you’d get solo.

Just make sure you’re actually allowed to be on their policy. Most companies require you to live at the same address. If you’ve moved out, you might need your own policy—though some companies allow you to stay on if the car is still registered to your parents.

Liability follows the car, not the driver. So if you crash your parents’ car, their insurance covers the damage (up to their limits). But if you crash YOUR car that’s on their policy, their insurance still covers it. The key is that the car needs to be listed on the policy.

Bottom line

Collision just walked across my keyboard and somehow opened fourteen browser tabs—she’s helpful like that—but here’s the short version:

Your first car insurance policy will probably be expensive. Accept it, shop aggressively to minimize the damage, and know that rates get better with time. Don’t buy coverage you don’t need but don’t skimp on liability. Get quotes from multiple companies. Ask about every possible discount.

And whatever you do, don’t just walk into the nearest office and sign whatever they put in front of you. That’s how you end up like 19-year-old me, overpaying for three years before figuring out you could’ve saved $800 annually just by making a few phone calls.

Welcome to insurance. It’s annoying but necessary. At least now you know what you’re getting into.