Best and cheapest car insurance for new drivers in 2023

Erie

Geico

Best for state availability

Nationwide

Best for new car replacement

American Family

Lowest NAIC complaint rate

USAA

Nationwide

Best if you need an SR-22

What car insurance is essential for new drivers?

Most states require all drivers to carry minimum levels of liability car insurance, and some require medical payments or personal injury protection (PIP) coverage. For financed and leased vehicles, lenders typically require collision and comprehensive coverages.

• Bodily injury liability: Pays the medical expenses of another driver and their passengers if you’re at fault for an accident.
• Property damage liability: Helps pay to repair or replace another driver’s automobile, or other type of property, when you’re at fault in a collision.
• Collision: Pays to repair or replace your car following a covered accident.

• Comprehensive: Pays to repair or replace your automobile due to noncollision losses, such as fire, storms or theft.

How does car insurance work for new drivers?

If you’re the parent of a teenager who’s reached driving age, your insurer may allow you to add them to your auto insurance policy. Many providers even allow you to add a dependent teen driver with a learner’s permit to your coverage at no additional charge. However, if they remain on your policy after they receive their driver’s license, your premium likely will increase.

All drivers must carry state-required minimum car insurance coverages, regardless of their driving experience, and requirements vary by state. For example, all Massachusetts drivers must carry at least:

• $20,000 in bodily injury liability coverage per person
• $40,000 in bodily injury liability coverage per accident
• $5,000 in property damage liability coverage
• $8,000 in personal injury protection (PIP) coverage
• Uninsured motorist coverage, which helps pay the medical expenses of you and your passengers if you’re involved in an accident with an uninsured or hit-and-run driver ($20,000 per person, $40,000 per accident).

How much is car insurance for new drivers?

Based on our research, adding a 16-year-old driver (not a driver and an additional vehicle) to a parent’s auto insurance policy costs an average of $2,448 per year among the 12 carriers we researched. But these average rates do not paint a clear picture for teen or adult new drivers. When determining your rate, insurers can use many factors to calculate your rates, such as annual mileage, coverage levels and location.

Other car insurance types to consider for new drivers

New drivers might also consider purchasing optional coverages, which vary by insurer, but may include:

• Gap insurance: If you finance or lease a vehicle and it’s totaled in a covered accident, this protection can pay the difference between the insurance settlement amount and the amount you still owe the lender.
• Rental car reimbursement coverage: If your automobile sustains damage in a covered accident, this coverage can help pay for a rental car or public transportation fares.
• Towing and labor cost coverage: This protection often covers all or part of expenses incurred by basic roadside interruptions such as battery jumpstarts, tire changes and lockouts.

Besides optional coverages, also consider the amount of liability coverage you purchase. For example, Massachusetts requires drivers to carry just $5,000 in property damage liability coverage, which likely won’t cover serious damage to an expensive luxury vehicle.

You may also need to adjust your collision and comprehensive deductibles. Choosing a high deductible can lower your premium, but if you file a claim, you’ll have to pay more out of pocket for repairs. When deciding on a deductible level, consider the amount of money you can pay from your own funds to replace your car.

Why is car insurance for new drivers so expensive?

Typically, teen drivers pay among the highest premiums because, statistically, they have more serious accidents. Motorists aged 16 to 17 pose the highest accident risk, while male drivers aged 16 to 19 pose three times the risk of people aged 20 and older, according to the Insurance Institute for Highway Safety. In 2020, about 2,800 U.S. teenagers died in traffic accidents, while nearly 230,000 sustained injuries and nearly $41 billion in medical costs, according to the Centers for Disease Control and Prevention.

Because they belong to a less risky age group, adult new drivers may receive a better rate than new teenage motorists. Factors such as your location and vehicle type can also have a major impact on your insurance premium.

How to get cheaper car insurance as a new driver

You can take a few steps to get the cheapest car insurance for new drivers. You may qualify for discounts right off the bat or earn eligibility during the life of your policy. Consider the following:

• Shop around: Rates can vary widely by insurer, so request quotes from several providers before purchasing a policy.
• Take a driver safety course: Many insurance companies offer discounts for policyholders who take a defensive driving course. State departments of motor vehicles and departments of insurance often list state-approved in-person and online courses on their websites. Contact your insurance agent to get information about courses approved by the insurer.
• Get good grades: Young drivers may qualify for lower premiums by getting good grades. Some providers offer discounts for high school and young college students.
• Sign up for a telematics program: While not available through all insurance companies, telematics programs monitor your driving habits using a device attached to your car or through a mobile app. If you maintain good driving habits, you might qualify for an insurance discount.

Generally speaking, drivers with a poor credit history, DUIs, accidents, or a history of driving without insurance should be prepared to pay higher rates than drivers with a clean record and good credit history.

How to get car insurance for new drivers who are older

Adult new drivers can purchase auto insurance like more experienced motorists can: by shopping around and applying for a policy. Some insurers allow policyholders who share a vehicle with a domestic partner, sibling or spouse to add the other person to their policies. A provider may also allow roommates to share a policy.

Sharing a single policy enables you to split insurance costs and may qualify you for a multivehicle discount. However, if you’re an experienced driver and add someone to your policy, your rate may increase. Additionally, if they get into an accident and have to file a claim, this could affect your claims record.

Methodology

To discover the best auto insurers for new drivers, we pulled rates for more than 150 auto insurance companies, then narrowed down our list to the top 12 companies. From there, we analyzed more than 250 data points and generated an overall score based on the following categories and scoring weights (in parentheses):

Annual average rate (35%)

Using data from Quadrant Information Services, we calculated the average rates for 16-year-old drivers across 12 major insurers. We weighted rates higher than all other categories, as it’s a top priority for new drivers since premiums are typically higher than average.

Accident forgiveness (15%)

The chances of a new driver (especially those under 18) getting into an accident are considerably higher than for experienced drivers who are older. Knowing that, we asked each insurer if they offered accident forgiveness, a feature that keeps your premium from going up after your first accident. 

State availability (10%)

If a company offers policies in all 50 states, it scored higher than companies that offer policies in fewer states. This category is important because companies like Erie scored well in many categories, but their relevance to you is marginal because, in Erie’s case, policies are available in only 12 states. 

CRASH Network grade (10%)

The CRASH Network is a third-party agency that provides yearly grades for auto insurers based on the opinions of body shops that work with insurers to do repairs on cars that have been in accidents. Scoring is based on responses to one question: “How well does this insurer’s claims handling policies, attitude and payment practices ensure quality repairs and customer service for motorists?” A CRASH Network grade is an important metric for new drivers because they’re more likely to get in a wreck.

New car replacement (10%)

New car replacement is a useful feature for new drivers who drive new cars because, in most cases, the coverage replaces your car with the same make and model for the first few years of your coverage. This category is important for new drivers, as their accident rates tend to be higher than experienced drivers. 

Vanishing deductible (10%)

A vanishing deductible is a deductible that decreases incrementally each year you don’t get into an accident or get a ticket. These programs can be an incentive for new drivers to avoid dangerous driving.  

NAIC index (3%)

The National Association of Insurance Commissioners (NAIC) calculates an index for insurance companies based on the company’s share of premiums and complaints filed with the NAIC. An index of 1.00 indicates the insurer received the expected number of complaints for a company of its size. An index below 1.00 means the company received fewer complaints than expected for a company of its size, and vice versa. We took the average index for each company from the past three years.

J.D. Power score (3%)

J.D. Power scores auto insurance providers based on five factors that are a key part of the customer experience: billing process and policy information, claims, interaction, policy offerings, and price. We include J.D. Power ratings in our scores because they help you gauge what an insurer’s typical customer experience is like.

Usage-based insurance (1.5%)

Usage-based insurance, or UBI, is a type of insurance that charges drivers based on their driving habits. It typically requires that you install a device in your car or use an app while you drive. For new drivers, using UBI can be a motivator to drive safely in exchange for lower rates.

Pay-per-mile (1.5%)

Some insurers offer pay-per-mile, which calculates your premium based on how many miles you drive. New drivers who don’t put many miles on their car each week can benefit from the lower premiums they may get through a pay-per-mile policy. 

SR-22 (1%)

An SR-22 is a certificate some states may require to show proof that a driver has sufficient coverage for their vehicle. You typically have to obtain one if you’ve been charged with a DUI, caught driving without a license or involved in multiple wrecks. Not every insurance company provides them, which makes it an important factor when considering an insurer. 

Who didn’t make the cut

Though 12 companies were in the running to be category winners, only five of them actually won. Companies that didn’t make the cut include Travelers, Farmers, Allstate, State Farm and Progressive. Each of these companies had poor metrics in areas that affected their overall ranking as well as their category scores. For example, State Farm, Allstate and Farmers had incredibly high rates compared to other companies, which pushed their overall scores into the bottom three.