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Why Is First Time Car Insurance So Expensive

When you buy your first car, you may be thinking about the cost of car insurance. After all, it’s one of the most important factors to consider when making your purchase. Unfortunately, car insurance can be expensive for a number of reasons. First and foremost, car insurers rely on statistics to set rates. This means that the more risky a driver is, the higher their rates will be. Second, car insurers have to factor in things like comprehensive and collision coverage. Comprehensive coverage covers accidents that don’t involve your car, while collision coverage pays for damages caused to your vehicle in an accident. If you’re a new driver who doesn’t have much experience with accidents or driving risk, these added costs may make car insurance extremely expensive. To avoid paying high premiums, do your homework and find a policy that fits your needs.

The Basics of Car Insurance

The Basics of Car Insurance

When you buy your first car, it’s important to be aware of the basics of car insurance. In most cases, your state may require that you have insurance on your vehicle. Here are a few things to keep in mind:

Underinsured Motorist Coverage: This type of coverage will protect you if someone hits your car and doesn’t have enough money to cover the damage.
Collision Coverage: This covers damages to the car from collisions with other vehicles or objects, such as trees or poles. It includes both physical damage to the car and loss of use due to the collision.
Comprehensive Coverage: This covers damages not just to the car but also to its occupants and property inside the vehicle. It includes coverage for theft, fire, and natural disasters, like floods or earthquakes.
Some states also require additional types of coverage, such as uninsured motorist protection and/or rental reimbursement. Talk to your agent about what kind of coverage is required in your state.

The Pros and Cons of Car Insurance

The Pros and Cons of Car Insurance

When you buy car insurance, you’re investing in your safety and the safety of others on the road. Here are some of the benefits to car insurance:

1. Protection from Financial Damages in the Event of an Accident: If you are involved in a car accident, car insurance can help pay for any damages that you may incur. This includes property damage, medical expenses, lost wages, and more.

2. Insuring Your Vehicle: Just like homeownership protects your assets against potential loss, auto insurance helps protect your vehicle from theft or damage. In the event that someone steals your car or it is damaged beyond repair while being driven by you, auto insurance can help cover those costs as well.

3. Reducing Anxiety After an Accident: When something terrible happens and you are involved in a car accident, anxiety is a common symptom. Auto insurance can help alleviate some of those anxieties by providing peace of mind during what may be a difficult time.

4. Supporting Local Economies: According to Forbes Magazine, “In 2004 … drivers who had comprehensive coverage paid an average $1,470 more than drivers who had only liability coverage.” Comprehensive coverage includes things such as bodily injury liability and property damage liability protection for accidents involving your vehicle. By having this type of coverage, you’re helping local economies by supporting businesses that offer these policies to customers.

The Cheapest Car Insurance Rates

If you are a first time car owner, you may be spending more on your insurance than you need to. The cost of car insurance depends on a variety of factors, but the main drivers are your location and the type of car you drive. Here is a look at some of the most important factors that can affect your rates:

Location: In general, people in high-risk areas (where there is a higher incidence of accidents) pay more for car insurance than those who live in safer areas. This is because insurers have to set higher premiums to cover the increased risk. Drivers in coastal states, for example, tend to pay more for auto insurance than those living inland because they are more likely to get into accidents while driving on the open ocean. The same principle applies to different types of cars. Drivers of luxury vehicles (such as BMWs and Lexuses) typically pay more for car insurance than do drivers of family sedans or economy cars.

Type of Vehicle: Owning a car that is considered high-risk can also lead to higher rates. For example, if you drive a sports car, your rates will probably be substantially higher than if you drive a family sedan. This is because sports cars are often involved in more accidents and incur greater repair costs. Car models that are less likely to be involved in accidents (such as Honda Accords or Toyota Camrys) generally have lower rates than models that are considered high-risk (Chevrolet Corvettes and Ford Mustangs, for example).

Insurance companies use a variety of methods to calculate rates, including location, type of car, and driving record. If you are considering switching car insurers, be sure to ask your current insurer about its rate calculation methods.


The average first-time car insurance policy costs about $200 per year. That figure is likely to increase as you get older, because the rates for young drivers are often lower than those for older drivers. As a result, it’s important to shop around and compare rates before you purchase your policy. You might be surprised to find that one provider charges much more than another for the same coverage.

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