Auto Insurance for First-Time Vehicle Owners: What You Need to Know

Auto Insurance for First-Time Vehicle Owners: What You Need to Know

You're a first-time car owner, so you have a lot of questions about auto insurance. This guide will help you understand the different types of auto insurance coverage and what factors affect rates. It will also walk you through choosing an auto insurance policy and maintaining your coverage over time.

Types of Auto Insurance Coverage

Auto insurance coverage, although specific to vehicles, is a broader term that includes many types of auto insurance, including the following:

  • Liability coverage: If you're at fault in an accident, this pays for damages to other people's property and injuries. The national average for liability insurance costs in the US is $683.
  • Comprehensive coverage: This covers damage from fire and theft and natural disasters such as floods and earthquakes. Data from the MarketWatch website shows that 67% of Americans have comprehensive car insurance.
  • Personal injury protection (PIP): If you sustain an injury in an accident that wasn't your fault, PIP pays medical bills up to $10K per person/$20K per accident. It also provides lost wages compensation up to $2K per month for three years if needed post-accident recovery time exceeds 90 days.

Factors Affecting Auto Insurance Rates

There are many factors differing from state to state that can influence the insurance premiums you are paying. Below are some of the most common ones:

  • Age. Your age plays a role in determining your premium. This is because statistics show that younger drivers are more likely to get into accidents than older ones.
  • Driving experience and history. If this is your first time driving, expect your rates to be higher than someone who has been driving for years and has never had an accident, even if they have worse credit scores.
  • Time since last accident/moving violation conviction. This one may seem obvious, but worth mentioning nonetheless: The longer it's been since your last accident or moving violation conviction, the better off you'll be when shopping around for auto insurance quotes online, especially if significant damage was done during those incidents.

Choosing an Auto Insurance Policy

Most people purchase auto insurance because it helps protect them against financial loss if they get in an accident with another driver that causes damage or injury. This can include:

  • Medical expenses that result from injuries when riding as a passenger in someone else's car.
  • Damage is done by one of their own vehicles during an accident with another vehicle.

But besides the financial loss, you must consider many other factors when buying an auto insurance policy.

Consider Coverage Options

There can be different coverage options, and which ones you need may differ based on state rules and other factors.

For example, comprehensive and collision coverage are optional in some states but mandatory in others. If you don't purchase these options when buying your policy, then the state law will require you to include them at the time of renewal.

Another factor to consider is how each type of coverage works:

  • Liability: This pays for injuries caused by an accident that was your fault. It also covers damage to property other than your vehicle when an accident involves one or more vehicles under this policy. In some cases, this includes medical bills related to any injuries passengers sustain in a crash involving the vehicle.
  • Personal Injury Protection/PIP: This pays the medical expenses for drivers or passengers during an accident regardless of who was at fault. It may also provide wage replacement benefits if you can't work because of injuries from an accident while riding as either driver or passenger on another person's vehicle. However, this depends on which state has jurisdiction over where the accident occurred since not all states require PIP coverage from their providers' policies. According to Nerd Wallet, it is available in 17 states and Washington D.C. 

Consider Your Vehicle

When considering an auto insurance policy, it's a good idea to consider the vehicle you'll be insuring. The following factors can help you determine which type of policy is best for your situation:

  • Value of the car
  • Safety features such as airbags and anti-lock brakes
  • Maintenance history
  • Repair history

If you live in an urban area with high crime rates or you modify your vehicle with aftermarket parts outside manufacturer specifications, your risk profile can increase when shopping for auto insurance policies.

You must also see if you need small motor vehicles or truck insurance. If you own a truck, it is best to go with truck insurance. Truck insurance is specific for trucks and can offer more benefits than general auto insurance.

When looking for an insurance provider, check which states the company has a license in. This will help you determine whether your state's insurance provider is legitimate. Most insurance providers will include such information on their websites.

Western Truck Insurance is a truck insurance provider offering various insurances, including truck liability insurance, trucking crime insurance, physical damage insurance, trucking bonds, and pollution insurance. The company has all the states they are licensed to operate in on its website. According to the list, they are licensed in 27 states. You can go through such information to decide.

Consider Deductibles

The deductible is the amount you must pay before your insurance company starts paying for your car repairs.

For example, if you have a $500 deductible and get in an accident that costs $1,000 in damage to your car, you'll pay $500 out-of-pocket and submit a claim for reimbursement from your insurer. They would pay the rest ($500) as part of their coverage agreement with you.

Consider Premiums

Auto insurance premiums are based on several factors, including:

  • Your driving record. This includes any accidents, speeding tickets, or DUIs in the past three years. If you have these, your premium could be higher than someone with a clean record.
  • Your car's value and make/model. Insurance companies will pay closer attention to high-end vehicles because they're more likely to be stolen or damaged in an accident than cheaper ones. Therefore, repairing them would cost more money than replacing them outright.

Every state will have different premium amounts based on various factors, such as crime, traffic, accident, etc. According to Statista, Michigan holds the highest premium for auto insurance at $4,386 for very minimum coverage in 2022.


The bottom line is that when you're starting, an auto insurance policy is a must. You don't want to expose yourself or your car in case of an accident or other unforeseen incident. However, many different types of coverage are available, and each has pros and cons. Thus, you must understand what each type covers before choosing one.

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