Question 1

What is a deductible and how does it work?

Accepted Answer

A deductible is the amount you pay out of pocket before your insurance pays for a claim. For example, if you have a $500 deductible and $3,000 in damage, you pay $500 and insurance pays $2,500. Choosing a higher deductible (like $1,000 instead of $500) lowers your monthly premium but means you pay more if you file a claim. Most first-time buyers choose $500 or $1,000 deductibles to balance affordability with protection.

Question 2

What is a premium in car insurance?

Accepted Answer

A premium is the amount you pay for your insurance coverage, typically billed monthly or every six months. If your premium is $180/mo, that's what you pay to keep your policy active whether you file a claim or not. Your premium is determined by factors like your age, driving record, location, and the coverage types you choose. Premiums for drivers under 25 are usually higher because statistically younger drivers file more claims.

Question 3

Why is car insurance so expensive for drivers under 25?

Accepted Answer

Drivers under 25 pay 50–100% more than older drivers because insurance companies base rates on accident data, and younger drivers statistically have higher crash rates. Lack of driving history also makes you a higher risk in the insurer's eyes, even if you're a safe driver. Your rate typically drops significantly around age 25, and you can lower it sooner by maintaining a clean driving record, taking a defensive driving course, or staying on a parent's policy. Male drivers under 25 usually pay more than female drivers in the same age group.

Question 4

What does liability insurance cover?

Accepted Answer

Liability insurance pays for damage and injuries you cause to other people in an accident where you're at fault. It covers their medical bills, car repairs, and legal costs if they sue you, but it does not cover your own injuries or vehicle damage. Every state requires liability coverage, with minimum limits like 25/50/25 (which means $25,000 per person for injuries, $50,000 total per accident, and $25,000 for property damage). Most experts recommend higher limits than the state minimum because a serious accident can easily exceed those amounts.

Question 5

Do I need full coverage or just liability?

Accepted Answer

If you own your car outright and it's worth less than $3,000–$4,000, liability-only coverage is usually enough. Full coverage (which includes collision and comprehensive insurance in addition to liability) is required if you're financing or leasing your car, and it's a good idea if your car is worth enough that you couldn't afford to replace it out of pocket. Collision covers damage to your car in an accident regardless of fault, while comprehensive covers theft, vandalism, weather damage, and hitting an animal. For a newer or financed car, full coverage typically costs $150–$300/mo for drivers under 25.

Question 6

What is comprehensive and collision insurance?

Accepted Answer

Comprehensive insurance covers damage to your car from non-collision events like theft, hail, flooding, vandalism, or hitting a deer. Collision insurance covers damage to your car when you hit another vehicle or object, or if you roll over, regardless of who's at fault. Both are optional unless you're financing your car, and both require you to pay a deductible before coverage kicks in. Together, these two coverages (plus liability) make up what's commonly called "full coverage."

Question 7

Can I stay on my parents' car insurance?

Accepted Answer

You can stay on your parents' policy as long as you live at their address, even if you're over 18 or own your own car. This is almost always cheaper than getting your own policy, sometimes saving $100–$200/mo or more for drivers under 25. If you move out or live at college more than 100 miles away without a car, rules vary by insurer but you can often remain listed on their policy. Once you move to a permanent separate address, you'll need your own policy.

Question 8

What happens if I let my car insurance lapse?

Accepted Answer

A lapse in coverage (even one day without active insurance) can increase your rates by 10–40% when you get a new policy, and some states will suspend your license or registration. Insurance companies view a coverage gap as high-risk behavior, so continuous coverage is important even if you're not driving much. If you're between cars, consider a non-owner policy to maintain continuous coverage and avoid the lapse penalty. Most insurers look back 3–5 years for coverage history when calculating your rate.

Question 9

What is uninsured motorist coverage?

Accepted Answer

Uninsured motorist (UM) coverage pays for your injuries and damages if you're hit by a driver with no insurance or a hit-and-run driver. About 1 in 8 drivers nationally has no insurance, and in some states that number is closer to 1 in 4. UM coverage typically adds $10–$30/mo to your premium and covers you and your passengers up to your policy limits. Some states require it, and even where it's optional, most insurance experts recommend carrying it.

Question 10

How does comparing quotes online work?

Accepted Answer

When you enter your information on a comparison site, your details are shared with multiple insurance companies or agents who send back quotes based on the coverage you requested. You'll typically receive 3–8 quotes within minutes to a few hours, either on-screen or via email and phone. The quotes are real rates from licensed insurers, but they're estimates until you complete a full application and the insurer verifies details like your driving record. Comparing quotes doesn't affect your credit score or commit you to buying.

Question 11

What information do I need to get a car insurance quote?

Accepted Answer

You'll need your driver's license number, the VIN or year/make/model of your car, your current address, and details about your driving history (accidents, tickets, or claims in the past 3–5 years). If you're currently insured or were recently, have your policy details handy including your current coverage levels and the date your last policy started. The process takes about 5–10 minutes, and the more accurate your information, the closer the quote will be to your actual rate. You don't need a car picked out yet to get quotes—you can compare rates for a car you're planning to buy.

Question 12

Is my information safe when I compare insurance quotes online?

Accepted Answer

Legitimate comparison sites use encryption to protect your data during transmission, and they're legally required to share how your information is used in their privacy policy. Your details are shared with insurance companies and licensed agents to generate quotes, and those companies may contact you by phone, email, or text to discuss coverage. You will likely receive multiple calls and emails after submitting—that's how the free service works. Read the privacy policy and terms before submitting to understand who gets your information and how to opt out of future contact.

Question 13

How does Under 25 Insurance make money?

Accepted Answer

This site earns a commission from insurance companies and agents when someone submits their information and completes a quote or buys a policy. You don't pay anything extra—insurers pay for customer referrals as part of their marketing budget, the same way they pay for TV ads or billboards. The quotes you receive are the same prices you'd get going directly to the insurance company. This referral commission is how the site stays free to use.

Question 14

Will comparing quotes increase my insurance rate?

Accepted Answer

No, requesting quotes does not increase your rate or count against you with your current insurer. Insurance companies don't know you're shopping around unless you tell them, and getting quotes uses a soft inquiry that doesn't affect your credit score. Your rate is determined by your age, driving record, location, vehicle, and coverage choices—not by how many quotes you request. In fact, comparing quotes typically saves first-time buyers $200–$600 per year by finding a better rate than the first company they checked.

Question 15

What is the minimum car insurance required by law?

Accepted Answer

Most states require liability coverage with minimum limits, typically ranging from 15/30/5 to 25/50/25, which means per-person injury coverage, per-accident injury coverage, and property damage coverage in thousands of dollars. New Hampshire and Virginia don't require insurance but have other financial responsibility rules. These minimums are usually too low to fully protect you in a serious accident—a single hospital stay can easily exceed $25,000. Many first-time buyers start with state minimums to save money but upgrade to 50/100/50 or higher once they can afford it.

Car Insurance Questions for First-Time Buyers