The Big "Catch-22" of Car Insurance

If you're new to driving, or just new to insurance in the US, your premiums could be much steeper than they could be.
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Decoding The Chaos
Insurance is a lot like your credit score. The two have many things in common, and your current circumstances can make a significant impact on what your monthly premium comes down to.

As a result, car insurance can seem a lot like a Catch-22. That being, if you don't already have insurance, you're going to end up paying more. In this article, we're going to go over some of the basics of how this process works, and how you can save money on car insurance if you're either a new driver or just new to insurance in the United States.

Understanding Risk Assessment
Why is it that when you shop for car insurance, they ask you so many questions? The simple answer is because they use your answers to determine how risky you are. In other words, it means that the company will use their modeling data to predict how likely you are to file a claim within the next 12 months. The more likely you are to file a claim (according to their system), the higher your premium will be.

The reverse is also true, however. If the information you provide suggests that you are of low risk, your premium will be cheaper.
New Drivers Cost More
To explain this situation better, I'm going to use myself and my circumstance as an example. I'm from the United States, but I spent the last 10 years or so living in another country. I have more than 15 years of driving experience, and I even drove regularly in the country where I was living previously. But when I came back to the US, I was surprised to find out that for me to get car insurance, I would need to pay practically double what I would otherwise need to pay if I had been continuously insured in the US for at least the last six months.

The reason why I had to pay more is not that I'm a risky investment per se. Instead, it's because insurance companies here were unable to verify that I have been an insured driver. That made me appear riskier than average, according to their risk assessment model.
Saving Money
The good news is that this condition is not permanent. Much like with a credit score, once you establish some history, you will find that your premiums will go down rapidly.

That's why it's important for new drivers (or for people with a circumstance like mine) to shop around for a new insurance policy once you've been insured for six months or so. You will almost certainly find that you'll be able to get a significantly better deal if you shop around once you hit this critical milestone. It's also possible that your current insurance provider may drop your rate if you ask them to. However, don't be afraid to switch providers for a better deal, as the savings in monthly premiums could add up.