First time car insurance: Your guide to insurance independence

Overview: Your transition to your own insurance doesn't have to mean paying more. This guide reveals how to leverage bundling strategies, understand your personal rating factors and customize coverage to your actual needs in order to manage that transition. You'll discover the different insurance types you may need like auto and renters and what they can help protect. Learn also some specific steps to establish your own policy affordably, explore savings programs and make better informed decisions about what makes financial sense for your situation.

Moving out of your parents’ place or putting a car title in your own name? These are two major milestones, but they come with the realization that you now need to buy your own car insurance for the first time. For years, you may have benefited from your parents' multi-car discount, an insurance savings that helped keep costs manageable. The moment you become financially independent and decide to have your own insurance policy for your car, however, that discount no longer applies, and your premiums may rise. This guide shows you how to navigate the switch to your own policy while helping keep costs lower.

Getting your own policy

From an insurer’s perspective, once you establish a permanent residence outside your parents’ home or title a car solely in your name and get your own policy: you’re now a primary policyholder. This means you’ll be the one managing claims, usually making premium payments and maintaining continuous coverage.

Replacing the multi-car discount

Moving out may mean you lose your parents’ multi-car discount, which may be a loss of up to 20%^{footnote 1}. However, by buying two or more types of insurance together, called bundling, you could unlock a multi-policy discount to make up the difference. For example, bundling a State Farm® auto insurance policy with renters insurance may save customers up to $900 a year^{footnote 2}. And because renters insurance costs only $13 a month on average, the discount makes it a cost effective addition while helping keep auto premiums competitive.

The value of renters insurance

Renters insurance covers your personal belongings, including laptops, bikes, furniture, clothing and electronics. However, the financial protection doesn’t stop there. Even if you think you don't have many belongings worth covering, the liability protection offered in a renters policy could be beneficial. This protection may help shield your future earnings if someone is injured in your rental, whether a friend slips on your stairs or gets injured at a party you’re hosting.

Establishing your own “Personal Price Plan”

When you establish your own insurance policy, your credit characteristics, place of garaging for your car and driving record now may influence your premium. This may be an opportune time to understand how insurers evaluate you as an individual so you can make strategic decisions about factors within your control.

That’s where the State Farm Personal Price Plan® may help. You can customize your coverage, deductibles and savings options based on what matters to you^{footnote 3}. The plan factors in your car’s worth, driving history and how much you’re comfortable paying out of pocket after an accident.

Making the switch to your own policy

Getting first time car insurance as a sole policyholder involves the following key steps:

• Choose your car — choosing a safe, reliable vehicle may help lower your premiums.
• Gather your documents — you’ll need a valid driver’s license, your vehicle’s details (make, model, year and vehicle identification number) and banking information. If you’re financing the car, you’ll also need your loan information.
• Decide what you need — think about the kind of coverage you may want and need. Are you looking for more modest coverage based on need considering your state’s required coverages, or do you need the protection of comprehensive and/or collision coverage? If you finance your vehicle, the lender will likely require these coverages.
• Check your title — your name should be on your vehicle’s title before applying.
• Compare quotes — get quotes from several insurance companies. Many provide online bundling tools or have agents who can walk you through the process, helping you explore potential savings by purchasing a renters and an auto policy from the same insurer.
• Ask about discounts — first time car buyers may qualify for discounts such as good student, safe driver, driver education savings or bundling. Be sure to ask about these options.
• Purchase your policy — once you’ve chosen a policy, you can usually pay online or in person. You’ll get proof of insurance that you must keep in your car.
• Enroll in money-saving tech-based programs — young adults may save an additional 20% to 30%^{footnote 4} by using telematics programs like Drive Safe & Save® from State Farm.
• Consider educational programs — young adults may also receive savings by participating in programs like Steer Clear®.
• Review your policy every year — life changes fast, and your car insurance needs might as well. Plan to review your policy at least once a year or after any big life change.

Additional answers to common questions

Here are some answers that may help further your understanding of transitioning to your own insurance policy.

• Is it cheaper to stay on my parents’ policy? Generally, you benefit from the multicar discount by staying in your parent’s policy, but usually if two conditions apply: you live in the same household and the vehicle title is shared. If you are not living with your parents, consider getting a renter’s policy in addition to your own car policy, so you protect the things you care for and may be able to have bundling savings.
• Do I need my own policy if I’m away at college? A separate policy isn't required if your car stays parked at your parents' house during school. State Farm offers a Student Away at School discount that is designed for this scenario, allowing you to remain on your parents' coverage while attending college.

Understanding coverage: What’s available and required?

When it comes to vehicle insurance, most states require certain minimum limits of coverage to help protect you and others. In addition, if you have a loan on your vehicle, your lender may specify insurance requirements, too. There are many types of available coverages:

Understanding your path to insurance independence

Transitioning from your parents’ policy to your own represents more than a financial responsibility: it’s a shift in how you’re evaluated and rated as a policyholder. Your credit characteristics, location and driving history may factor into your premiums, and the multi-car discount that once benefited you is no longer available.

However, this transition also comes with new opportunities: bundling options like renters insurance may offset premium increases, liability protection may safeguard your future earnings and tools like the Personal Price Plan allow you to customize coverage to match your actual circumstances and budget.

Ready to learn more about how to get car insurance for the first time? Connect with a State Farm insurance agent today.