Insurance companies tend to give car insurance quotes that are higher than regular to first time car insurance buyers. Usually first time buyers have to deal with a car insurance premium that is sometimes 50% higher than average. While it may not seem fair, insurance companies employ actuaries who are dedicated to figuring out risk management for every conceivable demographic. First time buyers are deemed to be "high-risk" by the risk management departments of car insurance companies, and as such are forced to pay higher premiums. There are several reasons as to why first time buyers are deemed high risk.
The first reason is because many first time insurance buyers do not have an established driving record. This lack of historical evidence of safe driving automatically places buyers under a "high-risk" category. This is because there is no proof that the new driver will be a safe and cautious driver. Another reason there are high premiums for new buyers is because a large percentage of new drivers are young drivers. Drivers below the age of 25 usually get more speeding tickets and get into more accidents than their counterparts who are older than 25. Drivers under the age of 25 are also more likely to get stopped for driving under the influence (DUI) and driving while intoxicated (DWI). Therefore, first time buyers who are young will pay a higher premium because of the high risk involved with insuring them
Statistically, new drivers are more likely to get into an accident than seasoned drivers because of a lack of experience, and this is another reason why premiums are higher for them. This lack of experience can cause accidents because of the inability to "read" the flow of traffic, a lack of driving judgement, and not being able to fully control an automobile. Not being able to estimate the braking distance between cars, for example, is a reason many new drivers have accidents. This inexperience is a risk factor that insurance companies take into account when acquiring first time buyers resulting in higher premiums.
When buying car insurance for the first time many buyers may have already had bad driving records. This is another reason why new buyers would have a higher premium than normal. Many drivers are actually on someone else's car insurance, so the rates are attached to the holder of that car insurance policy. Driving records, however, are independent of insurance companies and are attached to a driver. Therefore, a bad driver will have a higher premium because their record will follow them. First time car insurance buyers will more than likely continue to be subjected to higher premiums because the factors affecting the premium rates are not likely to change.