Auto Insurance Without Coverage History: Tips & Considerations

Many drivers can buy car insurance even if they haven’t had coverage for some time or are obtaining it for the first time without encountering significant obstacles. However, individuals in these situations might be required to pay higher premiums compared to those with a consistent, long-standing insurance history. Auto insurers require a clear and verifiable history before granting discounts and better rates. Without this reassurance, they assume the applicant is high-risk and price their policy accordingly.

When obtaining a vehicle insurance quote, you’ll often encounter questions about your current car insurer, coverage, and renewal date. This is because insurance history is one of the factors taken into account when calculating premiums and may significantly impact costs. Consequently, experts recommend maintaining coverage even during brief gaps when temporarily without a vehicle. Cancelling your current automobile insurance policy and leaving a gap between policies would necessitate restarting your coverage history when purchasing a new policy.

Typically, drivers lacking any previous or recent insurance history can expect to pay premiums that are 6 to 10% higher than those who have maintained uninterrupted car insurance coverage for a minimum of 6 months or longer. Therefore, while you may initially face higher rates due to your lack of insurance history, you might begin to see discounts as early as your next renewal, and they may continue to accrue over the next few renewals.

For individuals purchasing auto insurance for the first time, especially younger ones with limited driving experience, finding ways to lower their premiums can be challenging. Nevertheless, those who have maintained a driver’s license for an extended duration without any traffic violations may still have the opportunity to obtain more cost-effective rates, contingent upon their age.

The situation may be worse for people who have a lapse in coverage, meaning they had a car but no insurance. Your policy may be cancelled due to non-payment or you may let it lapse at renewal. Usually lapses are seen by insurers and a long lapse increases risks since insurers have no idea if you parked your car in a garage and went on a long trip abroad or you have been driving without insurance all along. So, they consider letting your policy lapse a high-risk behaviour.

In most cases, the reason for not having vehicle insurance at a given time doesn’t significantly impact your situation. However, there are exceptions, particularly for military personnel deployed overseas, who may be able to maintain continuous coverage without lapses. This is why USAA is often recognized for offering the lowest rates to individuals with no insurance history. State Farm is another company known for providing more affordable rates with no insurance history.

Additionally, certain insurance providers may consider the prior history of returning customers who have experienced extended trips, overseas work commitments, or periods of inability to drive due to health issues or injuries. If you have a valid reason for a break in your insurance history, it’s worth exploring whether companies will offer improved rates by taking your previous records into account before the gap.

Tips and Strategies for Buying Car Insurance Without a History

Motorists have several options to alleviate the potential increase in rates resulting from a lack of insurance history and tips for preserving their insurance track record:

Easing into Car Insurance: Frequently, individuals take this approach due to the typical characteristics associated with first-time vehicle insurance buyers. Many individuals, driven by the desire and necessity for a car and insurance, often opt for a starter car and choose liability-only insurance. Typically, a liability-only auto insurance policy costs 3 to 5 times less than a full coverage policy. By paying higher rates on a significantly more affordable policy, you can avoid hefty expenses while simultaneously establishing an insurance history. This strategy proves particularly effective for teenagers as they gradually move past the expensive years marked by youth, inexperience, and a lack of insurance and credit history.

Starting with Non-owner Auto Insurance: This enables drivers to establish or maintain a history of continuous coverage, contributing to their insurance track record. These policies also furnish liability coverage when renting a vehicle or operating someone else’s car, making them valuable for both protection and building insurance history. Starting with a reasonably priced non-owner car insurance policy can be a prudent approach as you prepare to purchase a car and need a much more expensive full coverage policy for it.

Avoiding Lapses: In certain scenarios, it’s feasible to prevent losing your insurance history. One such approach is when individuals anticipate not driving their vehicles for an extended period and putting it into storage. They have the option to modify their policy to Comprehensive coverage only while eliminating other driving-related provisions such as Liability and Collision. By doing so, their vehicles remain insured during storage, and they benefit from significantly reduced premiums, often up to 80% less, all while preserving their continuous coverage discounts.

Not Cancelling Vehicle Insurance between Cars: People often end up selling their car first and using the money to buy another car. Usually, this gap is short enough to keep your current policy and let the insurer know details of your new car once you purchase it. This may be more cost-effective than cancelling your auto insurance the moment you sell the old car and buying a new policy without insurance history for the new car. But it may not be worthwhile practice if the time gap is wide between selling the old automobile and buying a new one.

Shopping Around: Exploring different insurance providers to find the most competitive price is always a beneficial practice. Each insurance company assesses risk in its own unique way. While one insurer might be reluctant due to an inability to verify your history, leading to higher premiums, another might be more willing to take a chance and offer you favorable rates. Additionally, various factors influence your vehicle insurance rates, such as your driving record, credit score, zip code, and the type of vehicle you drive. It’s important to note that each carrier evaluates these factors differently, which underscores the importance of shopping around to secure the best possible deal.