We work with a lot of international movers who are coming to the US for school or work. Car insurance in the US is often expensive if you have a foreign driving license. Here's our best advice on what you can do to pay less.
Why is car insurance so expensive if you don't have a US license?
People moving from overseas don't usually qualify for the best auto insurance pricing for three reasons:
- they don't qualify for many discounts
- their data is typically not in the databases car insurance companies use to look up consumer data to quote a policy
- some insurance companies won't insure them
Let's look at each of these:
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Car insurance discounts foreign drivers may not qualify for
- Proof of prior insurance - Having a car insurance policy in the US in your name for at least six months before getting a quote can get you a discount of 10-30%. And some companies increase the discount if you've been insured longer, usually up to about three years. If you're moving from abroad, you don't have continuous insurance here, so you'll miss out on this discount.
- Multipolicy discount - Most insurance companies give a discount if you have multiple policies with them. Say, auto plus homeowners. International movers do qualify if they also buy a homeowners, condo, or renters policy. However, if you're moving into student housing, you may not qualify for a renters policy with the car insurance company you're buying from. (There are a number of insurers that specialize in renters insurance for student housing, so don't despair. They often don't sell car insurance, though.)
- Driver safety course - These discounts are usually for specific courses, which people new to the US are unlikely to have taken.
- Low mileage discount - Insurers may require proof of limited driving over the past year, which you're not as likely to have.
- Good student discount - This typically applies to students on their parents' policies, and often requires submitting last semester's grades from a US high school or college.
- Affinity discount - Some insurers give a price break to people who belong to professional or volunteer organizations, who graduated from certain colleges, or who work for a specific employer. These definitely can apply to those without US licenses, but it's less likely.
- Loyalty discount - People who stay insured for years with some insurers get discounts over time.
Missing data that increases the price of car insurance for new US residents
Two of the most important factors in car insurance pricing are your credit score and your driving history.
In most states, insurance companies are allowed to pull consumer credit reports from credit bureaus. These include how much debt a person has, how much they have access to debt, and how reliably they pay their debt. If you don't show up in the database, or there's very little information, you get coded as a "no hit" or a "thin file". These statuses usually won't get you the worst pricing, but they definitely don't get you the best rate.
In all states, insurance companies order Motor Vehicle Reports from the state Registry of Motor Vehicles for each driver. Then they calculate a score based on the number of accidents or driving violations for each driver, if any. Since they can't order these if you don't have a state-issued driving license, they usually assign a score based on the absence of a driver's license. That score adds a surcharge to their pricing.
Insurance companies that won't write international drivers
Insurance companies have a lot of flexibility when they decide who they want to insure in most states. Some insurance companies simply won't write a policy for anyone who doesn't have a US driver's license. Others won't insure anyone who doesn't have continuous prior insurance in the US, which amounts to the same thing if you've just moved here.
Take heart, though, there are plenty of insurance companies that will insure international drivers. You just may need to shop around a bit.
How to save money on car insurance if you don't have a US driver's license
- Shop around - In the US, insurance is sold directly to consumers and through agents. You can get several quotes either by talking to multiple insurance companies, or by working with an independent agent. Independent agents typically represent several insurance companies and will shop for you. They can also help you figure out what kind of coverage to buy and how much you need.
- Get a driver's license in your state as soon as you can - If you're eligible to get a license, the sooner you get it, the less you'll pay for insurance. Most insurance companies add a surcharge for people with a foreign driving license, which they'll remove as soon as you have a US license. You need to email or call them to let them know and give them your license number. They won't pick it up automatically.
- Shop again once you've been insured for a full six months - Most insurance companies give discounts for having at least six months of prior insurance. You may need to switch companies to take advantage of the discount, but it's likely to be significant. Also, some insurance companies won't insure anyone without prior insurance, so if you shop, you may now qualify. That will give you more price points to compare.
- Add a renters policy - If you're a homeowner you probably already have home insurance. Many people skip renters insurance, though, which we don't recommend. It protects your stuff and covers you if someone gets injured in your home and sues you. Renters insurance is typically cheap, in the $100-$250/year range. And it can qualify you for a multi-policy discount on your auto insurance. We've seen cases where car insurance plus renters insurance is cheaper than car insurance alone.
- Manage credit responsibly - As you engage with the financial system in the US, you'll start to build a credit score. Borrow only as much as you can manage, and pay all your bills on time. Since credit score is used to price auto insurance, this will set you up for the best rate in the future.
- Drive carefully - This one's obvious, but it won't help you much to get a shiny new US license and then get speeding tickets or get into accidents. You'll end up paying more for insurance as a result.
So, there you have it - our best tips for cheaper auto insurance for people without a US driver's license. We work with international movers all day long, so feel free to text, email, or call us if we can answer any questions.