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Affordable policy for young driver


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Question: I’m 19 in college and getting my own car and car insurance policy. Should I just stick with the company my parents’ have for car insurance or shop around?  Do you have any tips on how I can save money?

Answer: In your situation, it would be wise to price out your own policy with your parents’ car insurance provider and then compare car insurance quotes with multiple other carriers to see which insurer can offer you the best rates and thus save you the most money. 

Your parents’ car insurance company may offer you incentives to purchase a policy with it, like a family legacy discount for staying with the insurer your parents have.  That might be enough to bring its rates lower than other car insurance providers, or other auto insurers may have lower base rates and offer enough other discounts to offer you a lower overall premium.

You never know what car insurance company is the cheapest until you compare car insurance rates.

Before shopping, decide on coverages

As a new car insurance policy buyer, before starting the car insurance rate quote process, I’d recommend you decide what coverages you want to purchase.  This will allow you to get quotes for the right coverages for your situation and ensure that when shopping around you compare the same policy items each time.

You can read up on all car insurance coverage types here, but below is a basic primer.

State minimum coverages – This is the least coverage you can carry to register and operate a vehicle on the roadway in your state.

State coverages usually include bodily injury liability and property damage liability coverage, but can also include uninsured and/or underinsured motorist coverages. If you live in a no-fault state personal injury protection will be mandatory.

Limits - The state will have a minimum limit you must purchase of the mandated coverages, but you can purchase more if you want more protection. However, if you don’t yet have assets to protect and want the cheapest coverages possible, then state minimum may do for now.

Physical damage coverages - Liability doesn’t cover your vehicle in any way, so if you want insurance coverage for your vehicle, or if your car is financed or leased, then coverages of collision and comprehensive are a must.

Collision covers damage from accidents with other vehicles or objects, regardless of fault. Comprehensive covers theft, fire, vandalism and most damage caused by natural events like a hail or wind storm.

These coverages pay for the repair of your vehicle, or its actual cash value if it’s deemed a total loss, minus your deductible amount.

Deductibles - Physical damage coverages require you to choose a deductible (the amount you pay out-of-pocket before your benefits kick in).  Amounts of $250, $500 and $1,000 are popular choices.  Choosing a higher deductible can save you some money.

Once you know what coverages, limits and deductibles you want to purchase, you can shop around for a car insurance policy and make sure you are comparing apples to apples (the same coverage, limit and deductible amounts) with everyone you shop with.

Ways to save

Due to your age and short driving experience period, you’re classified as a high risk driver by insurance companies and will receive surcharges (extra charges added to base car insurance rate).  This makes it imperative to find ways to save money.  You can do so by:

  • Asking for discounts: If you receive at least a B average at school, then most insurers will offer you a good student discount.   Some car insurance providers offer its drivers discounts if they belong to certain associations, such for being the student, or alumni, of certain colleges or universities. Check with your school to see if it has an affiliation with any car insurance provider that offers an extra discount.
  • Taking a defensive driving class: Not all car insurance companies offer a discount for this, and those that do are very specific about what class you take, so check before paying out the money to take a course. 
  • Keeping a clean record: Your driving and claims records are main rating factors used by all car insurance companies. Keeping a clean record may allow you to obtain affordable car insurance rates -- and keep them.  
  • Letting your insurer monitor your driving:  Many insurance companies are offering pay-as-you-drive (PAYD) discounts if you place a telematics device in your vehicle to monitor your driving behavior.  If you exhibit good driving patterns, you can get a discount of up to 45 percent with some insurance providers. 

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