Not everyone gets a car – or even a driver's license – as a teenager. If you're a young adult navigating your first time buying a car and auto insurance, it can be a little bewildering. And if you weren't previously on your parents' insurance, insurance companies won't consider you to have been previously insured, which means your rates might be even higher than they would be for a young adult driver who had a good driving record as a high schooler. However, that doesn't mean that auto insurance is out of reach for you. Take a look at a few tips for avoiding sticker shock the first time that you have to buy auto insurance.
Know What Kind of Insurance Coverage You Need
The phrase "auto insurance" sounds straightforward enough. It's insurance for your vehicle. But that simple-sounding phrase includes a lot of different types of coverage. At a minimum, you'll need to buy liability insurance. This is insurance that covers any injuries or damages you cause if you cause an accident. Each state requires its drivers to carry a minimum amount of liability coverage. You may also be required to buy personal injury protection (PIP) insurance, which covers injuries to you and your passengers sustained in an accident that you caused. Not all states require this, but some do, especially states that have no-fault insurance laws.
After the legally required minimums, the type of coverage you need is (mostly) up to you. Insurers also offer uninsured/underinsured motorist coverage, which covers you if you're hit by a driver who doesn't have their own insurance. Another type of coverage is collision and comprehensive insurance. These are often sold as a package, but they cover different things. Collision covers damage to your car caused by an accident, while comprehensive covers theft and damages from things like floods, fires, or hail.
Comprehensive and collision insurance is one of the most expensive insurances to add. In Texas, for example, adding comprehensive and collision coverage can raise your insurance rate by more than $1700 a year. If you're driving an old beater that you bought cheaply, or if you have a large chunk of money saved for a rainy day that you could use to cover your own damages, it might not be worth it to add this coverage. On the other hand, if you are financing your car, you should be aware that many lenders will require you to carry comprehensive and collision coverage so that they will recoup most of their investment even if you crash the car.
Learn How to Get Discounts
While people often think of teenagers as being the most expensive group of drivers to insure, young adults between the ages of 20 and 25 are also considered a high-risk group to ensure, and if you're a young man, you'll probably pay even more. Some insurers avoid insuring drivers under 25 entirely. This may seem unfair, but statistics aren't on your side: statistically, young drivers, and particularly young male drivers, tend to rack up more accidents. And if you don't have a few years of safe driving under your belt to show the insurer, they have no reason to assume that you're less risky than anyone else in your demographic.
However, that doesn't mean that you're doomed to pay top dollar. Look for ways that you can knock a few dollars off of your premiums. Taking a driver safety course can help. Are you a college student? Being on the Dean's List may get you a good student discount. Ensuring that your car has safety features like driver and passenger-side airbags, anti-lock brakes, and an anti-theft system can help convince insurers that your car is safe, and therefore less risky. Do you belong to a professional or community organization? Your membership may come with perks, like discounts from certain insurers.
Are you willing to allow your insurer to track your driving habits? Some insurers offer drivers the opportunity to use a device that's installed in their car and monitors their driving. Drivers who display good driving skills will see their insurance rates decrease because of it. However, consider this option carefully – hard stops, fast acceleration, or even driving late at night can register as risky behavior. If you do those things often, this type of device might raise your rates rather than lower them.
Shopping around is standard advice for anyone buying insurance at any point in their driving career. But it's especially important for new drivers with no insurance history.
The rates that you're offered may vary even more widely from company to company than they would for a driver with an established driving and insurance history. A driver with an established record and history of making their insurance payments might receive quotes that are uniformly high or low, depending on how good that record is. But since you're an unknown quantity, you'll probably find rates that range from prohibitively expensive to surprisingly cheap. Some companies will consider no news (or insurance history) to be good news, while others will assume the worst. Your best chance of finding the most affordable rates is to get quotes from as many companies as possible.
Buying insurance for the first time may seem challenging, but everybody has to start somewhere. After the first time, it will come much more easily to you. Speak to an agent at companies like LA Insurance for more information.