Auto insurance is a fairly complicated topic and even for a seasoned driver, choosing the right insurance is a delicate task. Being an inexperienced driver only exacerbates the situation. Although a special kind of insurance doesn’t exist which is called “new driver insurance,” auto insurers generally categorize the following types of people as new drivers:
- Teen drivers who just received a driver’s license.
- Older drivers who have never driven.
- Immigrants and foreign nationals.
- Drivers of any age with a gap in driving or insurance coverage.
Generally, this analysis focuses on those 20 to 25 years old and since more risk is involved according to the statistics that depict more accidents caused by this age group. They also lack experience and hence insurance rates for new or first-time drivers are usually higher than rates for more experienced drivers. Fortunately, there are options for the cheapest car insurance and discounts for young drivers without breaking the bank.
Auto Insurance, Under The Hood
Auto insurance is mandatory in most states of the USA for a driver (whether greenhorn or experienced) to have in order to get behind the wheel on the road. Since you can’t avoid it, the next logical choice is to shop around and compare offers of different insurance companies. Auto insurance is like any other insurance where you have to pay a monthly premium to the insurance company and in return, the insurance company will pay for the damage of property and health in case of an accident and such is a contract between the policyholder and the insurance company.
Generally, car insurance provides property, liability, and medical coverage and for that basic auto insurance policy is comprised of six different kinds of coverage:
- Bodily Injury Liability: It covers the medical bill and other expenses caused by the policyholder and the family member listed on the policy. This coverage is applicable when these people are driving another person’s car with permission.
- Personal Injury Protection (PIP): PIP will cover medical payments, lost wages, and the cost of replacing services normally performed by someone injured in an auto accident. The funeral cost is also covered by it.
- Property Damage Liability: Because of this liability, the insurance company pays for damage policyholders (or someone driving the car with their permission) may cause to someone else’s property which includes lamp posts, telephone poles, fences, buildings, or other structures hit in an accident along with the car.
- Collision: When the policy holder’s car collides with another car, object, or as a result of flipping over, this is the coverage that pays for the damage caused by it. The collision coverage is offered with a deductible of $250 to $1,000—the higher the deductible, the lower the premium. If the accident is caused by another party, the insurance company may try to recover the amount it paid from the other driver’s insurance company and the policyholders will also be reimbursed for the deductible if the insurance company is able to get paid from the other insurance. When the policyholder is guilty, they pay for the damage minus the deductible
- Comprehensive: The damage caused by something other than a collision with another car or object, such as fire, falling objects, missiles, explosions, earthquakes, windstorms, hail, flood, vandalism, and riots, or contact with animals such as birds or deer is financed by this. It is not mandatory but if you have a car loan, the lenders may insist borrowers carry it until a car loan is paid off.
- Uninsured and Underinsured Motorist Coverage: If the policyholder, a member of the family, or a designated driver if of is hit by an uninsured or a hit-and-run driver, this coverage will reimburse for the damage and injuries. Underinsured motorist coverage is applicable when the guilty driver has insufficient insurance to pay for the other driver’s total loss.
Criterias For A Discount On Car Insurance Rates For Teenagers
If you must have to spend extra premium for a teenager then the next best thing is to shop around for discounts. Fortunately, there are some options for getting a good amount of discount on premium. Here are some of those options:
- Discount on grade points: students with excellent academic track record are usually more responsible and better drivers and hence some car insurance companies offer some discount based on the candidates CGPA on Nationwide teen car insurance.
- Accident Forgiveness: it is an auto insurance coverage option that potentially helps you to prevent a rate increase after your first at-fault accident. So, getting this coverage will save as much as 30% of premium raise after your first accident.
- Installing anti theft device: depending on the anti theft devices and the state of the vehicle when it is garaged, the insurance companies offer different discounts
- Comparing offers from different insurance companies: you have to compare the insurance rates of different companies every year. It may save you a lot if you search for better rates regularly and do not stick to the same company year after year. You will find various tools on the internet like PolicyGenius to do the research.
- Defensive driving course: one of the best ways to lower your insurance cost is to prove yourself as a reliable driver to the insurance company and you can do that by taking a defensive driving course. This type of driving course will teach you how to avoid traffic crashes and overcome road rage along with other physiological responses to poor driving. You will also learn about the effect of drugs and alcohol on your driving ability and how to use safety equipment to keep yourself safe while driving. You will find defensive driving courses on-line and through your DMV.
- Increasing deductible: it may sound risky, but if you’re a safe driver, this could save you a lot of money on your yearly rate. The deductible is the fixed amount you’ll be responsible for paying if you get into an accident and the insurance company will pay the rest. The downside is that, if an accident happens you may have to pay a great amount. So, it’s up to you.
- Bundling the insurance policies: sometimes if you use the same insurance company for both your home insurance and auto insurance, you might get a discount. You will get such bundling discounts in popular insurance companies like Allstate, Liberty Mutual, and Geico.
- Family insurance: although it’s not always feasible, sometimes the best way to get cheapest car insurance for young drivers is to stay on their parents’ policy for as long as they have the same permanent address. When you reach your early 20s, it may be profitable to buy your own insurance policy based on your age, location and gender.
- Choosing the correct type of car: a luxury car will normally cost you more in insurance. So, it is wise to find something safe and reliable for a youngster. Some trusted brand of cars are mentioned below
- Jeep Compass (or just Jeeps in general) – Jeep is a solid vehicle and on average, the insurance for it will cost you $1,349 per year. It’s one of the most popular cars which includes many built-in safety features.
- Subarus – it is one of the few cars capable of going 300,000 miles and average premium is $1,347.
- Honda CR-V – the annual premium for Honda CR-V is $1,333. This car is also very low cost and excellent for a teenager.
- Toyota Tacoma – this is a very popular truck which also comes with one of the cheapest car insurance rates for drivers, at $1,405..
- Ford Explorer – one of the toughest SUVs costing just $1,320 on average to insure each year.
- Nissan Sentra – another affordable vehicle with an average insurance cost of $934 per year.
- Hyundai Elantra – it is a popular car with slightly high insurance rates of $1,680.
Companies Offering The Cheapest Car Insurance For Young Drivers
Various insurance companies provide customers with different levels of service and satisfaction. According to a study, the average cost for a young driver is $2,241 per year for full coverage. Full coverage car insurance refers to a combination of coverages like liability, comprehensive, collision, uninsured/underinsured motorist protection, and any additional state-mandated coverage. In this section, a list of reputed cheapest car insurance companies based on reputation and discount offered for drivers has been compiled.
- Liberty mutual is best known for its impeccable customer services and agents. In the industry, it was voted 2nd for customer satisfaction in a 2012 study by J.D. Powers. Normally, the agents partner up with community organizations and employers to sell policies but anyone can get a quote and a policy from Liberty Mutual. Liberty Mutual provides accident forgiveness coverage which prevents premium increment after first claim. It also offers a new car replacement policy if you purchase a brand new car and are in a crash within the first year.
- Gabi offers easy quote comparison provision on their company website. To get it, you have to sign up for an account, link to your insurance provider, and choose from up to 20 different quotes from some of the top insurers in the industry. These rate quotes are free and it helps to save money on cheapest car insurance for young drivers. Also, at every policy renewal, Gabi will notify you a better deal elsewhere if found.
- Esurance has been bought by Allstate which is one of the strongest insurance companies. Previously, Esurance was well known for offering low quotes online and It’s easy to get a quote online, or call the 24/7 toll-free customer service line. You can save 5% by purchasing a policy after having commenced the original quote process online. It’s a generous offer and it’s called Fast 5. You will also get a multi-policy discount, multi-vehicle policy discount, and the Switch & Save, which gives you a premium reduction for moving from another insurance company.
- Allstate provides easy searching as well as easy management of your desired policy. Besides, Allstate offers numerous resources on the company website and roadside services which is helpful for travellers. Number of discounts like brilliant student, safe driver, multi-policy, and multi-vehicle which are pretty standard and when you set up an automatic withdrawal to pay your premiums, as well as savings for paying your policy in full. Different premium and discount rates are available for new cars, economic cars and farm vehicles. Because of such flexibility,Allstate can be an excellent choice depending on your situation.
- Progressive is an online based company offering quality coverage with great discounts. Since you can find multiple offers from different companies on their website, it’s a good place to start your research. Apart from online services, you can get help from a local agent or via phone. You can compare your present auto insurance policy and find out how much it would cost in another company. The Name Your Price tool helps to find a policy that would fit your financial situation. Standard discounts like safe driving, multi-vehicle and multi-policy, paying in full, online policy purchase, good grades (teen drivers), and more are also available in Progressive.
- State Farm enjoys the status of being one of the most recognizable brands in insurance and you can easily get a quote from the web site, or by calling an agent. The company provides excellent customer services along with standard discount schemes like good students, multiple automobiles, other products, and good driving habits, defensive driving course discount and less driving discount.. State Farm also offers a Steer Clear course to get a bigger deduction from standard premium. From the company website, you can use tools to determine how your rate might rise or fall, depending on different circumstances.
- Metromile offers pay-per-mile insurance so that occasional drivers could save between $400 and $500. It is feasible for drivers who drive less than 10,000 miles per year. Metromile is available in California, Illinois, New Jersey, Oregon, Arizona and Washington
- USAA has a selective clientele, the servicemembers and veterans of the US military are eligible to become USAA members and so are the spouses, children and grandchildren of anybody who honorably served in the U.S. armed forces. This company has an excellent record of customer service. USAA offers a special discount for those who garage their cars on military and choose comprehensive insurance coverage. The standard discounts such as safe driver discounts(if you can maintain a good driving record for five years.), defensive driving course discount with approved driver training course discount, vehicle discounts, occessional driving discounts, good student discount, and receive discounts for customer loyalty.
- Geico targeted a customer base of U.S. government employees and military personnel but now the company has grown to provide insurance to a wide range of customers. The discounts it offers are vehicle equipment discounts (air bags, anti-lock brakes, anti-theft, and daytime running lights), driving history and habits discounts, defensive driving courses discounts, good student discounts and special discounts for military service and federal employees.
Some Handy Tips For Young Drivers
If your car is posh and extravagant, then collision coverage is justified. Otherwise, you can save some money by avoiding it. Collision coverage is rather costly because this demographic is statistically more likely to get into an accident and file an insurance claim than more experienced drivers.
But be sure liability insurance is the mandated minimum for most states, but most of the time liability-only policy covers scanty amounts which are often not sufficient to reimburse the basic costs of an accident. Liability coverage only pays for the other person’s car in the event of an accident and not your own damages and medical bill. So, it’s a good idea to buy some extra coverage. You have to choose those coverages carefully to save money.
Medical payment coverage is highly recommended because depending on the severity of your accident, the medical bills you receive can also be astronomical. Also depending on the price of the vehicle, comprehensive and uninsured motorist insurance are recommended. Comprehensive will cover little incidents like theft or a tree limb falling on top of your car and uninsured motorist insurance reimburses the accident caused by an uninsured driver. It can be serious sometimes because in such cases, the harmed party is left with no compensation despite having insurance.
Wrap-up
People tend to forget to include the car insurance premium in their monthly budget for groceries or rent. But a wrong choice of car insurance for your kid can hurt your wallet pretty badly. Teens are both young and inexperienced and hence, they have to bear some of the most expensive car insurance rates of any demographic. But if you scrutinize all the options, you will be able to save a lot.
