- As long as you live with your parents and don’t own your own vehicle, you are eligible to remain on your parents’ auto policy. Staying on their policy saves money because parents are considered lower-risk drivers than young singles. However, many people buy their first car as a young single. If you do, insurance companies will require you to purchase your own insurance policy to avoid any potential legal confusion about who owns the vehicle and is responsible for its use.
- In most states the law requires you to maintain auto liability insurance to cover losses that are caused by your negligence, and sometimes you are required to carry personal injury protection coverage. To avoid penalty, pay your premiums on time, and don’t let your coverage lapse to save money in the short-term. If you do, you may be putting yourself at substantial financial risk as well as negatively affecting your insurance history.
- When buying or leasing your first car, remember to consider the cost of insurance in your financial calculations. Insurance rates vary with the type and model of vehicle, so check out these costs before you decide which car to purchase. For example, SUVs, convertibles and performance vehicles typically cost more to insure than other cars.
- While auto policies are an important way to protect your financial health, younger drivers usually own fewer assets and require less liability coverage. However, an accident claim can take a long time to settle, while assets may continue to increase. In such a case, your assets could outgrow your coverage even after an accident has occurred. Consider assets that you may accumulate in the next year or two, when determining your liability limits.
- To control costs, parents should also ask about an “accident forgiveness” clause that promises not to raise premiums if a student gets into one minor accident. They should also consider raising the policy’s deductible and only allowing their child to drive the family’s oldest, least expensive car. In addition, parents might consider purchasing an older car for their child and foregoing comprehensive and collision insurance on that vehicle.
- If you purchase a used car, or your parents give you their old car, you might consider dropping the collision coverage as a way to cut expenses. With older cars, the cost of collision coverage can exceed the value of the car.
- You might also consider raising the deductible for your comprehensive and collision coverage. A higher deductible will lower your premium cost.
- Seriously think about commuting to your job via public transportation, rather than by driving. Your premiums may be lower if you limit your vehicle use to weekly recreational activities.
- If you will be traveling extensively or will be deployed in the military for an extended period of time – and no one will be driving your vehicle – you may be able to suspend some or all of your coverage to save on premium payments. You should check out and choose a policy that specifically allows for full or partial suspension.
- Taking a defensive driving course may help lower your premiums.
- And, of course, it’s wise to maintain a good driving record – one devoid of tickets, accidents, and Driving While Intoxicated citations.
- For those of you in school, it’s also advantageous to maintain good grades, and inform your insurance company every semester, as they often offer preferred rates and discounts to young people who do so.
- College Students and Auto Insurance: Parents and college students should do some homework regarding auto insurance. If a college student is going to be using the family vehicle when visiting home, parents should make sure the child is listed by name on the family’s auto insurance policy. If the student will be taking a car with them to school, parents should check the specific rates for the college’s city and state before deciding whether to keep their child on the family’s auto policy. In addition, the insurance company should be notified each semester if the student maintains good grades, as that accomplishment might lower premiums.