College students love cars. The freedom! The love of the road! The unmentionable things that go on in the back seat!
And the cost of student auto insurance. Okay, that’s one thing that students dread about buying a car. Why? Plain and simple, young people pay an arm and a leg for auto insurance.
A typical student will fork out from $3,600 to $13,800 a year, depending on the car, driving record, age, and city and state where the vehicle is operated.
"When it comes to student auto insurance, I feel bad for young people, they haven’t got a chance," states Cathy Ryan, an independent agent for Hudson & Muma, an insurance company in Detroit.
A college student living near a big city, such as Los Angeles, New York, or Chicago, who drives a sports car such as a Mustang convertible and has a DUI (Driving Under the Influence of drugs or alcohol) or DWI (Driving While Intoxicated), will get rated as a high insurance risk. Add a speeding ticket or two, as well as an accident, and you’re looking at paying the highest insurance rates possible.
Even if you are a good driver who happens to sit behind the wheel of a sports car, watch out!
"Young people who go out and buy a Mustang, a Camaro, or a Firebird, they’re going to pay through the nose," warns Ryan. "Young people love sporty cars, but the truth of the matter is your insurance company is going to nail you if you drive one."
Plus, there’s a significant premium to be paid in you are a male under 25 for the simple reason that guys drive more often, especially on dates, and have a higher rate of accidents and dangerous behavior when behind the wheel.
"There’s no getting around the fact that males under 25 pay the highest rates," explains James Walsh, a Los Angeles-based co-author of Smart Wheels. Hot Deals: The Best Car for The Right Money."The insurance company has actuarial tables that document that young people have the highest rate of accidents and tickets. And this is one instance where they can actually justify the price hike."
Justified or not, good drivers under 25 — male and female — are the ones who suffer for it, paying rates that are in the stratosphere, thanks to the law of statistics.
Skip the car insurance? The hefty price tag for insuring your wheels leads some to go without. If you decide to hit the road as an uninsured motorist and wind up in an accident, you could easily steer a financial hardship into a financial wreck.
Plus, you’re likely to be on a collision course with the law, running the risk of jail time, seeing your license disappear, in addition to playing an auto insurance version of Russian Roulette on your financial future. Did you know that one fender bender as an uninsured motorist could totally ruin your credit rating for 10 years? This places a black mark on your reputation, as well as potentially jeopardizing your career, since employers perform extensive background checks on new hires.
"I’ve seen categorically stupid financial decisions by college students that have come back to haunt them for the rest of their lives," cautions Walsh. "The damage you do to yourself in your 20s can really come back and bite you when you’re in your 30s and 40s."
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