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Friday, October 24th, 2014


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Ask YOUNG MONEY: How can I save money on auto insurance?

Dear YOUNG MONEY,

My parents are making me pay for my own auto insurance this year. How can I save some money?


Ethan

Dear Ethan,

Paying for your own car insurance can seem daunting at first, especially if you’re already feeling strapped for cash. It doesn’t help that drivers under 25 typically pay the highest auto insurance rates of any demographic, with young males footing the largest bill. Fortunately, it is still possible for you to insure your car without going broke. Below are some suggestions on how to save money.

Do research

To find a good rate on auto insurance, you need to do your homework. Before you buy a new car, do research and compare prices. The same should be true when you buy auto insurance. Without looking at all your options, you could be spending hundreds more than you have to.

Look for discounts

When you research auto insurance companies, be sure to find out what types of discounts they offer. You may find that you’re eligible for a number of discounts that could save you a lot of money.

  • Good Student Discount. In most cases, students are eligible if they’re under 25 years of age, maintain a 3.0 (“B”) grade-point average or better, and are enrolled full-time in high school, community college, or university.
  • Young Driver Safety Discount. In certain states, there are discounts available for teen drivers who have passed an accredited program. The National Safety Council often has information about where you can take such courses and knows about state certified programs that offer courses for point reduction, auto insurancediscounts, remedial driving, or retraining.
  • Anti-theft/Safety Features Discount. If you car is equipped with anti-theft features, such as alarm systems, protective steering column devices, and certain anti-theft recovery systems, it’s likely your insurance rates will be reduced. The same is true if your car is equipped with safety features, such as automatic seat belts or air bags.

Raise your deductible

Another way to save on your insurance premium is to choose a higher deductible. You only pay the deductible if you need to make a claim, and the amount you save on your premium could more than cover the cost.

Avoid gaps in coverage

Be sure to purchase your new policy before your parents take you off their policy. Having a gap in your insurance coverage makes you look risky to insurance companies and can lead to higher rates.

Don’t skimp

If you’re toying with the idea of driving uninsured, think again. No one plans to have an accident, but if you do, car insurance will help relieve you of the financial and legal burdens you may face. Medical bills and auto repair or replacement costs add up very quickly, and in many cases can cost thousands of dollars.

Most states require that you carry a minimum level of auto insurance. However, most auto insurance companies advise you to invest in higher coverage levels because your state’s minimum will not be sufficient in a serious accident.

Drive safely

Above all, practice safe driving. A clean driving record helps keep your auto insurance rates down and, more importantly, helps save lives!

Best Regards,

Jessica Guerin
Esurance Auto Insurance

© 2008, Young Money Media, LLC. All rights reserved.

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