Auto Insurance 101
What is Auto Insurance?
Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy.
Auto insurance provides property, liability and medical coverage:
- Property coverage pays for damage to or theft of your car.
- Liability coverage pays for your legal responsibility to others for bodily injury or property damage.
- Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses.
Source: Insurance Information Institute.
Being Added to Your Parents Policy
Unfortunately, there is no way to avoid the price spike that accompanies adding you, a teen driver, to a policy. Because young drivers are inexperienced, teenagers have a much greater chance of being involved in an accident than do others.
For that reason, the cost to insure you, a teenage driver, is significantly higher. In reality, adding a teenager could mean a premium increase of anywhere from 50 to 100 percent. However, there are some actions you and your parents can take to offset that price increase.
Good Grades Help Save
Students with a GPA of 3.0 or higher qualify for a Good Student Discount.
Teens with their Own Cars Pay More
A teen's accessibility to a vehicle also impacts price, it may be something to consider when purchasing a car.
- If a teen has a vehicle available for their use at all times, the premium will be much higher than if they sometimes gets to drive a parent's car.
- When it's time for college, if you travel more than 100 miles away to school and don't take a car, your premium will decrease.
Make sure you are taking advantage of all other cost-saving options available, not just those that apply to teen drivers:
- Choose higher deductibles: You can effectively cut your insurance costs by choosing the highest deductibles you can afford. A deductible is the amount you must pay before your insurance kicks in.
- Set up EFT payments: You can avoid extra charges by selecting billing options that don't include service fees like EFT (electronic funds transfer)
- Get a package policy: Your parents can package their home and auto insurance on a single policy, this will provide additional discounts on your premium.
When should a new driver be added to your policy? Learn more on WestfieldInsurance.com