Car Insurance for Young Drivers

Auto insurance keeps you covered in case of damage to your vehicle due to an accident, fire, riots, theft, or burglary. Whether you are a young driver or a parent of a teenager, it is important to understand the benefits offered by opting for insurance.

Car insurance for young drivers may initially come across as expensive. However, insurance provides personal accident cover and other advantages that would provide considerable protection from the financial costs in case an inexperienced driver meets with an accident.

What is Car Insurance?

Car insurance protects your vehicle against unexpected losses. Insurance is essentially an agreement between the policyholder and the insurance firm, where the company promises to pay for the losses mentioned in the policy.

A basic level of car insurance is required by law in most US states. Different insurance policies provide different kinds of coverage. Auto insurance generally includes damage to your personal vehicle, damage to another person’s vehicle or property, medical expenses for yourself and others, legal expenses, and other relevant particulars.

If you are considering opting for car insurance, first decide the kind of policy you want. Explore your options by going through the types and amount of coverage.

Once you have bought a policy, you would have to pay a monthly premium. Some insurance policies offer you the option to pay a discounted price for all six months at once, or simply pay on a monthly basis.

If your car gets involved in an accident, or endures an insured damage, you first have to submit a claim to the insurance company and pay a deductible. Once you pay, the insurance provider will take care of the remaining expense. Car insurance deductibles are reset at each claim, instead of being renewed annually.

Types of Car Insurance for Young Drivers

Car insurance policies generally offer property, liability and medical coverage. Property coverage involves theft of or damage to the car, liability coverage pays for injury or damage to others, and medical coverage refers to the cost of treating injuries.

Here are 5 fundamental types of car insurance policies offered by most insurance providers:

Liability Coverage

This is used to pay the other party when you are at fault in a car accident. It covers injuries for the passengers in your own car as well as those in the other vehicle. Many states in America have specified a minimum amount of liability coverage as a legal requirement for car owners.

A useful tip is to purchase car insurance above the amount required by the state. This would provide extra protection in case you are responsible for the crash. This way, you would probably be able to utilize some of the insurance payment for your own injuries after providing for the other party.

Collision Coverage

This pays for the repairs to your car in case of a crash. If your car is totaled, the repair cost will likely exceed the value of the car itself. In such a situation, the insurance coverage will offer a fair market value for your vehicle.

If your vehicle is relatively old, collision coverage may not be the best option. On the other hand, if you own a new and expensive car, collision coverage can help you restore it close to its original state. Collision coverage offers reimbursement even if you are at fault in an accident.

Comprehensive Coverage

This coverage pertains to payment for the damage to your car that is not linked to a collision with another vehicle. If your budget permits, comprehensive coverage is quite beneficial.

Losses that comprehensive coverage compensates for include falling objects, fire, earthquakes, explosions, missiles, wind storms, floods, hail, vandalism, or contact with animals such as deer or birds. Comprehensive coverage also pays for a cracked windshield.

Under-insured and Uninsured Motorist Coverage

This policy provides payment in case there is a car crash and the other party is at fault, but does not have an appropriate insurance policy. Underinsured motorist covers offer payment to you and those who are covered as per your policy.

Uninsured motorist coverage, on the other hand, reimburses you when the driver that has caused the crash is not insured at all. In that case, this policy protects you and those covered under the policy. If you decide to opt for underinsured or uninsured motorist coverage, it is advised that the limits be higher than your liability coverage.

Things Young Drivers Must Know About Car Insurance

Starting to drive independently for the first time, or alternatively, handing over your car keys to your teenager, can definitely cause some anxiety. Young drivers can be easily distracted, and therefore have to be extra cautious on the road.

Having adequate insurance can help you find comfort in the fact that you have a backup in case of an accident or damage to your car. Before you finalize your decision to purchase an insurance policy, here are a few things you need to keep in mind:

Teenagers with Learner’s Permit Do Not Need a Separate Policy

There is no need for young drivers with learner’s permits to acquire an insurance policy of their own. However, if you have a teenaged child who obtains a learner’s permit, do inform your insurance provider.

Insurance companies tend to have different policies, and the insurance laws may change from state to state. While some insurance companies may say that adding a teen to your policy is not a requirement, AC Insurance highly recommends it!

Assign a Vehicle to Your Young Driver

Expensive vehicles usually have higher premiums attached to them. This is because in case of a car crash or damage, it will repair and replacement costs will be higher for a luxury model.

Make sure you assign a vehicle to your teen so that the insurance company decides the premiums accordingly. If you have more than one car, it is best to assign the less expensive one to your teen, so that the insurance company does not charge high premiums.

Get a Used Car

When your teen receives their driving permit, encourage them to buy a used car rather than a brand new one. However, thoroughly check it before purchasing to ensure its safety and reliability.

Driving a used car with updated safety features lowers the price of auto insurance. As compared to a reliable and used car, a flashy and fast car with compromised safety features is bound to bring up your insurance costs.

Make sure the car your teenager drives is well-equipped with features such as anti-theft devices, airbags, and anti-lock braking mechanisms. Such vehicles often result in the advantage of lower premiums.

Keep Your Insurance Provider Updated

If your teen is added to your insurance policy, make sure you inform them about some details. For instance, if your teen goes to college at a distance of more than a 100 miles without a car, do let your insurance provider know this, as it may help lower the premium amount.

In this case, your teenager may still be covered if they return home from college for the weekend, but it is best to check with your insurance provider to be sure. In some cases, you may have to provide some proof of admission at the college.

How to Choose the Right Insurance Policy

Not every insurance company would provide the same rates for auto insurance policies. Take your time to get quotes from various insurance providers before you make your decision. Here is what you need to do before finally settling on an insurance policy, ask yourself these questions:

Do you want to list your teen on your insurance or purchase a separate policy for them?

Teenagers who have a learner’s permit do not need a separate insurance policy to cover them, and can simply be added to a parent’s policy. However, if your teen has received their proper driver’s license, they can switch to their own policy. With a separate insurance policy, you can typically enjoy lower premiums.

Which insurance benefits do you prefer?

Go through the different kinds of insurance policies and decide which coverage benefits are more important to you. For example, some insurers do not offer accident forgiveness to young drivers. Make sure that the insurance provider you choose is offering the benefits you are looking for.

Are you aware of the discounts offered?

Young drivers are often eligible for discounts when they decide to purchase insurance. Some companies offer student discounts, while others offer discounts to teenagers who have completed certain driving courses. If your teen needs to do certain tasks or courses in order to get a discount, make sure you find out the details and encourage your child to enroll.

What kind of insurance is best for young drivers?

Teenagers are usually insured under a personal auto insurance policy. Collision and comprehensive coverage are usually not mandated by law, so you can skip them. Think about it this way: if the car your child drives is worth lesser than the deductible you would pay for a policy, then purchasing that policy is probably not a good decision.

Insurance Options for Young Drivers

According to the Centers for Disease Control and Prevention (CDC) teen drivers aged between 16-19 years are three times as likely to be involved in a fatal car crash as drivers who are over 20 years old.

However, ensuring that your teenager adheres to safe driving rules and having a sound insurance policy is sure to keep your child physically and financially secure. Here is how car insurance for young drivers works:

Adding a Teenager to Your Insurance Policy

Teenagers who are still driving on a learner’s permit can be added to their parent’s auto insurance policy. When you would include your child in your policy, they would be entitled to the same benefits as yourself.

Some insurance providers have policies where all the drivers listed have access to all vehicles that are included in the policy. This implies that your young driver would be covered by the policy’s limits when driving your vehicle as well as when driving their own car. Similarly, you would also be covered even if you are driving your child’s car.

In the situation where you own one expensive and one more reasonable vehicle, you can cut costs by assigning the older vehicle to your teenager. However, you would first have to check whether your insurance provider’s policy provides this option.

Insurance policies usually have the same liability limit for you and your teen. For example, in case your teen gets involved in an accident, the insurer can pay the full amount of bodily injury per accident, rather than having separate shares for different drivers on the policy.

Your young driver can enjoy all the benefits of the policy that you buy. For instance, if you have opted for rental car reimbursement, roadside payment, or disappearing deductibles, your teen can take advantage of them just like you can.

Buying a Separate Policy for a Young Driver

When your teen has finally grown up to let go of the learner’s permit and acquires a proper driving license, that is when they can also buy a separate insurance policy for themselves.

However, state laws differ when it comes to car insurance for young drivers. In some states, a parent may have to co-sign an insurance policy purchased by their teenager. The cost of premiums in this case is likely to be on the higher side. However, there are some discounts that your insurance company may provide. They may include:

• A student discount if your child is scoring good grades at school.
• The young driver has taken an additional driving education or defensive driving course.
• Students who live far from home during college may be eligible for an ‘away’ discount.
• Opting for a higher deductible against lower premiums.

Before your teenager starts driving, make sure you educate them about the road safety rules and regulations. Be firm about using a seat belt, train your child for bad weather conditions, and initially restrict them from driving at night. You can keep your teen on your own insurance policy, and once they receive a regular driving license, shift them to a separate one after careful research. AC Insurance has been providing top quality car insurance services since 1991. Click here to get a free quote today!

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