Compare Rates From Top Providers
Save Up To 46% on Car Insurance
Enter Zip Code:

Cheap Insurance For Young Drivers

Written by Todd Clay. Posted in Ask An Insurance Question Last Updated: 09/13/2010

How staying out of trouble, getting good grades, insuring a cheaper car, and staying on your parents policy will keep car insurance premiums lower

Young driver ready to take the keys.

Can this guy really get cheap insurance?

Cheap insurance for young drivers” may be one of the great oxymorons in the English language, right up there with “military intelligence” and “jumbo shrimp.”

There really is no such thing, especially for single males under 25.

However, there are a few things youthful drivers can do to contain the cost and at least prevent it from becoming “exorbitantly expensive insurance for young drivers.”

Stay Out of Trouble

The most obvious thing a young driver can do is keep a clean driving record. Even a single accident, ticket or claim can send the premium through the roof – especially if it occurs while he or she is already in a high-risk company.

Cheap insurance for young drivers may be a matter of opinion even under the best of conditions, but with a bad driving record it’s an outright fantasy.

Get Good Grades

Young drivers can also keep their insurance costs down by getting good grades in school. What’s more this is no big deal. It’s not like insurance companies expect high school-age drivers to get into MIT.

In many cases traditional-age college students (i.e. those under 23) qualify for the good student discount as well. Most companies require documentary proof of a 2.0 GPA or higher. A transcript or letter from a school official to the insurance company usually works.

Insure a Cheaper Car

Another thing to consider is the young driver’s vehicle. Auto insurance premiums are determined not only by the driver but by the car. Some makes and models are significantly cheaper to insure than others.

While a young driver can’t do much about his or her age, they can do quite a bit about what they drive. Choosing an older, paid-for car and going with a liability-only policy is a good way to move towards cheap insurance for younger drivers.

Make sure you check with your agent before buying anything though. Some companies will require the highest-risk family member go on the most expensive car. Agencies can vary on how they enforce that rule as well.

Parents Can Help Young Drivers Too

A final way to work towards cheap insurance for young drivers is for them to stay on their parent’s policy for as long as possible. This allows the young driver to take advantage of many of the same auto insurance discounts his or her parents enjoy. It’s unlikely a youthful driver would qualify for these discounts separate from parents.

Most insurance companies are perfectly happy to keep a young driver on the parent’s policy throughout high school and well into college. This is assuming the college student goes to school in a state where the insurance company does business. However, students are usually forced to go it alone by age 23. Consult with an insurance agent or broker to determine your best course of action.

When To Drop Collision Insurance

Written by Todd Clay. Posted in Ask An Insurance Question Last Updated: 09/06/2010

Consider your lienholder and personal financial situation before dropping collision coverage

car in accident with bus

This at-fault driver better have collision coverage.

Collision insurance covers damage to your vehicle when you are in an at-fault accident – so it can be a big chunk on your insurance bill.

Dropping collision coverage on your vehicle can often be appealing. After all, it’s probable the single most significant thing you can do to lower your auto insurance rates.

It’s no wonder people think about when to drop collision insurance – part of full-coverage insurance. But as with anything else, actions have consequences. Bear a few things in mind before dropping collision.

Don’t Drop It Until Your Car is Paid Off

Perhaps a better question is when NOT to drop collision insurance. The answer is if you’re still making car payments. Virtually all banks and other creditors on car payments – aka “lienholders” – require full coverage to protect their investment.

As the policyholder you have the right to drop your full coverage at any time. But if the lienholder finds out (and they will – the insurance company is required to inform them), they will “force place” collision coverage on the vehicle and then bill you for it.

No matter how expensive your full coverage is, the force placed insurance will be more expensive. As long as the lienholder is on your title, you are truly better off keeping your collision insurance. Adjust your deductibles if you need a price break.

Consider Lowering Deductibles Before Dropping Collision

Most lienholders require deductibles of $1,000 or less. Coincidentally, most insurance carriers offer maximum deductibles of $1,000. Higher deductibles are sometimes available on commercial policies.

If getting rid of collision insurance isn’t an option, raising your deductible can maximize cost savings. Just be sure not to raise it too high. When considering your deductible, choose the maximum amount you’re willing to spend on your vehicle in case of a mishap.

Anything lower, and you’re paying too much in insurance premium. Anything higher, and you could be stuck with paying more than you bargained for if you have an accident.

Understand the Risks of Dropping Collision

Regardless of whether you keep collision insurance, be sure to inform your insurance company to drop the lienholder as soon as you pay off your car. Otherwise this may be forgotten and cause problems later.

But once the lienholder is paid off and gone, you can consider dropping collision insurance without fear of their intervention. Just remember collision insurance protects your financial investment in your car. Without it, your car is not protected from at-fault incidents.

When considering dropping collision coverage, ask yourself one question, “If something happens to this vehicle, will I be OK with paying cash for another car?” If the answer is “yes,” then the time has come to drop collision coverage.

Car Insurance for Women

Written by Todd Clay. Posted in Research Last Updated: 11/08/2010

Why auto insurance is cheaper for women and how companies rate different groups of drivers

Young woman in car

Will she really pay less money for car insurance than her brother?

Like it or not, women are charged different rates for car insurance than men.

That said, throw any negative preconceptions you may have about women drivers out the window. All things being equal, car insurance for women is less expensive than men.

Why is that?

Statistically speaking women are involved in fewer accidents. Ask any insurance actuary – the person responsible for setting premium rates.

Why Premiums Are Different for Women

Though it sounds like insurance companies are discriminating against men, rest assured they are not. Companies favor or punish different groups based on cold, hard statistics alone.

Here’s how it works:

Every insurance company employs at least one actuary. This is a person with a mathematics background who analyzes losses incurred by that company. They also determine if any particular group of drivers are causing more or fewer claims than others. The company then bases its premiums based on the actuary’s study.

It is important to note that insurance companies only consider their own loss experience when compiling these numbers – with only a passing interest in what their competitors are doing. What’s more, different companies place a different emphasis on different outcomes.

For the most part pretty much every company comes to the same basic conclusions: drivers under 25, as well as drivers over 74, cause a disproportionate amount of claims. In addition, women cause fewer claims then men. Thus, car insurance for women is cheaper than car insurance for men – though the rates don’t vary wildly.

The Gender Gap In Rates

The gender gap in insurance is most apparent at the high school ages. While insurance for a teenage girl is still expensive, it’s not as expensive as it is for her brother or boyfriend.

However, by the time she turns 25 rate differences between her and her male counterparts tend to level off. By the 50s rate differences between men and women are often negligible, but even at that age there are still differences in the woman’s favor.

Insurance is fundamentally a business of statistics. While by definition these statistics drive the business and prefer some groups over others, no reputable company will prefer or discredit anyone based on anything else.

When it comes to car insurance for women, the buying and servicing process should be absolutely no different for them than it is for men. If it is, you should probably take your business elsewhere.

Bike Insurance for Your Motorcycle

Written by Todd Clay. Posted in Definitions, Research Last Updated: 03/23/2011

How bike insurance is similar to a car policy, why there’s a difference in premium, and when to carry full-coverage

green bike / motorcycle

Why you need a special policy to cover a cool ride.

Bike insurance has hit the big time. Only a few short years ago, insurance companies were squeamish about insuring Harley-Davidsons and Kawasakis. They’re now stepping over each other to add motorcycles to their policy rolls.

It has finally dawned on many of these companies that motorcycle insurance makes sense for both them and the rider. However, there are a few unique things to consider when writing a bike insurance policy.

Is it Similar To A Car Policy?

On the surface, motorcycle insurance operates in much the same way as automobile insurance. State minimum liability limits for motorcycles are the same as for cars. Motorcycles can also be insured for collision and comprehensive coverage.

However, on the whole bike insurance is considerably cheaper than car insurance. Indeed many companies are now advertising $100/year policies, an amount that can easily be a monthly payment for auto insurance. That said, as with automobiles it’s not always the best idea just to go for the lowest possible price when it comes to bike insurance.

Why Liability Coverage is Less Expensive for Bikes

A motorcycle is smaller than a car. The damage it’s likely to cause to other people’s property is less. For this reason, individuals with bike insurance can get away with lower liability limits than those who drive cars, but it is still not recommended to go just with state minimums.

Remember state required liability limits for property damage are outdated and quite low. Limits for bodily injury can be lower than for automobiles as well, but one shouldn’t skimp on those either for much the same reasons. While there’s no need to go crazy with liability limits, it is always a good idea to have limits high enough to cover the worst-case scenario.

Covering Injuries on Your Bike Policy

The real risk involved with motorcycle accidents is to the motorcyclist himself. For obvious reasons, regardless of fault, a motorcycle driver is much more likely to be seriously injured in an accident than an automobile driver.

It’s important to cover yourself, either with a good health insurance plan or with a generous medical payments on your bike insurance policy, preferably both.

Material Damage on Bike Insurance

Full coverage for bike insurance works the same way as it does for auto insurance. However, full coverage on motorcycles costs less because motorcycles usually cost less than cars.

That said, assuming there are no lienholders the question regarding full coverage for motorcycle insurance remains the same. If the bike stolen or seriously damaged, will it hurt you financially? If your answer is ‘yes’, you should probably keep full coverage.

How bike insurance is similar to a car policy, why there’s a difference in premium, and when to carry full-coverage

Car Insurance: What is It?

Written by Todd Clay. Posted in Definitions Last Updated: 10/05/2010

What is auto insurance, a short history, its components, and how it’s priced

Headlight On Car

Drivers need car insurance for financial protection.

Most US and Canadian drivers know they need car insurance, but what exactly is it? Simply put, car insurance is a financial protection used to cover losses caused by auto accidents and other vehicle-related mishaps.

Without auto insurance, people would have to pay for these losses themselves. That could easily bankrupt most drivers on the road in a serious accident. Car insurance protects your financial assets by covering physical damage and bodily injuries for auto-related incidents.

A Short History of Auto Insurance

Car insurance is considered part of the “property/casualty” family of insurance. In addition to automobile insurance, this includes homeowners, renters, and various forms of business insurance.

The roots of property/casualty insurance in America date to before the American Revolution. Originally these companies didn’t include auto insurance for a simple reason: there were few cars prior to the 20th century. There were even fewer serious vehicle accidents. Remember, 35 miles-an-hour speed would have been inconceivable until well into the 1900s.

Auto insurance dates to the early 20th Century. As cars on the road increased, car accidents incidents. Insurance companies soon discovered it could compensate drivers for their auto accident losses, but also make money while doing it. Some established property/casualty companies expanded into the market, while many others began as auto insurers.

Car Insurance Policy Components

In its most basic form, auto insurance consists of two components: liability and full coverage. Liability coverage covers both bodily injury and property damage to another vehicle if you’re found at fault in an accident.

In a “no-fault” state, each insurance company pays for its own insured’s losses, while only the insured found at fault sees a rate increase. In both cases the liability is defined by a pre-determined limit. All 50 states require all liability insurance at certain minimums.

Full coverage is further divided into comprehensive and collision sections. As the name implies, collision coverage covers your car for damages regardless of fault after a certain deductible is paid by the policyholder. Comprehensive, or “other than collision” covers other damage to your car. Common claims under comprehensive coverage include auto glass repair and replacement or damage caused by vandalism.

Other coverage commonly found in auto insurance include medical payments or personal injury protection (PIP), which covers bodily injury for you and people in your car if liability coverage isn’t applicable. There’s also uninsured and underinsured coverage (UM/UIM) which covers gaps in coverage if you’re hit by someone with inadequate insurance or no insurance at all.

How Auto Insurance Is Priced

Insurance is a business of statistics. Those drivers more likely to cause a claim pay more in premiums. Those with recent claims and tickets pay more than those who don’t. Gender and age are also taken into consideration. On the whole women pay a less than men. Drivers under 25 generally pay the most in premiums. Boys 18 and younger are usually the most expensive demographic.

However, after drivers turn 25, premiums usually drop until they bottom out in their 50s. Premiums start to creep up slightly again in the 60s. By age 74 a driver may once again be considered higher risk. As a reward, many companies will keep older drivers who have been with them for a long time at relatively low premiums.

Save Up To 46% on Car Insurance
Enter Zip Code:

Car Insurance Guidebook Unravels the Car Insurance Mystery

Unless you work in the car insurance industry, the topic is probably a mystery to you. The words deductible, comprehensive, collision, liability, premium, loss of use and bodily injury are all gibberish when they reach your ears.

Unfortunately, insurance is something that you are required to have by law if you want to drive. Because of how confusing it is many people go around in almost an insurance daze while they get car insurance quotes from the auto insurance companies that they have heard of. In reality, they are completely lost as to what they are actually buying.

Instead of looking at what each insurance company offers in the terms of protection for both themselves and their car, they are instead looking for cheap car insurance. Finding the cheapest car insurance coverage makes having to buy the required product all that much less painful, but misses the whole point of having insurance.

Learning about insurance through your insurance agent or websites like Car Insurance Guidebook will give you the upper hand when you looking for car insurance. You can take your knowledge and not only find the best price for insurance, you can use it to find really great insurance to protect you and your assets. Then you aren’t stuck settling for just average car insurance that can hurt you financially if you ever need it because there isn’t enough protection.

For example, when looking for insurance the car insurance rates are just the first of many factors that need to be taken into account when you are shopping around for car insurance. You also need to take into account the type of vehicle that you are driving. Many people don’t know this.

Are you driving around a vehicle that is a new sedan and can be protected under any blanket insurance policy? Or do you have an old car that you fixed up that needs special protection and could be better covered under classic car insurance?

Don’t just assume that when you compare car insurance that it will be a one-size-fits-all policy. This is where the insurance knowledge will come in handy; you will know what you need to protect yourself and your vehicle.

You will understand what your insurance agent is talking about when they use insurance terms and you will actually be able to make an informed decision. This is much better for you instead of the “nod and smile” approach people take in their insurance agent’s office.

Also just like your life changes your insurance needs will change. This year you may just need to learn about the best deductible to have. Next year you may need to educate yourself on car insurance for young drivers. As the years pass, motorcycle insurance may be something you will need to know.

Many wise people say that you never stop learning, so take their advice and educate yourself on the insurance that you spend a lot of money on and can’t get away with not having.