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Skip to Auto Insurance Considerations for All Life Stages

Special Considerations for Established Families

At this life stage, your cute little kids become teenage drivers, competing with you for the car. In addition – as you enter that mid-life period – your own automotive interests may steer you towards different types of cars than you’ve previously driven.

• When adding your teenage driver to your policy, be prepared to pay higher auto insurance rates. Although some states do not allow gender differences in auto rates, industry figures show that a teenage female driver can cause rates to increase as much as 50 percent, while a young male driver can boost costs by up to 100 percent.

• If you plan to provide your child with an automobile to take to college, check on the need for a separate auto insurance policy.

• At this stage of your life, you may be frantically transporting your kids – and their friends – to sports practices and other after-school activities. Given these chauffeuring responsibilities, you might want to consider increasing your liability insurance in case of an accident.

• Hopefully, your success in the job market is causing your net worth to grow. So you may want to consider purchasing an “umbrella policy” to raise your auto liability coverage, for example to $1 million, in order to protect your assets.

Here are some tips to prudently control your auto insurance costs:

• When you add a teen driver to your policy, it’s a good time to evaluate different auto insurance companies and compare costs, as firms differ in their policies for young drivers.

• If you’re planning to purchase a car for your young driver, keep in mind that auto insurance premiums are linked to the type of vehicle driven. If you’re buying or leasing a new car, check the insurance rates before you make your final choice. SUVs, convertibles and performance vehicles typically cost more to insure than some cars.

• Parents of new teenage drivers should encourage their children to maintain good grades and to take a driver’s education class, as these steps may help lower your insurance rates.

• In addition, keep in mind that if your child lives away at school (at least 100 miles) and has less access to the insured vehicle, you may be able to take advantage of insurance discounts.

• Remember that companies often grant discounts to those who are considered “safe drivers,” so try to keep your driving record – and your children’s driving record – free from accidents and moving violations for at least three years, or consider taking a defensive driving course.

Considerations for All Life Stages

Auto insurance is one of the most frequently used types of personal insurance. In fact, states require that you purchase some kind of insurance coverage in order to drive legally.

There are two basic components to auto insurance coverage: liability and property damage.

Liability Coverage

Most auto insurance policies cover your liability for bodily injury, property damage and uninsured/under-insured motorists.

Bodily injury liability insurance protects you against the claims of other people who are injured in an accident for which you were at fault. Their claims for bodily injury may include medical expenses, lost wages and pain and suffering.

Property damage liability insurance pays for any damage you cause to the property of others. This includes not only damages to other vehicles, but also other property, such as walls, fences and equipment.

Uninsured motorists coverage protects you, the policyholder, in the event that you are injured by a hit-and-run driver or a driver who does not have auto insurance.

Property Damage Coverage

Property damage coverage may include both collision coverage and comprehensive coverage. Collision coverage pays for physical damage to your car as the result of your auto colliding with an object, such as a tree or another car. This coverage is optional and not required by law. However, collision insurance may be required by your lending institution or lessor.

In the case of an accident involving an older car, the cost of repairing the car can quickly exceed the worth of the car. In this case, insurers will “total” the car and pay you what the car was worth based on its current book value rather than fix it.

Comprehensive coverage pays for damage to your auto from almost all other causes, including fire, severe weather, vandalism, floods and theft. You are not required by law to carry comprehensive coverage.

Your auto insurance premiums are affected by a number of factors:

• For starters, they’re linked to the type of vehicle driven. If you’re buying or leasing a new car, check the insurance rates before you make your final choice. For example, SUVs, convertibles and performance vehicles typically cost more to insure than some cars.

• Safety devices on your car can help reduce your premiums. If you’re buying or leasing a new car, consider getting one with anti-lock brakes, side air bags, automatic seat belts and daytime running lights.

• Anti-theft devices on your car, such as an alarm system and global positioning system – so that your car can be located if stolen – can help reduce your premiums.

• Where you park your car can also impact premiums. If you have access to an indoor garage or locked parking lot – places that decrease the likelihood that your car will be stolen – you may qualify for lower premiums.

• The geographic region in which you live may impact your premiums. For example, areas prone to extreme weather – hail, wind storms, hurricanes, etc. – higher traffic patterns or higher risk of theft may have higher insurance rates. If you live in an area prone to extreme weather, check whether your policy includes comprehensive coverage on your car to cover potential damage from storms.

• Your driving record – tickets, accidents, DWIs/DUIs (driving while intoxicated/driving under the influence citations) – directly affect your premiums.

• The number of claims you have previously filed impacts your insurance costs. You may want to consider not filing claims for smaller events to avoid premium increases.

• Finally, the cost of your insurance is directly linked to your policy’s deductible amount. The deductible is the amount of money that you agree to pay as part of a claim, before your insurer pays the remaining amount toward that claim. For example, if your vehicle incurred $1,000 of damage in an accident and your deductible was $250, you would pay the first $250 and your insurer would pay the remaining $750. The higher the deductible, the lower the premium.