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The Teenage Guide to Car Insurance

If you are like most teenagers in the United States, your parents have probably managed your car insurance policy. But now that you are heading out into the world and becoming an adult, it’s time to start thinking about these things. Here is a basic guide to car insurance for young adults.

What are the Different Types of Coverage?

Liability Insurance – Liability insurance covers the cost of any property damage or medical bills that arise from an accident you cause. Liability insurance is one of the most important and basic types of car insurance.

Collision Coverage – This policy covers the cost of repairs damage that occurs to your own vehicle. If your car gets totaled, the insurer will pay the value of the car right before the accident. Usually that value isn’t enough to buy a new car, but it is way better than nothing.

Comprehensive Coverage – Any problems not related to an accident fall under the comprehensive coverage category. These problems include weather damage, a stolen vehicle, hitting wild animals, and so on.

Personal Injury Protection (PIP) – Liability insurance covers the medical bills of the other driver when you are at fault in an accident, but what about your medical bills? Personal injury protection covers any medical bills you or your passengers have, no matter who is at fault in the accident.

Uninsured/Underinsured Motorist Protection – Every driver is required to have some level of car insurance, but that doesn’t mean that every driver has coverage, or has enough coverage. Uninsured/underinsured motorist policies help pay repair and medical bills when the bills exceed the other driver’s coverage amount.

Gap Insurance – If you are still making payments on your car and it gets totaled in an accident, gap insurance can help make up the difference. If you just bought a new car and still owe more money than you could easily pay off on short notice, gap insurance may be a good option. Some car lenders actually require buyers to have gap insurance so that they will get their money in the event of an accident.

No-Fault Insurance – No-fault insurance covers the costs of an accident no matter who is at fault. Chances are, if you are in your early twenties, you aren’t driving an expensive car. If your car is inexpensive to replace, no-fault insurance isn’t worth its high cost.  Besides, it is currently only offered in 12 states.

How Much Coverage Do I Need?

Every state has its own laws about how much insurance its drivers need. Most states require liability insurance, and about 15 of them require Personal Injury Protection (PIP). You can check your state’s .gov website to find out what you need, or ask an insurance agent in your area.

Once you have the minimum limit of insurance coverage, the rest is up to you. Decide if you want to purchase more coverage, or if you are happy with the minimum. Professionals, like those at Woody Sander Ford, know that depending on how much additional coverage you invest in may depend on certain considerations.  Some of these may include: How expensive is your car? If you are driving a beater, you’ll need less coverage than if you are lucky enough to drive a luxury vehicle. What does your budget allow? Sometimes you simply can’t afford to purchase more coverage, and have to stick to the minimum.

When Should I Get Car Insurance?

Since every state requires some type of minimum insurance, you should get your own policy whenever your parents remove you from their insurance policy. This usually happens when a teenager or young adult buys their own car. It doesn’t really matter when you get your own policy, just as long as you are never driving without coverage.

How do I Pick the Right Insurance for Me?

Besides the considerations listed above (budget and type of vehicle), make sure you are aware of any available discounts. A lot of people in their early twenties are students, and some insurers offer discounts for that. Here are some more factors that could lower your car insurance bill: low annual mileage, using your car primarily for certain things like agriculture or work, owning a home, being a loyal customer/renewal discounts, installing safety systems in your car, owning your car, having a clean driving record, paying bills online, military affiliation, wearing your seat belt The list goes on and on. Also, don’t be afraid to shop around. Don’t just buy the first insurance you come across. Getting several auto insurance quotes, from Calgary to Cancun, will give you an idea of how much you should be paying for coverage in your area.

Most companies have a lot of general information about insurance on their websites. Once you find the right coverage for you and your vehicle, you are one step closer to being an independent adult.

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