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Cheap student car insurance is a common concern for most young drivers. Young drivers have the highest car insurance premiums and the least amount of money, which is a tough combination when you are trying to start out on your own. There are some solid ways to find affordable car insurance, but just make sure that you avoid these three costly mistakes during your search.
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These 3 mistakes may sound like a good way to save money at first, or you might not even be aware that you are making a mistake, but it can cost you in the end! Your goal is to get enough insurance to protect yourself financially in the event of an accident or loss that does not cost an arm and a leg.
Mistake #1: Getting Too Little Insurance Coverage
Many young drivers make the mistake of only getting the state minimums of mandatory insurance. However, the state minimums for coverage might not be enough to cover you in the event of an accident, advises the Insurance Information Institute.
Mandatory insurance coverage such as Bodily Injury Liability and Property Damage Liability pay for damages that you cause to other drivers.
If you do not purchase enough insurance to cover the medical bills, car repairs, and other damaged property of all the people involved in an accident that you caused, you will then be financially responsible to pay anything over and above what your insurance will cover.
Some states require that you also purchase car insurance coverage such as Personal Injury Protection (PIP) and uninsured/underinsured motorist coverage. Personal Injury Protection pays for your medical bills and possibly lost wages when you cause an accident. How will you cover the tens of thousands of dollars of medical bills that can result from a car accident, especially when many young drivers are also without adequate health insurance coverage as well?
Furthermore, uninsured/underinsured motorist coverage pays for your losses if you are the victim of an accident and the at-fault driver doesn’t have enough insurance to cover your injuries and damages. Where will the money come from to fix or replace your vehicle and pay your medical bills if you don’t have enough of this insurance?
Additionally, two types of optional insurance coverage are usually only required by lenders until you pay off your car loan. Collision coverage pays for the damages to your vehicle even if you caused the accident. Comprehensive coverage pays for most other damages that are not caused in an accident, such as theft, fire, or natural disaster. If you do not have these types of coverage, and you do $8,000 in damages to your vehicle in an accident you caused, you will be responsible for fixing your vehicle out-of-pocket. Similarly, you will also be financially responsible if your car is stolen, if you hit a deer or if a tree limb falls on your vehicle.
The point of insurance is to protect you financially if you are involved in a car accident or suffer a loss.
Court judgments against you, garnishment of your wages, hospital bills, and poor credit from an accident where you were insufficiently insured can follow you for years. You might think student loans are tough, but costs from a car accident will be much worse if you don’t have enough insurance.
How Much Coverage is Enough
While you don’t want to get too little coverage in auto insurance, you also don’t want to buy too much. You need to make sure that the coverage you get suits your driving situation. For instance, if you live in an urban area or you drive on the highway often, then you likely need more coverage than someone who lives in the country and only drives on rural roads.
Another thing to think about is your optional coverage such as Collision and Comprehensive.
If you drive an older vehicle that has lost most of its value, then you probably don’t need to pay for these types of coverage; you really won’t that have big of a monetary loss to cover in the event of an accident or other damage. The National Association of Insurance Commissioners advises that if your vehicle’s market value is less than $1,000, then you should consider dropping the coverage.
Mistake #2: Committing Fraud
Car insurance fraud may seem like the realm of only hardened criminals who stage car accidents, but the auto insurance application form is one place where many generally honest people commit fraud, according to the Coalition Against Insurance Fraud. Many people reason that such fraud is just fudging the truth, telling a white lie or is a sound way to lower insurance premiums, but insurance companies and prosecutors consider the lies reported on insurance applications as fraud.
Insurance companies use application information to set your insurance premiums, so any misinformation that lowers your premium costs auto insurance companies money just like faking whiplash after a fender bender. The following are considered acts of fraud:
- Claiming you drive less miles than you actually do
- Insuring your vehicle in someone else’s name
- Insuring your vehicle in a region that has lower car insurance rates than the one you live in
- Stating you only use your vehicle for personal use when you actually use it for work-related activities
- Claiming your vehicle is parked in a garage or secured lot when not driving when it is not
Penalties for Fraud
Many who report inaccurate information on an auto insurance application in order to get lower premiums believe that no one is being hurt by such fraud.
However, auto insurance companies lose money and pass that loss on to their customers.
Every driver has higher insurance premiums because of such fraud, so it really is not a victimless crime.
Lying on your car insurance application is certainly not as serious as running auto accident rings or torching your vehicle to collect from an insurance company, but it is still illegal. Besides costing everyone more money in premiums, car insurance fraud is also punishable by fines and jail time.
It may be hard to prove, but it really isn’t worth it. Just as supermarkets will prosecute shoplifters who eat a handful of grapes without paying, car insurance companies will work hard to sniff out and prosecute fraud. All states have anti-fraud laws, and their wording is pretty clear.
According to a Connecticut law, “In Connecticut, a person is guilty of insurance fraud when, with the intent to injure, defraud, or deceive any insurance company, he knowingly presents false, incomplete, or misleading information in support of an insurance application, claim, or other benefit. This charge is a felony, and it includes a fine of up to $5,000, five years in prison, or both.”
Therefore, if you think that fines and jail time are not for you, make sure that you are completely truthful on you applications for car insurance. At the very least, fraudulent information on an application may be grounds to be dropped from your insurance or for a claim to be denied.
Mistake #3: Ignoring Student Discounts
While auto insurers reward the safest drivers with lower premiums, they also offer discounts to those who prove they are more likely to be cautious drivers.
The last mistake you can make when searching for affordable student car insurance is to ignore the good student discount.
Auto insurers have found statistical links between certain behaviors and bad driving that leads to accidents. For instance, those who make poor financial decisions that result in a low credit score are more likely to also make poor driving decisions in the judgment of car insurance companies. Thus, drivers with poor credit will pay more in car insurance.
In that same vein, car insurers have found a connection between students who get good grades and a lower risk of being in an accident. Many car insurance providers offer discounts to high school and college student who can show proof of good grades semester after semester.
Make sure to research the requirements off all of the car insurance companies you are considering, because they vary greatly.Some auto insurers will want a B average or better, while others will want your grades to be ranked among a certain high percentile with your classmates. Many colleges and universities have a form or letter that they will send your auto insurance company every semester.
Another option is to take a defensive driving course. According to reports compiled by the National Highway Traffic Safety Administration, schools are offering Driver Education Programs less often due to budget constraints, and teen drivers have the highest rate of accidents of any other age group. Teen drivers have three times as many accidents as any other group. Many car insurance companies offer additional discounts to any driver, student, or adult, who takes a defensive driving course.
The Best Place to Search for Student Car Insurance
One of the best places to start your search for cheap student car insurance is by comparing rate quotes from many the different companies at car insurance comparison sites. Once you know how much insurance you need, you can fill out a standard car insurance application once, with completely truthful information, and the comparison sites will send it to multiple car insurance companies.
The car insurance quote comparison site will likely send your application out to car insurers who provide discounts for students, but you can also inquire about discounts with any car insurance company after you get a quote. In this way, you can compare all of your car insurance options.
Start your search for cheap student car insurance right away by inserting your ZIP code into the FREE toolbox quote finder right now!