Advantages of car insurance for Young Drivers

One advantage of buying car insurance for your young ones is that it saves you from financial catastrophe when they meet with an accident that may cause financial damage. It is expensive to pay for a young driver’s car insurance premium, but just imagine if your youngster will be involved in a traffic accident that injures some pedestrians. You will be held liable for that.

But with the young driver’s car insurance, the insurance company will pay for the damages. You and your family will be saved from financial ruin. This is the main advantage of car insurance. You paid a few bucks in exchange of a thousand benefits.

Another advantage of car insurance under 25 is that you and your family are saved from the mental anguish of having to face all the problems and issues, just in case the juvenile member commits an accident that will cause injury to other people and damage to properties.

You will be spared from the worries of seeking out legal help for solving the problem, and the massive bill when a rental car gets smashed up. The insurance company will take care of the essential documentation and legal representation on your case. You are passing on the risk and the worry to the insurers and getting security just for paying a young driver’s insurance policy premium.

Disadvantages of purchasing Car Insurance for Under 25's

The chief disadvantage of car insurance for young drivers is its expensive premium. Statistics show that due to inexperience, young drivers are more likely to be involved in accidents and traffic violations than mature drivers.

The insurers perceive that the young driver car insurance market is a high risk demographic. So, they charge high premiums for this type of insurance policy. This is unfair because there are many young drivers who are responsible and safe. Insurers also charge an even higher rate to young male drivers because they drive more miles and they are considered to be more reckless than young women.

Other reasons why insurers charge higher premiums are the following: the car to be insured is a sports car or any high end car; the driver to be insured has a poor driving record; and, driving in or near large metropolitan areas.

Things You May Not Know About Insurance

Perhaps the most commonly purchased type of insurance is automobile insurance, also called driver’s insurance or car insurance. Although laws vary somewhat, virtually all states and countries today require drivers to carry some sort of automobile insurance to legally operate a vehicle on public roads. The penalties for driving without insurance can range from fines to a suspended license or, in the case of repeated infractions, possibly even a short jail sentence. Given that driver’s insurance is required in pretty much every state, it’s worth having some basic knowledge about the subject. Types and levels of Coverage The type of insurance coverage a person needs, and how much they will pay for that coverage, vary depending on a number of factors, such as the age of the driver, his or her driving record, the age and value of the vehicle, the dollar amount of the coverage, and whether the vehicle is fully paid for. While auto insurance can get pretty complex, there are four types that everyone should be aware of. Liability coverage is the most basic type of coverage; it protects the driver against any claims that might be brought after an accident or other incident that is the driver’s fault. This is usually the minimum coverage that a driver needs to be considered insured. Liability insurance usually has the lowest premiums, but it doesn’t cover any damage to the driver’s own vehicle; thus a lower monthly premium needs to be balanced against the risk of a potentially large financial burden. Also, most loan lenders require a driver to carry comprehensive coverage until the borrower has paid off the loan in full. Collision insurance covers part or all of the cost of repairs to the driver’s vehicle in the event of a collision, based on an estimate of the project cost for the repairs. While collision insurance can definitely pay for itself in the even of a car crash, the monthly premiums are higher than simple liability. Most policies are also subject to a deductible, which means that the policy carrier is responsible for paying a set amount before the insurance company pays. Deductibles vary widely; generally speaking, though, the higher the deductible, the lower the monthly payments, and the lower the deductible, the higher the monthly payments will be. ? Comprehensive coverage is typically required for vehicles that are still in the process of being paid for. Many vehicle owners also carry comprehensive coverage for expensive or otherwise valuable vehicles. Comprehensive coverage covers damage that isn’t the result of a collision – fire, theft, vandalism, and so on – although the exact items covered can vary quite a bit from one policy to the next. Uninsured Coverage protects you if an uninsured or underinsured driver hits you or your vehicle. Although insurance is a legal requirement in most places, that doesn’t mean that everyone on the road is insured. This type of coverage means that you won’t get stuck with the repair bill if someone less responsible than you involves you in an accident. Each type of insurance is available at several different levels of coverage; the higher the coverage (in dollars), the higher the premium will be. Premiums will also increase if the driver is involved in an accident or receives tickets for traffic infractions. Additionally, premiums are higher for males than for females, for younger drivers, and for drivers in urban or higher-crime areas. Despite this, however, automobile insurance is a necessity for any responsible driver.

5 Things to Know About Car Insurance

1. It’s not as simply as it seems.

Your premium is the result of a fairly complicated formula, and in some cases different formulas are used by different companies and locations. Some common factors that influence your premium include:

• The age of the primary driver
• Driving record
• Type of car being insured
• Location
• Average driving distance

…to name a few. Basically, if you park or keep your car in a location with a high crime rate or drive your car more than average, you will probably pay a little more because you’re seen as riskier to insure.

Some insurers also use your Credit Based Insurance Score (CBIS) which factors in things like your credit history – yet another reason to improve your credit score!

Also note that rates on new model cars are based in part on the MSRP, since they lack the historical data of used cars and average accident occurrence and repair costs.

2. Vanity will cost you.

Whether you’re experiencing a mid-life crisis, or just want to look like you are, that sports car is going to cost you more to insure. A recent list of Insure.com’s priciest cars to insure for 2009 lists the usually suspects at the top: BMW M6, Dodge Viper and the Nissan GT-R. At the bottom of the list are the family cars – no one steals the family minivan, and it’s hard to qualify for nascar with one.

Another factor is the average cost of repair. At the top of the low cost of repair list for 2009 were Kia Sportage,Hyundai Santa Fe and Hyundai Entourage.

3. Remember: safety first!

Having two or more accidents will drive up the cost of our premium, and so will traffic and speeding tickets. In some states, these count as points against your license. Get too many points and you lose your license. But you can be far from losing your license and still have enough points to tack on another 30-50% to the cost of your premium.

The lesson here is clear – keep your nose clean. Avoid reckless driving, tickets and DUI/DWI’s.

4. You don’t need everything.

If you have enough of an emergency fund to be able to pay for car repairs out of pocket, or if your car is older than five years and the loan is paid off then you can save a bundle by canceling the collision and comprehensive coverage. If it’s not paid off, but you can afford most repair costs, then consider raising the deductible.

5. Don’t forget the discounts.

Common discounts include:

• Multi-policy discount (same insurer for auto and home owner’s or renter’s)
• Taking a defensive driving course
• Driving a car with certain safety and security features.
• Low-mileage discount if you drive less than 10,000 miles a year.

It never hurts to ask the agent if there are other discounts to be had – every percent helps.

Top Five Things Insurance Companies Don't Want You to Know

1. The insurance company is NOT on your side. Claims adjusters and insurance company lawyers are paid to minimize the money they pay out to claimants, even if it is your policy (as in the case with uninsured or underinsured motorist coverage). The insurance company works for its shareholders, not the people who pay their premiums.

2. After a serious car accident or truck accident, a claims adjuster, lawyer or investigator working for the insurance company is at the scene putting together evidence to support either denying your claim or minimizing the amount of compensation. For this reason, it is important to contact an experienced car or truck accident attorney to gather evidence and statements to help maximize your compensation.

3. Insurance companies and their employees will ask you questions designed to confuse you or to have you admit to something you don't fully understand that can be used against you in court. Therefore, you should not give any statements to the insurance company without first engaging an experienced attorney to represent you.

4. If the person who hit you does not have sufficient insurance coverage to cover your claim, and you have underinsured motorist coverage that exceeds that person's coverage, then you may be entitled to compensation from your own insurance company. We can help you make that determination.

5. Even though the insurance company may attempt to discourage you from retaining the services of a qualified car or truck accident attorney, they have high-powered lawyers protecting their interests and representing them. You should retain your own high-powered attorney to protect and represent your interests. It is much better to take advice from someone who is totally on your side as opposed to someone whose interests are in direct conflict with yours.

How To Shop For Car Insurance

Determine the policy you need. While there are only a handful of nationally-recognized car insurance companies, A.M. Best, an industry credit rating firm, says there are about 450 insurers in the car business. The best place to start, experts say, is by getting an idea of what kind of policy you need and the kinds of companies you're willing to get it from. 

Compare companies. Now that you may have narrowed down the list, experts say price should be factor when selecting a company, not a determinant. Consider buying your car insurance from the same company as your homeowner's or renter's insurance. Many company offer discounts. 

Toggle your premium. Once you have settled on the terms of your car insurance policy, there are still opportunities to reduce costs. 

What not to do when shopping for car insurance:

• Don't skimp on coverage. It may be tempting to purchase only the minimum amount of liability required by law, but experts warn against this as accidents can cost way more than you could ever expect. Experts recommend a minimum of $100,000 of bodily injury protection per person and $300,000 per accident. You should also consider raising your liability coverage to protect your savings and assets from an accident in which you're at fault. You'll also need to purchase both collision and comprehensive coverage if you want to protect your vehicle from damages like falling tree limbs, hail, flood, fire, as well as from theft and vandalism.
• Don't wait for discounts. If you don't drive your car that often, some insurers offer usage-based insurance -- a sort of mileage discount that may save you up to 30 percent. But insurers can't know this unless you speak up. Even signing up for an automatic payment plan may provide a discount of up to 5 percent. Other discounts may apply if you belong to certain associations, install an anti-theft device in your car, or complete a defensive driving course. Ask! Ask! Ask!
• Don't buy the car, then shop for coverage. Experts recommend comparing insurance costs before buying a car, since the premium is based in part on the car's sticker price, repair costs, overall safety record and likelihood of theft. Even among similar cars in the same price range, premiums can vary widely.

Car Insurance Myths

Myth #1: Hey, You're Paying the Premiums... Insurance Should be Bought and Used for Every Accident and Disaster.

Insurance is designed to protect one from catastrophic disasters. An insurance rule of thumb: If you can pay for the loss or damage without a financial hardship then pay it, otherwise expect your insurance premium to eventually show an increase. Also, buying every type of insurance just isn't necessary. Sometimes the risk is worth taking rather than paying a premium. Learn more at Don't Buy Insurance You Don't Need

Myth #2: If I am Alive, I Must Need Life Insurance!

Life insurance is designed to take care of one's dependants after the caregiver's death. If you have no dependants, then you probably don't need life insurance. This includes children and retired persons... usually they don't have people that depend on their income so life insurance for these groups can, in rare instances, be beneficial but is usually unnecessary.

Myth #3: I'm the Breadwinner in the Home, So Only I Need Life Insurance.

Have you seen the cost of childcare lately? Add that along with housekeeping, food preparation, home accountant, and school transportation. From that list alone one can see how much a spouse really contributes to the household budget. It is estimated a non-working spouse contributes at least, but usually more, the equivalent of a full time job. For this reason it is important to buy life insurance for everyone in the household if the absence of their income would cause a financial hardship.

Myth #4: Whole and Universal Life are the Best Life Insurance Choices Since I Can Get My Money Back.

Term life insurance is probably the best choice for most. Term life is set for a specific term, like 10-30 years, with a much lower premium than whole and universal life. Your best bet? Buy term life and invest the premium difference in a retirement account. Lean more about Term, Universal, and Whole Life at Life Insurance Policy Basics.

Myth #5: Flood Insurance is Only for People Who Live in a High Risk Area.

Everyone who lives in a National Flood Insurance Program area is eligible and can buy flood insurance. These areas are not always prone to floods so even if you think your area is low risk you may be eligible. Check with your insurance agent to learn more or find additional information at Why didn't my policy pay for damage caused by a flood?