Insurance Regulations For Newly Licensed Drivers

by Joshua on December 08, 2014

Insurance laws for newly licensed drivers and teen drivers can be overwhelming to understand. It may be easier to get the gist of auto insurance with four factors in mind.

Minimum Liability Insurance Requirements

The two types of liability insurance include property damage liability insurance and bodily injury liability insurance. While property damage liability insurance covers damages to another’s property during an auto accident, bodily injury liability insurance covers personal injuries of another during an auto accident.

Almost all states require liability insurance with minimum liability coverage varies by state. Keep in mind that the minimum might be sufficient to cover repair and medical expenses, especially for serious accidents. In such a case, you would be sued for any expenses not covered by your insurance.

Therefore, purchasing more than the state minimum may be wise. Depending on multiple factors such as your age, personal assets, and economic situation, the cost of liability insurance can vary. Insurance professionals recommend having about $300,000 in bodily injury protection and $100,000 in property damage protection per accident.

Basic Kinds of Additional Coverage

There are many different kinds of additional auto insurance coverage, but here are the three most common people consider including collision and comprehensive, underinsured and uninsured motorist coverage, and personal injury protection.

Collision and comprehensive insurance is typically optional unless you financed your vehicle to a lender who requires this coverage until you pay off your loan. While liability insurance protects other people’s property, collision and comprehensive protect your own property. Collision ensures coverage to damage to your own vehicle in a collision-specific accident. Comprehensive ensures coverage of your vehicle in the event of theft, vandalism, natural disasters, and weather conditions.

If you are in an accident with a driver who has enough coverage to meet the state’s minimum requirements, but does not have enough to cover the damages, underinsured motorist coverage will protect you in such situations. On the other hand, if you are in an accident with a driver who does not have any coverage or auto insurance, uninsured motorist coverage will protect you in these types of situations.

Personal injury protection, also called no fault coverage, is a medical payments coverage. It covers the cost of all medical expenses not covered by another’s liability coverage. PIP is required in some states.

Choosing a Deductible

A deductible is an amount of money you choose to pay out of pocket, in the event of a car accident. Deductibles can be as low as $250 However, higher deductibles will usually reduce the cost of your premium. Your premium is the cost of maintaining your insurance policy. Be aware to choose a deductible you can afford to avoid financial hardship in the event of a serious accident.

Comparing Auto Insurance Quotes

Compare auto insurance packages with the same types of coverage and deductible amounts when looking into auto insurance quotes. Feel free to inquire about any discounts, including discounts for completing driver’s education courses, driving a vehicle with a high safety rating, being married, or being of a certain age.

Tips to Reduce Auto Insurance Costs

Generally, auto insurance for teen drivers is more costly than that of adult drivers. This is attributed to the trend that teen drivers are at greater risk to be involved in traffic accidents, and receive more traffic tickets over any other age group of drivers. However, there are many ways both parents and teens can cut the costs of auto insurance for their family’s newly licensed drivers.

  1. Tips for Teens

Getting good grades may not be the easiest solution for some, but it is a simple way to reduce the costs of auto insurance. Many auto insurance companies offer discounts to students who have good grades or make good grade point averages. Generally, a B-average is considered good. Regardless of whether your state requires this or not, providers may offer discounts to teens that successfully complete driver’s education programs.

Depending on the insurance company, you may be able to get some more money off your premium if you take additional driver training courses. In addition, the extra training may benefit the teen to have more practice in driving.

Newer car model do not necessarily mean lower insurance rates. In fact, newer models can be more expensive to insure over their older counterparts. Whether you are a parent or a teen, look for a car that is more sensible rather than a car that is ideal. If the parents decide to pay a higher deductible, this can help decrease the overall auto insurance rates.

  1. Tips for Parents

Look into adding another vehicle to your current policy. Multiple vehicle auto insurance discounts can help cut costs if you have at least one insured car. Encourage your teen to choose a reliable and safe car. Try to get them to consider models or makes with high safety ratings and avoid the luxury brands such as BMW and Mercedes.

Increase your deductible to lower insurance rates. Consider skipping collision and comprehensive coverage, because if your teen does drive an older model car that is not financed, it may be more financially sensible to overlook this optional coverage.

Listing your teen as the primary driver of a car will cost more. Consider listing your teen as an “occasional” or a “pleasure-use-only” driver.

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