Buying car insurance can be a nightmare.
Trying to buy it while insurers still consider you a “young driver,” which is typically under 25 years old, makes it even worse.
I recently purchased my own auto insurance policy, and the quotes I received were beyond anything I had ever imagined.
A $400 monthly premium? You’re out of your mind. No thanks.
Why is Auto Insurance So Expensive for Young Drivers?
According to the Centers for Disease Control and Prevention, drivers ages 15 to 19 years old accounted for 11%, or $10 billion, of the total costs of motor vehicle injuries in 2013, even though the age group represented only 7% of the population.
“Teens are more likely than older drivers to underestimate dangerous situations or not be able to recognize hazardous situations,” the CDC’s website says.
As a result, insurance companies see them as a huge risk and charge higher premiums to insure them.
If you’re drowning in a high auto insurance premium, don’t fret — there are ways to save on your policy as a young driver.
Here are a few ways young drivers can cut down auto insurance costs.
1. Consider Insurance Premiums When You Purchase Your Car
When you’re young, you may be looking to buy a sexy, fast or luxurious car — but do you know how your selection will affect your insurance premiums? A common mistake is thinking about insurance costs only after you’ve purchased a car.
Jennifer McDermott, consumer advocate at car insurance comparison website finder.com, says considering insurance costs when you purchase a car will save you money in the long run. Things like safety features, make, model and age all affect insurance premiums, so be sure to get quotes on any car before buying it.
If you can’t find an insurance quote within your budget, it might be time to look at different vehicles.
2. Purchase a Vehicle With the Right Safety Features
Usually, when you get an auto insurance quote, the process involves the insurer asking you many questions, including:
“Do you have anti-theft devices installed in your car?”
“Does your car have antilock brake system (ABS)?”
“Is your car equipped with airbags?”
Purchasing a vehicle with these devices keeps you and your car safe, resulting in lower risk. This reduced risk sometimes results in discounts from the insurer.
(P.S. Looking to buy a car while you’re still in college? Check out our top eight cars for college students!)
3. The Way You Pay Makes a Difference
Neil Richardson, a licensed insurance agent at The Zebra, says changing the way you pay can be a smart way to cut down insurance costs.
The Zebra’s 2016 State of Auto Insurance Report reveals that paying your bill in full, rather than in installments, can save you around $62 a year.
If you can’t cough up that large chunk of change at once, no worries. Richardson also says that electronically transferring funds from a bank account can save you $28 annually.
Another benefit of electronic transfers? You can set them on autopay and never miss a bill — but make sure you have enough money in your account so you don’t face overdraft fees!
4. Avoid Coverage Gaps
This tip depends on your situation at home, so it may not apply to everyone.
Richardson says that being on your parent’s car insurance policy before getting one on your own can work to your advantage when it comes to savings.
“Your personal car insurance history began the day you were first insured (under your parents or otherwise),” says Richardson. “The longer you’re insured, the more money you can save.”
If you’re moving out and seeking financial independence from your parents, preventing a gap in coverage is crucial. Richardson suggests buying your own policy before you drop your current coverage under your parents. This can help you avoid coverage gaps.
According to Richardson, avoiding gaps in coverage can save you an average of $100 per year.
5. Use the Available Technology
Many auto insurers are using devices that record your driving habits to offer discounts to safe drivers. Progressive, for example, offers Snapshot, which measures things like how often you brake hard or accelerate quickly, and the time of day when you usually drive.
Insurers consider these metrics indicators of risky or safe drivers. They compile this information and adjust premiums based on the risk you bring — the safer your driving, the more discounts you get.
Providers sometimes offer a discount after you agree to install these devices in your car. The discounts aren’t immediate, though; insurers will collect your data over a period of time and offer a discount afterward.
6. Look for Good-Student Discounts
If you haven’t noticed by now, college student discounts are a wonderful thing, and you should use your student status to save on auto insurance.
Some auto insurance providers offer good-student discounts, which are usually based on your GPA. Insurers have different eligibility thresholds, so call and check with yours.
You’re in school and want to do well anyways — why not save money for it?
7. Take a Safe-Driver Course
Safe-driver courses can improve a young driver’s skills behind the wheel, which is why some insurance companies offer premium discounts for customers who have taken these courses. Call your provider and find out if it offers this discount.
Get the Insurance Coverage You Need Without Going Broke
Auto insurance can be a budget breaker for young drivers, but don’t let the high price stop you from getting the coverage you need.
You may want to go with only the minimum coverage your state requires, but this isn’t always a good way to cut costs. If you were to get into a serious accident, you might not have enough coverage to pay for all the damage, which may force you to pay out of your own pocket.
Keep these tips in mind when you purchase car insurance as a young driver — they could help you in the long run!
This article contains general information and explains options you may have, but it is not intended to be investment advice or a personal recommendation. We can’t personalize articles for our readers, so your situation may vary from the one discussed here. Please seek a licensed professional for tax advice, legal advice, financial planning advice or investment advice.
Kelly Smith is a junior writer and engagement specialist at Codetic. Catch her on Twitter at @keywordkelly.