How Young Drivers Can Lower Their Car Insurance Premiums

Things You Need to Know Before Buying Car,House, Health & Life Insurance online.

Insurance Buying Tips #1: Shop smart
When looking for insurance, your No. 1 priority should be to find adequate coverage. Price is important, but you’ll want to determine what kind of coverage you need first. Then you can fit that coverage into your budget and determine which carrier can provide you with the most comprehensive policy for your situation. You may be tempted to choose insurance with the lowest price tag, but if you don’t have enough coverage (or the right kind of coverage), you will see less financial benefit when it comes time to file a claim.
Insurance Buying Tips #2: Look for discounts
Once you evaluate your coverage needs, factor in your budget and find ways to save. Ask your insurance agent if there are any discounts on your coverage. Often, carriers offer discounts for things like paying your policy in full, staying auto accident-free or, if you’re in school, getting good grades. You also can save money by “bundling” multiple policies, such as purchasing a home and auto policy from the same carrier.
Insurance Buying Tips #3: Fill in the gaps
An average policy will cover the basics, but you may need to add extra coverage to meet your unique needs. For instance, you may have items like electronics or a nice piece of jewelry that would be financially difficult to replace, even with the assistance of your average renters or homeowners policy. You may want to add additional coverage for these items.

When it comes to car insurance, young drivers pay higher premiums than older drivers. This is a very annoying fact, especially when you are a young driver and you're just getting started in your chosen career, meaning your budget is tight. Most medical insurers take your financial situation into account, so why can't car insurance providers? And what exactly is the reasoning behind them charging younger drivers more? Well, there are two reasons:

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  • Inexperience. Insurance companies reason thatthe longer you have your licence, the more time you've spent on the road and the better your driving capabilities are likely to be. So naturally young drivers are considered to be a greater risk because they have less experience.
    • The odds are against you. According to statistics, South African drivers aged between 18 to 29 cause five times as many accidents as any other age group. What's even more worrying is that most of the accidents caused by young drivers are fatal and alcohol related. The statistics also show that car theft and vandalism are higher amongst young drivers than any other age group.

    Taking these statistics into account it becomes clear why insurance companies feel obligated to charge young drivers more. The risk of something happening is significantly higher and this risk factor is reflected in the price.

    So how can a young driver lower his or her car insurance premium? Is it even possible? The answer is yes and here's how:

    1. Get a smaller car. This is probably not something you want to hear (never mind consider) but the fact is that a 1.1 or 1.2 litre car will cost you a lot less per month than anything from a 1.6 upwards.

    Insurance Buying Tips #4: Purchase life insurance—you aren’t too young
    Life insurance is essential, no matter how young or old you are. And for millennials, buying now may be a smart move because it’s cheaper to buy a life insurance policy when you’re young and healthy. This kind of insurance can help your family cover unexpected costs in your absence, including student loan debt or a mortgage, in addition to end-of-life costs. And if you have kids, a life insurance policy can also support their education or childcare expenses. Additionally, every millennial should consider long-term disability coverage, which helps you stay afloat financially if an accident happens and you become disabled and unable to work.
    Insurance Buying Tips #5: Talk to an independent agent
    An independent insurance agent is an essential resource when purchasing insurance—especially if this is your first time. An independent agent works with multiple different carriers, which is different from captive agents who can only sell insurance from the carrier they work for. Working with an independent agent can help make sure that you are getting the best coverage, for the best price. You’ll also benefit from independent agents’ insurance knowledge; they know how to talk you through your options and actually explain what each policy includes. An independent agent will make sure all of your assets are covered, help you find discounts or other ways to save, and be a valuable resource as your life changes and your insurance needs change, too.
    Insurance Buying Tips #6: Only buy insurance to maintain your existing standard of living
    You don’t need insurance for events that won’t severely strain your finances. Start with your basic needs (home, auto, business), then work your way to include other needs (cyber, liability). You can always obtain coverage later for something if you change your mind. You can minimize your risk and maximize your savings by buying insurance that won’t cause you to break the bank.

    2. Don't pimp your ride. Modifications like alloy wheels, audio systems or souped-up engines make your car more attractive to thieves, meaning the risk of it being stolen is higher, and the higher the risk the higher the premium.

    3. Increase your car's security. Have an immobiliser or an alarm installed. Also ensure that you have safe and secure parking for your car, preferably a garage that can be locked. Tell your insurance company about these changes and adjustments and they'll adjust your premium.

    4. Increase your excess. The higher your excess the lower your monthly premium. Just be aware that if your car needs to be fixed after an accident the excess needs to be paid first before the insurance company pays the rest. If you decide to go this route make sure you always have enough money saved up to pay the excess.

    5. Become a better driver. Take defensive driving courses and send your insurance provider copies of the certificates that show that you've successfully completed them.

    These five steps will ensure that your insurance premiums get lowered, but even if you only implement one or two of them, the difference will be significant. And don't be cocky! Be a safe driver. Don't give your insurance company more reasons to label you 'high risk'.

    Sources

    1. Ntando Makhubu (2013-04-22), “Youth are greatest menace on SA roads”, iol.co.za/motoring/industry-news/youth-are-greatest-menace-on-sa-roads-1.1504068#.U6AsHvmSxqU

    2. Gocompare.com, “Young drivers' car insurance guide”, gocompare.com/car-insurance/young-drivers-car-insurance/guide/

    Insurance Buying Tips #7: Ask your insurance provider what the policy doesn’t cover
    Every insurance policy has perils that are not covered by your policy. These perils are referred to as “exclusions”, and every policy has them. Ask your insurance provider to explain the exclusions in your policy to avoid discovering what they are once you incur damages or a loss.
    Insurance Buying Tips #8: Consider bundling several policies with one insurance carrier
    here may be value in bundling several policies with one insurance carrier. If you’re looking to insure multiple vehicles or obtain multiple types of business coverage (e.g., liability, property, cyber), then you may want to consider obtaining coverages under one insurance provider who carries multiple products, and who may be able to offer you multi-policy discounts or loyalty programs.
    Insurance Buying Tips #9: Review your insurance needs on a yearly basis
    As your needs evolve, so will your insurance policy. Maybe you’ve acquired a new vehicle since obtaining auto insurance for your primary vehicle, or started operating your business out of your home, or experienced a cyber-attack during the year… Whatever the change(s), you’ll want to make sure you’re covered for any new risk exposures. Talk to your insurance provider to stay on top of your insurance needs.
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