If you have a college student heading off to school this fall, the last thing you need to worry about is making sure he or she has cheap car insurance. With all the expenses involved in sending a child to school it’s helpful to pay as little as possible. Thankfully, cheap car insurance is available.
The law in most states is very friendly to college students as it relates to car insurance. We’ll get to that in just a minute. For now it’s important to know that you and your students don’t have to simply settle for whatever your current car insurance company offers you. You can look around and compare offers from competing companies.
Keeping a Student on Your Policy
The best way to ensure the most affordable price for your student is to keep him or her on your policy for as long as possible. In most states, that means age 26. As long as your child is attending college or university during those years, he or she can be included on your policy under the student classification. Check with your insurance company to verify any upward age limits.
Also, consider there might be some residency restrictions. For example, if your child is attending school out of state he or she can remain on your policy as long as they do not continue to reside in that state while school is not in session. If they stay away from home year-round, they may be considered an independent adult requiring their own car insurance policy.
The Car Your Student Drives
The next thing to consider is the car your student drives. Car insurance companies base premiums, in part, on the make, model, and age of a car. They do so for two reasons:
- liability insurance – larger, heavier vehicles are more likely to do more damage in an accident
- comprehension/collision insurance – newer and more expensive vehicles cost more to repair or replace
If you want the cheapest car insurance possible for your college student, encourage him or her to buy a car that is older, does not require a blank loan, and is classified as a compact or subcompact. This will allow you to get the cheapest liability and comprehensive/collision rates.
If your student will be living at home and driving one of your vehicles, make sure your insurance company assigns them to the oldest and least valuable car. That’s not to say they cannot drive your new vehicle from time to time; rather, it is to say the older vehicle will be their primary mode of transportation.
Student Driver Discounts
An important part of cheap car insurance for college students are the discounts some insurance companies offer. One of the more popular of those discounts is one given for good grades. As the thinking goes, a student with good grades is less likely to be careless, will have less time for leisure activities, and will take their responsibilities behind the wheel more seriously.
If your student is eligible for the good grades discount, he or she will have to provide the insurance company with the proper records to demonstrate those grades. Those records can be obtained from the college or university they are attending.
Shop, Compare, Buy
When you are ready to start looking for a policy, we recommend you shop online. Using a website like ours is the quickest and easiest way to get multiple quotes. And with quotes in hand all that’s left to do is compare and buy. It’s just that simple.
For the cheapest insurance possible, remember to compare quotes at least once per year. Otherwise, you’ll never know if you are paying too much.
If you were to compare car insurance rates by state you’d find that similar drivers with similar vehicles pay different rates depending on the state where they live. This is one of the curious aspects of car insurance a lot of people don’t understand. That misunderstanding comes by way of the fact that so many drivers think of cheap car insurance as a static product similar to a computer or television set. By “static” we mean a product that comes off a production line and is identical among all pieces of the same line.
The thing about car insurance is that it’s not static. For example, two different drivers may both have collision and comprehensive coverage on their vehicles but pay different rates for it. This makes complete sense when you consider one driver owns a BMW while the other driver owns a Kia. The values of their respective vehicles heavily influence the cost of their collision and comprehensive insurance.
In terms of the various states, here are a couple of things that influence auto insurance quotes:
State Laws – Far and away the biggest influence on cheap auto insurance at the state level comes by way of insurance regulations. A state where insurance is heavily regulated to the point that it chokes out competition will see higher car insurance costs. Other regulatory conditions that contribute to annual premiums include minimum liability requirements, taxes and fees, how the state’s high risk pools are funded, and how traffic violations are dealt with.
Population Density – Population density is another big factor at the state level. States with high population densities such as California and Massachusetts have the potential for higher insurance rates because there are more drivers on the road to cause accidents.
Accident Rates – The different states experience different accident rates depending on a whole host of factors. Weather, average driver age, road conditions, and economic conditions all play a part in influencing accident rates. Like population density, a state with a higher rate of accidents per capita will see that reflected in car insurance quotes.
Job Outlook – Believe it or not insurance statistics show a greater propensity for insurance claims among specific occupations. Insurance companies can look at those statistics from one state to the next and partially determine rates of accident claims based on occupation and income levels.
Suffice it to say there are a number of things at the state level that contribute to how much you and I pay for insurance. When you’re searching for car insurance quotes, it’s best not to about worry what your cousin and his neighbor are paying two states away. Your state is what it is and that’s not likely to change. By the same token, if you’re thinking of moving to another state and you’re not restricted in your choices, taking into account the likelihood you’ll be able to find cheap car insurance may be a factor in your decision.
Every year, the National Insurance Crime Bureau (NICB) compiles a list of the most frequently stolen cars in the United States. Year after year, the list is surprising to those who are not familiar with car theft. I will count down the top 10 in just a moment, but I like to point out a couple of interesting observations before I start.
First, late-model cars do not tend to be stolen as frequently as older cars, and this for a variety of reasons. They are easy to come by, replacement parts are readily available, and anti-theft devices (including keypad access) take longer to breach.
Second, older cars may be stolen even if they look like moving wrecks. To understand why this is the case, just read through my top 10 list. You will understand by the time you are done. With that said, here is the list of the top 10 stolen cars in the USA:
10. Nissan Sentra (1994) – The 1994 Sentra was the last of the third-generation of this line. It was also the first to feature Nissan’s now famous SR20DE engine that made it the fastest subcompact of its day. The car sold very well in Mexico, the Philippines, and other markets.
9. Ford Explorer (2002) – The Ford Explorer was completely redesigned for the 2002 model year. As the first in the third-generation of Explorers, the biggest difference with the 2002 was the introduction of independent suspension.
8. Dodge Ram Pickup (2004) – As part of the third-generation of Dodge Ram pickups, the 2004 models sold very well in the retail market. The third-generation face-lift made the truck look more rugged and durable, so thieves who steal these vehicles are looking for grills, headlights, and rims.
7. Chevy Silverado Pickup (1999) – Silverado was the name given to Chevy’s full-size pickups bearing a specific trim package from 1975 through 1999. Without that trim package, they were simply designated with letters and numbers. In either case, they have been among the best-selling pickup trucks of all time.
6. Acura Integra (1994) – Believe it or not, the Acura Integra is actually just a Honda with a different name. The company made the car from 1985 through 2006 in Japan. It is not uncommon to still see these cars on the road today.
5. Dodge Caravan (2000) – In 1994 Chrysler introduced a brand-new vehicle to the market: the minivan. The 2000 Caravan was the last in the third series and sported a brand-new look and a beefed-up, six-cylinder EGH engine.
4. Toyota Camry (1991) – The Camry is probably Toyota’s most defining vehicle to date. It put the company on the map when it was first introduced in 1982. The 1991 model was the first in the second series and introduced a wider body and sleeker look.
3. Ford Pickup – Full-Size (2006) – Ford has always been a good competitor when it comes to full-size pickups. Their F-series is constantly doing battle with Chevy for market dominance.
2. Honda Civic (1998) – The Civic is easily Honda’s best-selling car in North America. It been continually produced since 1972 and is now in its ninth generation. The 1998 model was part of the sixth generation and was primarily focused on sleeker looks and an upgraded suspension.
1. Honda Accord (1994) – Honda began production of the accord in 1976. Since its introduction, it has been one of the best-selling vehicles in North America. The car made history in 1982 as the first Japanese product made on American soil.
So, have you figured out what most of these cars have in common? D you know why they continue to be among the most stolen cars in the United States?
The two things most of them have in common are their ages and the fact you still see so many of them on the road both in the U.S. and in Mexico. They are appealing to thieves because owners need replacement parts yet aftermarket parts are no longer manufactured in large quantities. When thieves steal these cars, they do not intend to sell them whole. They strip them down and sell the parts on the black market.
Even if the body of one of these cars looks a little rough, it would still have value to a thief as long as things like the taillights, wheels, and interior components were still in good condition. Those things are hard to find at auto parts stores and junk yards.
Image Citation: wikipedia.org
It’s probably safe to say that no one reading this article remembers a day when car insurance was not available. If you’re a senior, you may remember a time when it was not mandatory in your state, but the earliest forms of car insurance go back to the late 1800s. It has been a part of all of our lives to one extent or another.
The first car insurance policy on record was written in 1889 to cover the liability of a man named Truman Martin. Mr. Martin owned an early steam powered automobile which, while it was a great invention, was a source of worry in that it could damage property or injure people.
If you want to know the rationale behind mandatory car insurance, that’s it.
Car insurance is a necessity in order to protect us from the carelessness of other people who might cause injury or property damage. If insurance was not mandatory too many people would be at risk of financial devastation after an accident.
How Car Insurance Evolved
The first policies written in the 1800s were pretty much an experiment, given the fact that underwriters really had no idea how much damage a car could cause. Furthermore, so few people had automobiles that accidents between multiple drivers were unheard of. Those early liability policies were more focused on the possibility of damaging buildings, road signs, and pitching posts.
By 1925 there were enough cars in the road to significantly increase the likelihood of multi-vehicle accidents. That forced the insurance industry to reassess cover drivers and effectively deal with the question of personal injuries. That transition paved the way for what is today’s modern car insurance product.
A Policy for Everyone
Whether or not you agree with the compulsory insurance laws in your state, it can’t be denied that healthy competition among car insurance companies has resulted in a wide range of policies and options. As such, there is a policy out there for just about every driver and every need. That’s a far cry from the “one size fits all” policies of the 1920s.
You and I can shop for the cheapest car insurance possible, purchase a comprehensive policy that will cover everything under the sun, or settle on something in between. We can choose between liability limits, different deductibles, and whether or not we want to add items from a long menu of options. In other words, we have enough options to make car insurance accessible and affordable for everyone.
Next time you’re shopping for a new insurance policy remember the rationale behind it. That may not make things any more pleasant in terms of the shopping experience itself, but understanding why car insurance is necessary may take some of the edge off. And, though we sincerely hope it never happens, you’ll get a full appreciation of the rationale behind car insurance if there ever comes a time when you need to make a claim against someone else’s liability policy.
A driver in Washington State sits at the border crossing with Canada waiting to be interviewed by a customs officer. During that wait he might be thinking about meeting up with friends or relatives in Vancouver. He might be thinking about sites he plans to see while in Canada. He may be thinking any number of things; he probably won’t be thinking about is car insurance. But the California driver crossing the border into Mexico doesn’t have that luxury.
The United States and Canada have a reciprocal agreement whereby both recognize car insurance policies written by companies in the opposite country. There is no such agreement between our country and Mexico. So while you can travel in Canada without buying Canadian car insurance, you cannot do so in Mexico. If you plan to drive your car south of the border you must purchase an insurance policy written by a Mexican company and recognized by the Mexican government.
Short Trips versus Long Trips
The good news about driving in Mexico lies in the fact that you can get a pretty cheap car insurance policy to cover a short-term visit. The bad news is that Mexico has some very strange and strict laws concerning car insurance and accidents. Let’s start with distance first.
Mexican law creates a “buffer zone” in which Americans can operate their vehicles while still considered being in the country on a short-term basis. There are two types of zones known as the Border Zone and the Free Trade Zone. If you plan to venture outside one of these two zones Mexico requires you to file for recognition as a vehicle importer. And unfortunately, imported vehicles command a higher price for car insurance.
Accidents and Criminal Investigations
The other quirky thing about Mexican traffic law is the fact that all auto accidents, no matter how minor, are investigated as criminal matters until it can be determined otherwise. Practically speaking, this means an American driver would automatically be suspected of a crime if he was involved in an auto accident.
If the crime investigation reveals the driver did not have proper auto insurance that individual is quite likely to do some time in jail. In cases where a court forgoes jail time, he still could face severe fines, vehicle seizure, and a temporary or lifetime ban on re-entering Mexico.
Purchasing Cheap Mexican Car Insurance
Fortunately for Americans, purchasing cheap Mexican car insurance is fairly simple. There are lots of companies offering policies online you can purchase in just a matter of minutes. Should you prefer to get your policy through a human agent, there is no shortage of Mexican insurance companies located in border cities.
The most important thing to remember is to get your insurance documents written in English. Either that, or be fluent in Spanish. You don’t want to pay for a policy that provides you with little or no actual coverage. The only way to know that is to read it for yourself.
For a lot of people, car insurance is one of those things we purchase grudgingly because the law requires us to do so. If we had our way we wouldn’t bother sinking tens of thousands of dollars, over the course of a lifetime, into a product we may never use. But it’s better to purchase insurance than be caught without it.
These days’ state laws take driving without insurance very seriously. And with good reason. As the cost of health care and consumer prices continue to rise, the potential financial loss represented by even a minor car crash are higher than they’ve ever been. The damage caused by a serious accident could push someone to the brink of financial ruin.
Whether we agree with insurance laws or not, make no mistake that every state requires drivers to make good on any damage they cause or injuries they inflict through car accidents. In legal terms this is called “financial responsibility.” With the exception of Idaho, every state requires drivers to prove financial responsibility before they are legally allowed to register and drive a car.
If you’re pulled over by a police officer or involved in an accident, having no insurance coverage will usually result in immediate consequences. At the very least you’ll be given a citation and forced to pay a small fine. But most states are not that easy. Most will impose severe penalties such as:
- severe fines in the hundreds of dollars
- suspension of a driver’s license and registration
- vehicle impound
- potential jail time
Each state is obviously different in the penalties they impose and the means by which they do so. But make no mistake about the fact that driving without insurance is not taken lightly. If you’re caught, you will pay.
In addition to the immediate consequences of having no insurance, there are some future, long term consequences as well. First off is the fact that an insurance violation will most certainly result in higher rates on future policies you purchase within the next couple of years.
Second, insurance companies do have the right to reject you for a policy if you have a no insurance citation on your record. You may try to get a policy through half a dozen companies only to be rejected by all of them. In such a case you would be left to purchase your car insurance from a company specializing in high risk; this means higher rates.
Third, repeat offenses can land you in jail in many states. Once that’s on your record it will forever affect lots of things including job prospects, housing options, and so on.
While it’s true many Americans have a hard time finding cheap car insurance they can afford, being caught without it is even more unaffordable. Think long and hard before getting behind the wheel of an uninsured vehicle. It’s not worth the potential fines, suspensions, and jail time just to get where you’re going.
You may already know that car insurance companies use a long list of factors to determine how much each of us will pay for car insurance. Things they take into consideration include:
- age and sex of driver
- driver history
- make and model of the car we drive
- geographic location
What you may not know is that credit ratings are also factored in. This suggests that a poor credit rating could possibly have a negative effect on insurance rates. Indeed, that is exactly the case.
The Definition of “Credit Rating”
Before we talk about how your credit rating affects your car insurance rates it’s necessary to explain the credit rating process. In the United States a consumer credit rating is expressed in a number that can range anywhere from 300 to 800, depending on the baseline used.
That number is the result of a mathematical equation created by two engineers in the 1950s. They created the formula to see if they could predict if, and when, a consumer would default on his credit. Surprisingly, their formula turned out to be an incredibly accurate.
When this mathematical formula is applied to an individual, the resulting number is known as the “credit score.” That score tells a bank, store, or insurance company how likely you are to miss payments or fall permanently behind. Most notably, it predicts the likelihood that you will fall behind within the first six months of establishing credit.
Credit Rating and Car Insurance
Your credit score is important to an insurance company because they need to be confident you will make all of your payments on time and without question. They are depending on your payments as a means of helping support their cash position while also giving them some money to invest. If you have a low credit score your insurance company has reason to worry that you will miss a payment or two.
If you have a bad credit score (below 500 is considered bad) you’re likely to see higher car insurance rates. You can bring those rates down in the future by improving your credit score. As an added bonus, an improved credit score means your financial situation is healthier all the way around.
By and large, state laws make it perfectly legal for insurance companies to consider your credit rating when determining your car insurance rates. But most of them make it illegal for an insurance company to refuse to cover your based only on your credit score. In other words, it can be a factor, but your credit score cannot be the sole determiner of your rates or whether or not you get a policy.
In addition, if you are rejected by an insurance company, state laws require that company to inform you in writing; they are required to include the reasons for rejecting you in their statement. If you see your credit score as being a factor, you know you need to work on improving that.
The information age has brought about an interesting quandary in the area of selling used vehicles previously damaged in an accident. Things like Carfax are now making it possible to track a vehicle’s repair history, making it easier for potential new owners to know what’s under the hood and body before they make a purchase. While this may be good from the standpoint of consumer protection, it’s bad in terms of the resale value of used vehicles.
To understand this principle, just ask yourself a question. If you we’re looking at a 2006 minivan that had sustained front-end damage in a crash, would you be more likely to forgo that vehicle in favor of another one of similar make and model for a similar price? If you’re like most of us you certainly would. The perception of diminished value goes hand-in-hand with cars that have been damaged and accidents — even when the vehicle is repaired to serviceable condition.
In the insurance world the principle of diminished value is a sticky one. Insurance companies obviously don’t want to pay out more in claims than they need to; at the same time they know offering the cheapest car insurance available is not necessarily going to be enough to keep customers happy after accident claims. There needs to be a balancing of profit and customer satisfaction. Diminished value makes achieving that balance a bit more difficult.
Pursuing a Diminished Value Claim
Unless you’re car insurance policy specifically prohibits diminished value claims you do have the right to pursue one with your insurance company. That doesn’t mean they have to honor your claim, but at least you have a shot at it. Depending on how large the difference is between the value of your repaired car and the Blue Book value of your make and model in general, it might even be worth it to hire an attorney. But the difference would have to be at least several thousand dollars to make it worth your while.
To give an example, let’s say an accident caused $5,000 damage to your three-year-old Dodge Durango. Because the Blue Book value of the car is still well over $10,000 your insurance company chooses to repair your vehicle. But then suppose the service writer at your repair garage informs you the truck will lose about $3,000 worth of value simply because it was involved in a crash. If your car insurance company only pays the $5,000 repair bill you have essentially taken a loss because the value of your Durango is now less.
This is a case where you might consider a diminished value claim to recover that $3,000. Whether or not you’re successful depends on your circumstances; circumstances that include the type of policy you have, the insurance company you purchased it from, and how well you can make your case. Rest assured that if you purchased a cheap car insurance policy from a discount broker you’re going to have more trouble with a diminished value claim than you would with a more reputable company.
History on Your Side
No matter how little you paid for affordable car insurance, you do have history on your side when it comes to diminished value claims. Owners of classic cars have been successfully filing such claims for decades. If you study up on the subject, read some articles from industry lawyers, and maybe pick the brains of others who have filed such claims, you can be successful in recovering diminished value in some cases. You can also file a complaint with your state insurance department or seek the services of a certified mediator.
Recently a New Jersey father took his young son down to a local river to watch and feed the birds. As he slowed the vehicle in preparation to park it, the boy bolted from the car and headed for the river’s edge. The understandably panicked father also jumped out of the vehicle to prevent his son from falling down the embankment. While he saved his son, his vehicle went off the road, rolled down the embankment, and ended up in the water.
The story has a happy ending as far as father and son are concerned, but the vehicle is another story. Although it started right up as soon as police fished it from the water, the owner told reporters he assumed his car insurance company would total it.
His comment raises an interesting question. If the engine runs normally and there appears to be no major structural damage, why would an insurance company total it? To understand that, we must look at some other factors.
What It Means to Be “Totaled”
Before talking about the vehicle and the damage it might have sustained, it’s important to first understand what it means when a car is “totaled.” When a car insurance company uses that designation they are essentially saying the car is a total loss from a financial standpoint. In other words, regardless of whether the owner purchased the cheapest car insurance possible or a top-of-the-line policy, the insurance company has decided they will spend less money to replace it then to repair it.
In most states when a car insurance company totals a vehicle they take ownership of that vehicle once the owner accepts a claim check and cashes it. If the insurance carrier believes it can make a little money by selling the vehicle at a salvage auction they will make arrangements to come and tow it from the customer’s property. If they decide they can’t make any money they will sometimes tell the customer to dispose of it as they see fit. Either way, the car insurance company has the final say.
What May Have Happened
In the case of a New Jersey man, we don’t know exactly sort of damage was incurred by his vehicle. But there are couple of things we can speculate on. First of all, regardless of whether or not he had cheap car insurance we can say that he did have collision and comprehensive coverage; otherwise, the idea of the insurance company totaling the vehicle would be irrelevant. Knowing that, we can look at a couple of things that might have driven the repair costs too high.
If the front end of the vehicle suffered body damage when it hit the river bed, or perhaps dents and dings on its way down the hill, they could result in repair costs of up to several thousand dollars. The insurer must also consider having the engine taken apart and checked for water damage despite the fact the vehicle started right up.
Third, there’s the issue of drying out the vehicle’s interior; this might be the most costly part of the procedure. In order to prevent mold from growing the car’s interior would have to be dismantled, disinfected, and properly dried. That job would probably be worth at least several thousand dollars if the potential water damage was serious.
If you add up the costs of all three types of repair work it’s conceivable a claim could cost the car insurance company $8K-$10K. If the vehicle is more than three or four years old it could be replaced for less money.
Perhaps you’ve heard people say that one way to reduce your car insurance premiums is to increase your deductibles. But do you know what deductibles are? If not, we’ll explain them here. Needless to say, deductibles are part of the standard auto insurance policy everyone should be familiar with. They play an important role in how much we pay for our policies as well as how much we might potentially have to pay after an accident.
In the simplest terms possible, a deductible is the amount of money the customer is required to contribute in order to pay for repairs to a damaged vehicle. Deductibles apply in the case of collision and comprehensive insurance. So if you have a $500 deductible on your auto policy and you file a $5,000 claim after an accident, your insurance company will only pay $4,500. You will be responsible for the other $500.
It’s important to note that deductibles work on a “first pay” system. In other words, the customer pays the first $500 (or whatever the deductible is) and the insurance company picks up the rest. In some cases a repair shop may require customers to pay their portion before a vehicle will be released; others allow some time for the customer to pay his bill.
Why Deductibles Are Good
Deductibles can be looked at as a good thing for a couple of reasons. The first is the fact that they encourage consumers to shop around for repair estimates before choosing a garage; much the same way they shopped around for car insurance quotes before purchasing a policy.
They aren’t shopping around for the best price, mind you; they’re shopping around for the best quality. As long as it’s going to cost them $500 out of pocket they want a garage that will do the repair the right way. Even though it might cost more the insurance company a little bit more, there’s less of a risk that the consumer will come back with another claim because the first repair wasn’t done correctly.
Deductibles are also good in the sense that they encourage drivers to be more careful behind the wheel. With a significant deductible hanging over their heads they are more likely to drive safely and avoid accidents. That’s good for the individual driver, his car insurance company, and for everyone else on the road.
Why Deductibles Are Bad
Deductibles can be looked at as a bad thing from the perspective of insurance fraud. Unfortunately, garage owners and operators have figured out they can make customers happy by inflating repair estimates to cover their deductibles. In cases where an insurance company makes payments to the customer rather than the repair shop, this type of fraud is very easy to perpetrate. In cases where the insurance company pays the repair shop, it requires a little bit more cooperation between the shop and the customer.
It must be said that the vast majority of repair shops are going to be honest when it comes to estimates and deductibles. But the consumer needs to be aware of the possibility of fraud and make sure he’s not a participant or contributor. Insurance fraud accounts for millions of dollars in car insurance company payouts every year. Drivers who participate are only raising the rates for everyone.
Now that you know a little bit about deductibles you are better prepared to compare car insurance quotes. You can get lower rates if you’re willing to accept higher deductibles in exchange. On the other hand, you might be willing to pay a little more to avoid them.