How to Get Started with Auto Insurance

Getting a car is a huge step up in life. Driving itself requires a lot of learning, effort, and time. Unfortunately, getting that license is not where your car journey ends – not by a long shot. 

There are a million and one other things that you need to sort out before you can get yourself on the road, and most of them are going to cost you money. It’s the unfortunate way of the world; you’re going to be charged for absolutely everything you possibly can be. 

With cars, this is so profound that often the extra charges involved total up to more than the value of the vehicle itself. There are things like road tax, your annual inspection, and insurance, which happens to be the topic of this article. 

Car insurance exists in a similar vein to life insurance or home insurance, in that it serves the same protectionary purpose, except this time with regards to cars. However, where the most significant difference lies is in the fact that, while life and home insurance are optional, auto insurance is not. 

You must have auto insurance to be able to drive on the road legally. This is because, when you’re driving, it’s not just your property you stand to damage. If you crash into somebody else’s car or their garden, and anything in between, you need to have the money to be able to cover those damages. 

That is, in essence, the purpose of car insurance. It doesn’t exist to cover your items in the case of damage. Although it can, its primary purpose is to protect others from yourself. 

If only it were that simple, though. No, there are different types and conditions and quotes and all sorts of things to talk about, which is precisely what we’re about to do. 

Starting Out

When you’re first starting your road faring life, chances are you aren’t actually going to have your own car. That’s no sweat! Very few people start out driving their own vehicle straight away. Instead, you can become a named driver on your parent’s car. 

A named driver is a type of insurance that allows you to designate specific people who are covered under your insurance when they drive your car. You see, when you insure your vehicle, you’re not actually insuring the car. You’re insuring you driving the car. That means that, if someone else drives the car and gets into an accident, the insurance doesn’t cover it. 

Not only does it cost you more money, but it’s also illegal, which is where named drivers come in. Becoming a named driver is the obvious first step. It’s the softest approach you can take to becoming road insured, and it’s the cheapest, for both you and your parent. 

Even if you plan on getting your own car sooner rather than later, you’re better off still getting insured under your parent’s insurance plan. There is one big reason for that, and that is price. 

Insurance is super expensive, but it is also a variable, meaning that it fluctuates up and down. The primary reason for this all comes down to risk factor. In other words, the more likely you are to get into an accident, the more likely the insurance company is going to have to pay out, so the more it’s going to charge you on your insurance. 

For a first-time driver, this amount is going to be staggeringly high. However, all hope is not lost. There are a few things that you can do to bring down the amount. This is why we advocate for becoming a named driver because one of those factors that affect your insurance cost is how long you’ve been insured without a claim. 

There are other factors. Age, for instance, is one. Unfortunately, you can’t really influence this one; it just changes with time. It seems unfair to a lot of people, and it is, but the statistics don’t lie, and the statistics say that young drivers are significantly more likely to get into an accident than an older driver. There is also the factor of experience, too. 

What kind of license you have also makes a difference. If you have a learner’s permit, then your premium is going to be higher than if you were a novice with a license. So try and get that license as soon as you possibly can. 

The number of driving lessons you’ve completed also comes into play. If you’re only halfway through your lessons, then the chances of you crashing are higher than if you’ve completed them all, naturally, so again, the price is going to be higher. 

One other thing that is a factor is any underlying health issues. Things like poor eyesight or epilepsy may deem you a higher risk than other drivers and push your insurance premium up. If you’re unsure if your health conditions qualify under this, you can always ask your insurance company. 

Regardless of circumstances, it’s unlikely that you’re ever going to be refused insurance. If you are, you are able to request an explanation in writing formally. 

Types of Auto Insurance

Moving on from becoming a named driver, there are a number of other types of auto insurance, all ranging in coverage, price, and so on. The type of insurance you get is going to depend on your circumstance entirely, but starting out, you’re better off going with the cheapest option. 

It’s not just the insurance company that needs to consider your risk factor; you need to as well. If you think you’re more likely to get into an accident and be honest with yourself, then you’re not going to want to fork out money for expensive and fancy insurance. 

On top of that, what kind of car you’re driving plays a massive part. If you’re cruising around in some old banger worth $300 dollars, then you’re not going to want to get fully comprehensive car insurance that costs you more than the price of the car in the first place.

The kind of area you live in is also going to play a part. If you live in a neighborhood with a high crime rate, then you might want to consider going for an insurance plan that covers things like vandalism and theft. Again though, weigh the cost of the insurance against the value of your car. 

So when you’re deciding what type of insurance to get, keep all of this in mind and go with the option that makes the most sense. What kind of options do you have, though?

Third-Party Coverage

This is the most common type of car insurance and is also the cheapest aside from named drivers. Third-party cover does what it says it does: covers any third parties involved in your accidents. In simpler terms, if you crash into someone, their car is covered under your insurance. This extends to any injuries inflicted on passengers or any other type of property damage. This issue with this is that the insurance does not cover you. So any damage you deal to your car needs to come out of your pocket. That is unless you’re in an accident that is partly the fault of someone else, in which case you can claim on their insurance. This is why it is cheaper than the other options; it offers you the lowest amount of personal protection. 

Third-Party Fire and Theft

Third-party fire and theft is an addition to third party cover, rather than being its own entire branch of insurance. The function of this add on is relatively self-explanatory. It covers the cost of repair or replacement in the event that your car is damaged by fire or is stolen. 

Fully Comprehensive Auto Insurance

This is the ultimate coverage for car insurance and the type that people want to have. However, it is the most expensive type of car insurance, but it’s plain to see why. As the name implies, fully comprehensive auto insurance covers everything, meaning both damages to a third party and yourself. So it is the option that offers the most personal protection. 

Additional Add Ons

There are a few add ons that you can apply to your insurance at extra cost or that may be included with fully comprehensive. The price of these and what is offered changes depending on the insurance company, as does whether or not it is covered with fully comprehensive, so ask them if you’re not sure. 

There is the no claim bonus protection. To explain this, we need to tell what a no claim bonus is. When you cash in on your auto insurance, it is called claiming, which means that you’re claiming money from the insurance company. Needless to say, the insurer doesn’t like this, as it costs them money, so it drives up your premium. However, if you don’t claim for a period of time, the cost of your insurance actually goes down. This is called your no claims bonus. This is why you’re better off not claiming for little things and instead paying for damages out of pocket. It may actually end up being cheaper in the long run. 

With that out of the way, the no claim bonus protection protects your no claim bonus against one claim. So you can claim on your insurance once, and the bonus is not going to be affected.

Then there is the personal accident insurance. This is an addon that you can get for both yourself and named drivers. This insurance covers you in the event that you sustain a severe injury as a result of an accident and are unable to work. 

You can also add on insurance that protects your personal belongings that are in the car. This is a type of theft insurance and covers the cost of the stolen goods up to a certain amount, which you should agree on with the insurance broker prior to signing the dotted line. 

You can add on roadside assistance. This covers the cost of you needing to call a roadside mechanic in the event that your car breaks down. 

There are a few other services that are not strictly typical insurance add ons that you can get. One covers you if you decide to take your car overseas. One allows you to claim a courtesy car in the event that yours has to be repaired. The last is the coverage of legal costs in the event that you get brought to court. 

Buying Auto Insurance

That covers all of the information that you need to be privy to before giving the insurance companies a call, but now what? Well, you need to figure out just what type of insurance you want to get. 

If even after reading all of that, you still aren’t sure, there are a couple of exercises that you can do to help you decide, and one you have to do regardless. 

First things first, let’s start with the mandatory exercise, and that is budgeting. You’re not going to get very far if you don’t know how much money you can afford to spend, or even worse, if you end up paying more than you can afford. 

Write down all of your income, where it comes from, how much it is, and when it comes in. Then do the same for your expenses. See how much you have leftover, and decide how much of that you can part with for your insurance. Then keep that number in mind moving forward.

After that, you need to think about what kind of insurance you should actually be going for. Again, your budget determines everything here, but here are some things to think about:

Personal injury should be taken with the utmost seriousness. The health of you, your family, and your friends are significantly more important than other factors involved in auto insurance. If you get into an accident, one of the first questions you’re going to be asked in hospital is about your health insurance. If you don’t have health insurance, or don’t have excellent health insurance, seriously consider adding on personal injury protection to your insurance. 

Consider how much you drive and how far. If you travel miles for work and often have to take back roads and unusual routes, consider the possibility of getting stranded. A towing company is going to charge you extra the further you have to go, so consider getting roadside assistance protection if you have to travel far regularly. 

Also, think about the worst-case scenario for your area. If you’re in a rough neighborhood, consider theft protectio. If you live in an area that is, say, prone to flooding, give more serious thought to fully comprehensive insurance. 

Once again, and this cannot be stressed enough, weigh up all of this coverage against the value of your vehicle. Only get the good stuff if the car is worth protecting. 

Once you decide what type of insurance you want, as well as what add on packages to get, it’s time to choose an insurer. 

Most mainstream auto insurers are trustworthy and worthy of at least a phone call and a conversation, but there are a few things to keep an eye out for. Your insurance company should be reasonable when compared to the broader market. If a representative is trying to charge you extortionate rates compared to the market average for the insurance you’re looking for, chances are that insurance company is not worth your patronage. 

You also want to make sure that the insurer is not going to be challenging to work with. This is why it is advocated that you go with one of the major insurance providers, rather than small independent companies, as those can try to swindle you out of your coverage by claiming things aren’t covered on your policy or not covering damage that is received out of state. 

After you find out how much you can spend, what insurance you want, and what insurer you want to work with, it’s finally time to give them a call. This can be quite a daunting part of the auto insurance process, but don’t panic, and don’t worry. You’re going into a negotiation, and so long as you have prepared yourself well, you’re going to be just fine. 

Regardless of whether or not you do this in person or over the phone (in person is better), there are some staple rules to follow. The first is not to overdo it. What we mean by that is not to be suckered into any deals or extras that you get offered. The insurance agent you work with is going to try and sell you as much as possible. They may tell you about how valuable something is and try to throw figures and statistics at you. Don’t be fooled by this; not only does the insurance company want more money, but the agent may also be making a commission from it, so stick to your guns regarding what coverage you want. 

Next is to represent yourself well. You may be young, but you need to act professional and like you know what you’re talking about. This is yet another reason why preparation is so essential for this. You need to make it clear that you are not some easy mark for the insurance representative to make some money off of and that you deserve the respect that should be afforded to someone who has put in the work and preparation that you have. 

After that, it’s all about coming to an agreement. Let the agent know what kind of coverage you’re looking for and how much you’re willing to spend. Most insurers have a minimum amount they can offer insurance from, which is the “starting at” price you may see on advertisements, meaning there is a little bit of wiggle room. So talk through the process with the agent until you can come to an agreement. 

Choosing the Best Insurance for You

Getting auto insurance is a process that can suck the life and fun out of owning your first car. If you’ve gone through the effort of getting a license, getting a car, and learning the skills needed to drive it, then you really just want to get on the road. 

Unfortunately, bureaucracy gets in the way. In all seriousness, though, it is essential that you get, at the very least, third party coverage. Not even from a legality standpoint, but it’s just the decent human being thing to do. 

Regardless of how great of a driver, you may think you are, you are only starting out, meaning you are more likely to make a mistake. It’s just the way it works, no matter how diligent you are. So the right thing to do is to make sure that others aren’t going to be put out by those mistakes.

What’s more, with just a little bit of effort, the whole process can go a lot more painlessly. Even just reading through this article should be enough education to get you started with getting your insurance coverage. You may be tempted just to go ahead and get whatever an insurer is offering, but that approach is going to cost you extra money that could be better spent elsewhere. 

So when you’re applying for your auto insurance, be smart. We’ve mentioned it a few times, but preparation is vital. Know what you want, how you want it, and how much you want it for, and the whole process is going to be much smoother.

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