According to autoinsurance.org, college graduates pay an average of $1955 per year or $163 per month for auto insurance. However, insurance providers might offer discounts depending on the type of vehicle you own and your age and driving record.
After graduating from college, more research is probably the last thing you want to do. Nonetheless, it’s important to understand how car insurance premiums are calculated so you can find a policy that suits your budget and needs. With this information, you can research the best car insurance for college graduates.
What Are the Different Types of Auto Insurance Coverage?
When discussing auto insurance, it’s necessary to understand the different types of car insurance and their abbreviations. The most relevant terms, according to Car Insurance Comparison, are:
- Bodily injury (BI): Bodily injury insurance covers the medical expenses of other parties who are injured in an accident that’s your fault.
- Property damage liability (PD): This coverage pays for the property damage other drivers sustain in an accident that’s your fault.
- Personal injury protection (PIP): Personal injury protection enables you to claim compensation for your medical bills, lost wages, and other damages after an accident.
- Uninsured motorist (UM): This type of insurance covers the cost of repairing your vehicle when you’re involved in an accident where the at-fault party is a driver without car insurance.
- Underinsured motorist (UIM): Underinsured motorist coverage reimburses you for damage to your vehicle in an accident that occurred due to the negligence of a driver who doesn’t meet the state’s minimum insurance requirements.
You must have at least the minimum auto insurance coverage required in your state. However, if you own a newer vehicle or you can’t afford to replace your current car in the event of a total loss, consider purchasing a policy with more coverage.
Comprehensive and collision insurance are two of the common additional insurance policies drivers choose to buy. However, these two types of coverage have deductibles. If you’re involved in an accident or a hail storm damages your vehicle, the deductible is the amount you need to pay out of your own pocket before your coverage takes effect. If your financial situation allows, it might be a good idea to opt for a higher deductible, which results in a lower monthly premium.
What Are the Factors Affecting the Cost of Auto Insurance for College Graduates?
From how frequently you drive your vehicle to where you park your car, a wide range of factors can affect your auto insurance premium. For most drivers, the average annual cost of auto insurance is about $850. College graduates typically pay higher premiums partly because of their age group. In the United States, drivers below the age of 25 pay significantly higher auto insurance rates than their older counterparts.
Being a young person will inevitably raise the cost of your car insurance. To insurers, age correlates with driving experience. Drivers who are more experienced are less likely to get involved in an accident or file a compensation claim. To reduce the financial risk you pose, insurance companies will offer you higher premiums.
Other factors that can affect your car insurance costs as a college graduate include:
- Driving record: As a college graduate, it’s essential that you try to maintain a good driving record so you can prove you’re a responsible driver. The chances of a driver with a clean record getting into accidents are much lower than someone with a spotty record. Being a good driver also helps you qualify for auto insurance discounts.
- Place of residence: Where you live can also cause your car insurance rate to rise. In general, urban areas tend to have higher theft and vandalism rates than suburban and rural places. Therefore, residents in bigger cities usually pay higher insurance premiums.
- Credit score: Your credit score is another factor that can affect your auto insurance rate. Basically, the lower your credit rating, the higher risk you pose to an insurer, resulting in a higher premium. So, it’s worthwhile to try to get your credit score as high as possible, as it can substantially lower your monthly premiums. If you have to repay a student loan, making payments on time can help you improve your credit score.
What Are the Auto Insurance Discounts Available to College Students?
Depending on their situations, new college graduates might be eligible for a variety of auto insurance discounts. Insurify lists examples such as:
- Good student discount: If you plan to enroll in graduate school or you’re still a student in any training school, you might qualify for a good student discount if your insurer offers it.
- Good driver discount: Your insurance provider might give you a discount on your auto insurance if you have an excellent driving record.
- Military discount: Almost every insurance company provides discounts to both active and inactive military personnel. If you plan to join the military after graduating from college, ask your insurer about a military discount.
- Government employee discount: If you work for the local, state, or federal government, you might be able to get a government employee discount from your auto insurance company. Examples of government workers who qualify for this discount include police officers, firefighters, and teachers.
- Telematics program discount: Many auto insurance providers offer discounts to drivers who sign up for their telematics program. To join this program, you must allow your insurer to place a small device in your vehicle to monitor your driving habits. If you show you can drive safely, you’ll qualify for a discount.
- Bundling discount: While you’re looking for auto insurance, you might want to meet your other insurance needs at the same time. Usually, insurance providers are willing to lower your car insurance rate if you buy other types of insurance from them. As a new college graduate, you might choose to live with roommates to save money. If this is the case, consider bundling your car insurance with your renters insurance.
Sources:
https://www.autoinsurance.org/the-average-auto-insurance-premium-for-a-college-graduate/
https://www.carinsurancecomparison.com/auto-insurance-for-college-graduates/
https://insurify.com/blog/car-insurance/recent-college-grads/
https://www.caranddriver.com/car-insurance/a35292862/cheap-car-insurance-after-accident/
https://www.caranddriver.com/car-insurance/a35292706/how-long-do-you-have-to-insure-a-new-car/
https://www.caranddriver.com/car-insurance/a35590611/car-insurance-premium/
https://www.caranddriver.com/car-insurance/a35291950/car-insurance-explained/
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