Tips for first-time car insurance

Most first-time drivers are teenagers covered by their parents' car insurance policy. As a teenager, you probably weren't involved in selecting auto insurance coverages and limits. Now that it's time to purchase your own policy, be sure your coverages, limits, and discounts cater to your situation. Here is a simple car insurance checklist for first-time buyers:

  1. Does your liability coverage match your net worth?

    While your parents may have high liability limits, you might not need limits as high as theirs. Choosing your state's minimum liability limits can help you save money, but you should only do so if the minimum limits are higher than your net worth. You can figure out your net worth by adding up your bank, investment, and retirement accounts, plus equity in your home and any other property, and then subtracting any debts you have.

  2. Is your vehicle properly protected?

    If your car is financed or leased, your lender will usually require you to carry comprehensive and collision coverage. But even if your car is paid in full, comprehensive and collision can be worth carrying as they can pay to repair or replace your ride if it's damaged or stolen. If your car is paid off and worth less than a few thousand dollars, you can lower the cost of your insurance policy by eliminating comprehensive and collision. If you choose to drop physical damage coverages, make sure you can pay out of pocket for another car if something happens to your vehicle.

  3. Are your deductibles affordable to you?

    Your parents may have chosen high deductibles on their policy. While this is a good strategy to lower your policy's rate, make sure you can cover your deductible amount in case you have to file a claim.

  4. Are you maximizing all available discounts?

    While insurance for drivers over 25 generally costs less than what younger drivers will pay, you should still choose an insurance company with an array of discounts to help you save. If you’re a renter, you can bundle your auto policy with renters insurance and earn a multi-policy discount with Progressive in most states. If you have a roommate, some insurers allow you to share an auto insurance policy if you drive separate vehicles — and you'll earn a multi-car discount. You may even be rewarded for the time you spent on your parents' policy with a continuous insurance discount.

    Check out more ways to lower your price for car insurance.

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