AUTO INSURANCE

Giving lessons to your teenager recently? Then you understand why car insurance for a new driver is expensive. New drivers are some of the riskiest drivers on the road from the point of view of the car insurance company. And premiums for new drivers reflect that. There are some things you can do to keep premiums at a manageable level:

Add your child to your policy. In nearly every case, it is more economical to add a child to your existing policy than it is to take out a separate policy for your child. Contact your insurance company or agent directly and tell them you want to add a driver. Compare prices if you like, but chances are overwhelming that your best deal is going to come by including your whole family on one policy.

Keep the grades up. Insurance companies keep careful statistics, and over the years, they’ve found that the kids with the best grades also make the best drivers. The correlation is so strong that many companies will discount insurance premiums for kids with good grades. One technique: tell your youngster you will pay the rate for a good student. If grades slip, and premiums go up, it’s up to your child to earn the difference. Otherwise: No wheels.

Multi-line discounts. Many insurance companies will discount premiums if you hold multiple policies with the same company. If you already have your homeowner’s insurance, flood insurance or life insurance with a company, consider getting them to quote your auto insurance too.

Raise a good driver. An accident, or one or two moving violations early on, can cause premiums to skyrocket, or even prompt a cancellation altogether. Level with your kids about the importance of safe, responsible driving. And show them how much it will affect their pocketbook if their rates go up. A $150 per month rate increase equals a lot of hours flipping burgers!

It’s a tough situation. Many working families need to borrow money to finance a car just to get to work. If you can afford a new car, your warranty should see you through the term of your loan on most major repairs. But many used cars don’t come with warranties. If the car breaks down, you’re still on the hook.

The vast majority of car loans are just that: loans. The bank, credit union or consumer lender makes the loan in good faith, and you are expected to pay back the money on schedule – regardless of the condition of the vehicle. But if the vehicle is disabled while you still owe money on it, you may find yourself in a bind. Here are some things you can do to lessen your exposure.

Keep your insurance current. This is a big help, because if you lose the use of your car due to theft, or – if you carry collision insurance – accident, your insurance company will reimburse you to pay off your loan. This will theoretically help you qualify for a new loan for another car. The only thing you are out is your deductible – so make sure that whatever your deductible is, it’s an amount you can afford to lose. Many car loans require insurance as a condition of the loan, so check the fine print on your loan agreement. Note: Collision insurance is expensive. Many people choose to go without it, especially on older cars. That can lower your monthly premiums by quite a bit and make it that much easier to save money.

Don’t skimp on maintenance. Many breakdowns are preventable – or they can be delayed until after you’ve paid the car off. But don’t neglect routine maintenance to help keep it running well. Check the oil. Change your oil and filter as scheduled. Use the correct transmission fluid, brake fluid and coolant. Keep your tires balanced. Monitor their wear. Rotate them. Don’t neglect the spare. Pay special attention to your tires as you transition from one season to another. Bad tires cause accidents.

Buy “gap” coverage. Unless you come up with a large down payment, chances are you will, at some point, owe more on the loan than the car is worth. If you crash your car, your insurance company will reimburse you only up to the insured value of the car. But if you own “gap” coverage, your insurance company will reimburse you enough after an insurable event to pay off the loan.

Consider the warranty. Think about purchasing the warranty on your used car, if one is available. If a major engine, transmission or drive train issue is a risk you can’t afford to bear, then you might need to consider buying the warranty. Otherwise, you run the risk of owing money on a car you can’t even drive. Don’t take risks you can’t afford to lose.