The Average Auto Insurance Premium for a College Graduate

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Things to Remember...
  • Understanding how auto insurance premiums are developed is an important step in finding a policy that fits your budget and meets your personal needs
  • From where you live and park your car at night to how much you drive your vehicle, there are many factors that dictate premium rates
  • Your auto insurance company views in terms of risk, so providing further safety for your driving situation lowers that risk factor
  • In addition to doing your research, you also need to consider locating an insurance agent that can work for you
  • Bundling multiple policies with one insurance company will guarantee you receive a quality discount
  • While riders do provide additional coverage, they will make your premiums higher

Quality, affordable auto insurance can be hard to find, so let us do the work for you! Just enter your ZIP in the FREE quote tool on this web page!

Being welcomed into the real world by auto insurance agents, when shopping for insurance premiums, can be a kick in the gut. However, you can follow some simple guidelines to lower your premium costs and find a plan that is perfect for your situation.

Typically, insurance companies offer a variety of discounts depending on age, driving record, type of vehicle insured, and believe it or not, whether you graduated college.

If you are a college graduate, you already are one step ahead in the game of finding affordable auto insurance. Congratulations!

Do Your Research

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After graduating college, it probably seems like the last thing you would ever want to do: doing more research.

However, understanding how auto insurance premiums are developed is an important step in finding a policy that fits your budget and meets your personal needs.

You have already acquired fantastic study skills and research skills, so put those newly minted skills to work.

Some factors like age and gender impact auto insurance rates, so there is not much you can do about that. However, there are some things that you can impact and even control.

For example, maintaining a clean driving record can reduce premium rates quite a bit. In addition, maintaining a clean, spotless credit score, especially after college, can also reduce rates.

The Insurance Information Institute provides a number of resources to better educate you how auto insurance works. Unless you were a finance or accounting major in college, odds are you never took a course about auto insurance.

For most people, the average cost for a full year of auto insurance is around $850.

For a recent college graduate, that price will inevitably be higher. The fact that you are young will increase the rate. If you are a male, your rate will be even higher. You must be prepared for higher rates because of factors you cannot control.

Other Factors that Impact Insurance Premiums

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From where you live and park your car at night to how much you drive your vehicle, there are many factors that dictate premium rates.To start off, consider your own driving record.

Having a good record means that you are less of a risk to insure. The odds of a person with a clean record getting into frequent accidents are lower than a person with a spotty record.

Sadly, if you already have a blemished record, you could be in for some higher rates. If this is you, monitor how you drive and make adjustments to your routine that may be dangerous.

There are also many courses on driving you can take. For example, the American Association for Retired Persons offers a driver safety course that many insurance companies give discounts for taking.

Secondly, your credit score will invariably impact your auto insurance premium. The lower your credit score, the higher the risk an insurance company views you, which results in higher rates.

Making sure your credit score is as high as possible will help reduce your monthly premium costs.

There are a few pieces of advice you can use for improving your credit score. MSN offers a very helpful article on credit scores.

Another factor to consider is where you live. Depending on your location, you may have higher premiums. Urban areas typically have higher theft and vandalism occurrences than others do, so residents in larger cities normally pay higher auto insurance premiums.

Thankfully, you are a recent college graduate and can relatively dictate where you land your first job.

If possible, do some research about potential areas where you may work and find out prices for auto insurance in those areas before moving.

Furthermore, installing safety equipment in your vehicle can also reduce premium rates. For example, installing an alarm system in your vehicle would meet these criteria.

Your auto insurance company views in terms of risk, so providing further safety for your driving situation lowers that risk factor.

Finally, considering how much your drive your vehicle and what type of car it is can impact your premium. The more your drive your car, the higher the chances are of getting into an accident. This makes your riskier in the eyes of insurance companies.

If at all possible, consider using public transportation when you can. This can help reduce the amount of driving you do and can help lighten the load of your premium.

 In addition, as great as it may sound, buying a fancy new sports car, or low gas mileage SUV, will also increase your insurance premium rates.

Cars that statistically are vandalized or stolen more will yield higher insurance rates.

The Insurance Information Institute has provided a comprehensive article that goes over a few other factors to consider when purchasing auto insurance, including a variety of discounts that may fit your situation.

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Find a Quality Insurance Agent

In addition to doing your research, you also need to consider locating an insurance agent that can work for you.

Finding your own policy can be effective, but sometimes, even an intelligent, self-driven college graduate needs some assistance! Finding an independent insurance agent would be a wise choice.

The primary difference between an independent insurance agent and one that works for a major organization, such as GEICO, is that the independent agent has access to providing you insurance from a variety of sources.

An agent with a major company can only offer you policies from their pool of resources. An independent agent is not limited to only one company’s policies. They can locate every discount out there and find a plan that fits your budget.

Find the Right Policy for You

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As a young person, finding affordable auto insurance can be difficult, but there are a few things you can consider to reduce your premium rates. The first step is to decide how much you are willing to pay out of pocket.

This is called your deductible. If you get into an accident or a hail storm dents up your car, your deductible is how much you pay before your insurance kicks in.

Depending on your financial situation, you may be able to afford a high deductible, which in turn would lower your monthly premium.

Spend some time looking at your personal financial situation and find out how much you can afford to pay towards auto repairs.

When you are doing research on insurance, do not forget to compare multiple companies and their prices. Some companies offer discounts that others do not.

When hunting, ask insurance agents about various discounts they offer and find a conglomerate of discounts that works best for you.

Riders and Endorsements

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Riders, also known as policy endorsements, are additional pieces added to a policy that tailor the policy for a specific individual. Some states require certain endorsements depending on the vehicle that is being driven.

Understanding how riders and endorsements function is important. They do give further coverage, but most of the time; they create higher premiums.

When purchasing auto insurance, be hesitant when an agent wants to add policy endorsements.Most of these, however beneficial they are to the insurance agent, simply do not help much in the long run.

An endorsement to consider would be roadside assistance, but outside of that one, there are not many others that give you enough benefit for the amount you pay. This is where doing quality research can pay off.

Remember, insurance agents want to make money, so they will try to throw endorsements at you. You may not need them, but you do need to know what they are.

Other endorsements are things like comprehensive coverage, which cover events that are outside of human control like hail damage or a flood, additional insured for children who are added to a policy, or reimbursement for a rental car if your vehicle is in the shop for repairs.

As some of these are great to have, consider your situation and what you are willing to pay for.

Bundling Policies

Again, because most recent college graduates are under the age of 25, auto insurance premiums will be more expensive.

An easy way to acquire discounts towards your policy is to bundle different kinds of insurance. If you have renter’s insurance, you may want to move that policy over to the company that handles your auto insurance.

Bundling multiple policies with one insurance company will guarantee you receive a quality discount. If you have more than one vehicle, you can also receive a multi-vehicle discount from nearly every insurance company out there.

Graduating college is a fantastic rite of passage in American culture, so understanding various topics, like auto insurance, can help ease the transition into functioning as an independent adult.

Despite factors that you cannot control, like age, gender or where you live, there are easy ways to reduce your premium. An average premium may cost $850 annually, but with good research and a quality agent, you can find cost-effective insurance that is perfect for you.

For quotes that can fit your budget and meet your needs as a recent college graduate, enter your ZIP code into the FREE quote tool below!

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