Thursday, August 14, 2014

Auto Insurance for First Timers #PostGradProblems

Don't worry! Auto Insurance isn't as scary and complicated as it seems.


Leasing: If you are getting a lease, you will get screwed on insurance premiums. This is because you don't own the car, therefore it is up to the leasing company. They usually require more than minimum state auto insurance standards so be sure to factor that into cost comparison!

Buying Your Own Auto Insurance: Deep breath. It will be okay, I'm going to walk you through all the weird numbers and terms. You'll have to go shopping on your own, but you'll be much less likely to end up paying way to much.


  • It Depends On Your State: Each state has different standards and laws for auto insurance. 
    • Other states require no-fault insurance, which means your insurance covers your bodily injury and property damage no matter who caused the accident. 
    • IN CA, this is not required! In California, you are only required to have insurance that will cover damage to OTHERS who are not at fault in an accident. That means you don't have to worry about insurance that covers your medical bills and repairs. However, I would probably recommend that considering the amount of accidents I see everyday on the LA freeways.

  • The Basic Types of Insurance:
    • Bodily Injury Liability: This basically means your insurance pays for injuries you cause to someone else. 
      • This is REQUIRED in CA, and most states. 
    • Personal Injury Protection: This insurance covers the injuries to the driver and passenger in your car. 
      • NOT REQUIRED in CA. 
    • Property Damage Liability: Pays for damages you inflicted on someone else's car, mailbox, garage, etc. 
      • This is REQUIRED in CA. 
    • Collision: This pays for your car repairs when you get into a wreck. 
      • This is NOT REQUIRED in CA.
      • Hint: I would recommend this in LA, unless you have a clunker.  You would end up spending more money in coverage than the car is worth.
    • Comprehensive: This pays for your car repairs when anything happens, from theft, to earthquakes, to Sharknados. 
      • This is NOT REQUIRED in CA.
    • Uninsured Motorist: This pays for your injuries if you get into an accident with someone who isn't insured. 

  • Understanding Insurance Policies
    • Most insurance policies use this fancy and confusing number thing that looks a bit like this: 20/40/10. Don't freak out, it's very simple. 
      • The first number refers to "Bodily Injury Liability"per person injured in the accident. In this case, "20" refers to the fact that $20,000 of medical bills per person are covered by your insurance. 
        • In CA, the minimum is 15, or $15,000 per person in an accident. 
      • The second number refers to "Bodily Injury Liability PER ACCIDENT. That is, the total amount the insurance will cover in medical bills per accident, no matter how many people are injured. 
        • In CA, the minimum is 30, or $30,000 per accident. 
      • The third number refers to the property damage maximum PER ACCIDENT. 
        • In CA, the minimum is 5, or $5,000 per accident. 
Tips for Purchasing Insurance: 

1. Get quotes from multiple companies. Never settle and always haggle. Just some words to live by. 

2. If you are coming from another state, except to see a huge price hike in your auto insurance. Due to the high number of accidents, theft, and crime in Southern California- auto insurance is pricey because of risk. Insurance companies make money when you don't have an accident, and that is very unlikely in SoCal. 

3. Insurance can y even depend on where you live in LA. If you live in Santa Monica, your auto insurance will be cheaper than if you live in East LA or Downtown where there is a lot of break-in's. 

4. If you are under 25, your rate will be higher. 

5. If you have had an accident, theft, or any insurance problem (even at a different insurance company), you will have higher premiums. 

6. The type of car also matters! Convertibles and older cars have higher insuance rates. 

Consider Per Mile Insurance: 


I recently came across this new insurance company that is designed for millennials and offers "per-mile insurance." It's called Metromile and I'm very intrigued with how easy they make insurance. It's designed for people who drive less than 10,000 miles a year. Perfect if you stay and never leave LA, especially if you live and work in the same neighborhood or side (holla at the east siders!). Although, if you want to take a road trip, you don't pay for miles over a certian amount a day. 

You plug in this little gadget into your car and it tracks your miles (in addition to giving you diagnostic info on possible problems with your car). You pay a low base rate per month and then a per mile rate that is mere cents. Your rate is determined by the deductible you choose and the liability coverage you choose. It covers every type of insurance we talked about above, which is pretty impressive- no need to pick and choose. 

I went ahead and entered all my information to get a quote. I drive a used convertiable from 2007 and have never been in an accident. I also live in the East LA "ghetto", so your quote may be cheaper if you live in Santa Monica or Burbank, etc. 

Here's my quote: 


My advice, you consider per-mile insurance if you drive only a small amount to work and spend much of your time in the same neighborhood/side of LA. If you are commuting from the OC or even Burbank to Santa Monica, maybe it's not for you. 
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2 comments:

  1. This article has taken so much stress off my mind! Now that I'm expected to get established on my own, I have to worry about these things. I didn't know the first thing about auto insurance before reading this article. This has been very helpful. http://www.powellsinsurance.com/auto.html

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  2. I am still on my parents auto insurance. I just make a payment to them each month. My dad gets an awesome discount for having so many vehicles, so it is way worth it for me. But I don't know exactly what I will do when he kicks me off of his insurance. I'll jump that ditch when I get to it. http://www.seinsurance.net/auto-insurance.php

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