Affordable Automobile Insurance

About 10 million drivers so far have named a second driver on their insurance policies. About 2.5 million of these are their own children and their average age has increased from 25 years to 31 years. These figures indicate to what extent the young adults are relying on their parents for financial support, the main reason being the current economic meltdown.

Earlier research had suggested more adults in the age group of 18 to 24 years were returning to live with their parents or have postponed plans to move out. While these young adults are staying with their parents for longer than usual, they are also utilizing their parents’ insurance policies for longer because of lack of affordable automobile insurance options.

Young drivers are required to pay higher insurance since they belong in high risk category. They are, therefore, finding a way around the problem by getting themselves named as second driver in their parents’ insurance policies. It is a legal practice for young adults to be named as second driver on their parents’ policy. It’s just that the child in question should not be the main driver of insured car.

Young drivers are increasingly finding it difficult to keep their cars on the road due to increasing petrol prices, insurance premiums and other costs. It can be concluded that many are indulging in practice called “Fronting”. In this practice, young adults buy their own cars under their own name but the insurers are told the parent is the main driver. As recession has unfolded on the economic horizon, fronting cases are on the up. The cost of this illegal activity is ultimately borne by consumers themselves.

Many young drivers are taking this cost cutting to another extreme. They are not getting insurance for their car at all. Others are taking the middle path and they are opting for the more affordable “Third Party Cover”.

A poll conducted in Canada indicates that people attached as much important to affordability along with protection. About 88% people said adequate coverage benefits were important to them, whereas 91% said affordable automobile insurance was equally important.

Car insurance prices differ a lot in terms of pricing from one policy to another. Not all websites are being transparent while displaying insurance quotes. They will not disclose all cost saving tips required by you. Read on if you need some.

If you are looking to pay for your insurance premium in installments, you will eventually end up paying more. There are extra charges called Fractional Premium fees which are applicable when you pay in installments such as six month, quarterly or monthly. The premium fee increases in direct proportion with the number of installments. Insurance advisors recommend six month installments, because it results in affordable automobile insurance.

Your insurance rate also depends on the model of your car which has been divided in various categories. You will have to pay a higher insurance rate for a costlier car. Premium for any insurance policy is decided after taking into account several factors such as number of drivers included in the policy and their risk profile. Other factors are – legal costs, price for car repair, claim frequency and insurance benefits payable.

A study conducted in Canada suggested government insurance monopolies tended to charge higher premium compared to private companies operating in a competitive market. When auto insurance policies are decided by government the decisions are based on political logic rather than economic reasons.

If the decision is left to private companies they decide auto insurance rates on several factors. Auto insurance companies have conducted extensive studies and they believe single males who are under 25 years of age come under high risk category. The lowest risk group consists of non smoking, middle aged and married females. Young males are charged 40% higher premium than females.