It is no secret that New Jersey has some of the highest insurance rates in the country. Even more troubling is the fact that insurance carriers are leaving the state and not renewing policies leaving automobile drivers in the dust. Though this may cost the average driver a fair sum, a new driver may soon need to take out a mortgage to pay new driver auto insurance premiums in New Jersey. If you are a first time driver or the parent of a first time driver read below. It may be the difference between driving and walking…
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In order to examine some of the solutions to the high cost of insurance in New Jersey it is important to identify why it is so expensive for a first time driver. First time drivers in the state have had a long history of being some of the worst drivers in the country. It is also a highly congested state which equals more automobiles on the road and more autos mean more accidents. All of this forces auto insurance through the roof.
In 1998 full coverage insurance for a new driver averaged about $2200 per year. The same coverage in 2001 was about $2500 and just two years later it was about $2800. To combat this rising rates for new drivers New Jersey developed a provisional license for new drivers. New Jersey drivers are able to get a provisional driver’s license at the age of 17.
A lot of people refer to this license as a “Cinderella license” because it prohibits the driver to operate a vehicle after midnight and it also has passenger restrictions. The insurance companies didn’t really react the way the state had hoped and insurance costs only decreased slightly. Don’t be disappointed yet. The following is a list of ways you can greatly decrease the cost of insurance while reaping all of the benefits of being mobile.
1. Study Hard – Not only does it pay to stay in school from an academic standpoint, but it also may reduce your first time driver insurance costs. Most insurance companies offer an “honor roll” discount on auto insurance for first time drivers/students. DO NOT overlook this discount. Some companies offer as much as 20% off for having good grades. Most insurers require at least a “B” average or a 3.0 on an 4.0 scale.
2. Stick with 4 Doors – Though not all two door cars are technically “sports cars” insurance companies treat virtually all two door cars as sports cars pushing your first time driver premium up considerably. Coverage could possibly go up as much as 30% for having a two door car. Even if it is Grandma’s old Reliant K.3. Forget the Lease – If you are thinking of leasing a vehicle for yourself or your child, forget it. Not only is a leasing a car a poor financial decision for a new driver, but it will also send your premium soaring. The reason for this is that the insurance must cover what is owed on the vehicle versus a vehicle purchase which covers only what the car is worth. (The sad truth is that in almost every case what is owed on a car is considerable higher than what the car is worth.)
4. Collision, Just Say NO – Collision is an add-on to basic liability auto insurance. With collision on your policy the insurance company agrees to pay for any damage to your car, even if the accident is your fault. Without collision, if the accident is your fault the insurance company will pay for the repair of the other car that you hit, but not your own. Collision for a new driver is usually 30-50% of the premium cost. Case and point, there is no reason for a new driver to test out their road skills in a Porsche. If your financial situation affords you the ability to get a car specifically for the new driver it is best to buy an “oldie but a goodie.” Older cars can be just as reliable as newer ones and when you buy an older car that doesn’t have a great street value you can drop collision off of your policy. If the car it totaled, it only cost a few bucks anyway, and you saved most of what the car was worth in your premium. For a list of “oldies but goodies” see below.
5. Never Skimp on Medical Benefits – Ok, this is not a money saving tip, but it is a tip nonetheless. A lot of insurance companies will try to sell cheap insurance with low medical benefits. This means that if the driver is in an accident and is hurt the insurance company will pay minimal benefits. Make sure that medical coverage on your policy is concurrent with medical expenses. Ask your insurance professional for more on this.6. Thumbs Up to Tort – A lot of insurance companies are selling “Limited Tort” insurance policies at a discount.
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