Millennials are unlike any generation before them. They have forged their own path, foregoing traditional rules of the past to do life on their own terms. When it comes to car insurance, it makes sense that millennials want to understand what they are buying, why they are buying it, and whether they need it. If you fall into this age group, there are some car insurance tips that are especially relevant to your generation. Continue reading to learn our three best car insurance tips for millennials.
The Millennial generation is known for its cord-cutting ways. According to Forbes, young adults tend to prefer flexibility and frugality over long term commitments and compulsivity, rejecting traditional credit cards, and opting to lease or live at home with mom and dad rather than buying a house. While these tendencies help young people keep more money in their pockets, it has negative implications as well. One 2015 study found that millennials have the lowest average credit scores of any generation – a big problem when it comes to finding the best car insurance.
Many car insurers scrutinize their applicants’ credit reports since bad credit statistically increases the likelihood of someone needing to file a claim. Although there is a difference between having never used credit and a history of poor credit utilization, scoring models may not reflect that. Overtime, millennials who make an effort to improve their credit ratings may find that quotes on the best car insurance policies become much more affordable over time.
Insure Your Lease
Another fact about the millennial generation: They are more likely to lease a vehicle than any other age group. In fact, Time reports that nearly 1 in 3 millennial-age drivers choose to lease rather than buy a car. If you fit into this category, your car dealer may have specific insurance requirements. This will likely include coverage for both liability and collision damages, as well as comprehensive protection that insures against non-collision related damages like falling tree limbs and hail storms.
You may also be required to purchase an additional type of coverage known as gap insurance in case your car is totaled in a collision. Since traditional insurance policies compensate you for the depreciated value of your vehicle, also known as the ‘actual cash value,’ there is likely to be a balance between your insurance reimbursement and the amount you owe the car dealer. Per the name, gap insurance picks up where your auto insurance leaves off, ensuring you do not face a major out-of-pocket bill.
Liability Limits are Important – Even without Major Assets to Protect
A common misconception about liability insurance is that the limits on coverage are designed to protect victims rather than policy-holders. While liability coverage does pay victim medical payments, lost wages, and other accident-related expenses, it is the policy-holder who should be concerned about the limits on coverage. Ultimately, you are responsible for the property damages and bodily injuries you cause in an accident – whether you have enough liability insurance or not.
If your coverage is not adequate to pay the claims, you might have to pay out-of-pocket instead. Since liability damages can add up to thousands and even hundreds of thousands of dollars or more, it pays to ensure the limits on your coverage are sufficient. If a judgment is passed against you, victims may have a right to any unprotected assets you own, such as a savings account. If you do not have enough money to cover the bill, you could face years of wage garnishment – a major financial blow to a millennial just beginning his or her career.
If you live in the Waukesha area and are in the market for car insurance, let Wolfgram Insurance work to find the coverage you need. Contact us today for a free quote. We look forward to serving you soon.