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Old 2019-01-12, 03:12   #1
jvang
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Default Motor Vehicle Insurance and Credit Stuff is Scary

Since I'll be getting my driver's license in a month or two, I decided to check out how much insurance would cost for a car. I filled out claims for several insurance companies (State Farm, Liberty Mutual, and Progressive because I'm too lazy to do more of them), filling out information as an 18 year old high school graduate with a fully paid (used) car. For the car, I put in something similar to what a friend of mine drives, a base model Camaro (yeah, let's make our kid's first car a sports car! Nothing could go wrong!), which is probably partially to blame for the result. $350 was the average monthly payment, with practically no coverage.

I don't plan on purchasing a vehicle in the next couple of months, but I'm wondering what I can do to get a reasonable insurance rate. What seems like a better plan would be to get a used 250 cc motorcycle, as long as insurance for motorcycles isn't higher than for cars. A quick Google tells me that $2000 gets me a 2013 Honda CBR 250R, which my dad rode for a while. He thought it was pretty awesome, and it looks like a much faster bike than it really is (90 mph would be a miracle). It also get 70-80 MPG, which is insane; 20 dollars a month would be more than enough for frequent travel, and I could probably do $10.

Also, I heard that merely having your credit score checked (by you or someone that you give your info to, like an insurance company) could do bad things to the score, so I read up on freezing my credit report. It turns out that the government has a bunch of consumer information regarding credit stuff, and you are entitled to a free report + scores every year. And some sites offer free checks whenever, but I'm not sure if they're trustworthy.

I figured that, since I don't even have a credit card, I shouldn't mind having my credit frozen. But then I tried to do it, and the companies wouldn't take my information. Since I don't have a credit card, have never taken out a loan, or used credit of any kind, does that mean my information isn't on file with the three big credit reporting agencies?
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Old 2019-01-12, 14:39   #2
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Insurance for a CBR250R would be about $12 per month, $10 per month if I paid for a year in advance (from Progressive, a bunch of other companies wanted $40/month). That seems like a pretty good deal, and I could bump it up to $20-$30 per month to get a lot more coverage past the legal minimum
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Old 2019-01-12, 14:50   #3
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Our motorcycle insurance is around $80 a month.

Are you sure it would be that cheap for you?

PS - A scooter would be very practical!

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Old 2019-01-12, 17:47   #4
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Quote:
Originally Posted by Xyzzy View Post
Our motorcycle insurance is around $80 a month.

Are you sure it would be that cheap for you?

PS - A scooter would be very practical!

I'm assuming that you may not have the minimum coverage; I'm not sure which coverage is necessary/worth anything and which ones are not useful. The only thing a scooter would offer me over a CBR is storage capacity; if I wanted to get something from a store then I'd take a backpack, and if it was a real problem I'd put a small bag on the back of the bike. The CBR gets 70 MPG, which is fine for fuel economy, and it's reportedly comfortable.
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Old 2019-01-13, 06:53   #5
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The camaro is the problem with your car quotes; for a teenager, that is likely double the rate of a generic slow sedan.
Try again for a quote with something like a 20-yr-old Volvo 850, or a Buick sedan. If you pick a car valued below $5000, pay some attention to what the cost is with collision coverage and without; I've seen policies for teens where the coverage for your own car's damage could pay for the car itself after 3 years!
Liability is coverage for damage you cause to others; collision is coverage for damage you cause your own property. Motorcycles are cheap to insure because they're unlikely to cause much damage to anyone else
If you live on campus when you go to college, a car is likely unnecessary; and almost surely so during your first year.
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Old 2019-01-13, 15:32   #6
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Quote:
Originally Posted by VBCurtis View Post
The camaro is the problem with your car quotes; for a teenager, that is likely double the rate of a generic slow sedan.
Try again for a quote with something like a 20-yr-old Volvo 850, or a Buick sedan.
I dunno, 1999 Buick Lesabre for a recent high school graduate would still be $333 per month

I tried to put in a Smart car, but couldn't find it in the list. So then I tried some small sedans from the 1980s, and got it down to $210/month for basic coverage on a 1981 Toyota Tercel. Yay?

Ooh, I even found a single listing for one. It's in... semi-reasonable condition? https://www.autoblog.com/used-detail...ta-Tercel-1981

Guess I'll steer clear of any car purchases for now. No need for one, and no way to afford that sort of insurance

Last fiddled with by jvang on 2019-01-13 at 15:33 Reason: typing is hard
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Old 2019-01-13, 18:17   #7
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Wow, $333 is terrible! I sit corrected. Thanks for trying my advice.
Good thing I didn't start driving sports cars until my late 20s, then. Yeesh!
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Old 2019-01-13, 21:35   #8
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Looking at the individual options of an insurance plan, there are quite a few things to choose to include or not, and varying levels of cost/deductibles. There are a few that stand out:

Liability (BI/PD)
$25,000 person/$50,000 accident/$25,000 property damage

This seems to be the bare minimum that is required. There are options to bump it up; what does that do for you? (to whom/where does any of this money go in the first place?)

Uninsured Motorist Bodily Injury/Underinsured Motorist Bodily Injury

This takes my payment from $12 to $25 per month. It sounds important, but kind of dumb; is the option above this one going to pay for their injuries, but if they don't have insurance and I don't have this option then I get nothing?

Totaled Vehicle Options

This has 2 choices, either no coverage or "actual cash value." Does that mean that I have to have this option for them to actually pay for my vehicle/motorcycle in the case of a total loss? This one also bumps me up a bit; it's a $40 per month addition.

Comprehensive/Collision

I think I have a basic idea of a deductible; everything under the amount of the deductible is what you're responsible for, and they'll cover the rest. Does $500 for both of these sound reasonable, or would it be dependent on the price of the vehicle? Would whatever they pay me past the deductible be affected by the "actual cash value" option in the previous section? These aren't even options if "actual cash value" isn't selected, so I'd assume that they are related somehow, but I don't know if it's important.

Uninsured Motorist Property Damage

And then I have to add this on for them to cover my vehicle if I get hit by an uninsured driver? Isn't driving without insurance illegal? Why do I have to pay extra to make up for illegal activity?
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Old 2019-01-13, 21:50   #9
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And since I'm bored, I decided to check what my monthly claim would be for a CBR1000RR, which has a little under 200 horsepower and easily hits 180 mph. Surely an 18 year old riding one of these superbikes would pay more on insurance than on a 1981 Tercel… right?

Nope, just $80 per month. Because that makes sense
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Old 2019-01-13, 22:30   #10
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Quote:
Originally Posted by jvang View Post
Surely an 18 year old riding one of these superbikes would pay more on insurance than on a 1981 Tercel… right? Nope, just $80 per month. Because that makes sense
What you have to appreciate is insurance companies are some of the most disciplined in the art of the actuarial analysis.

While it might not make immediate sense, an 18 year old at 180 mp/h on a light bike is unlikely to cause as much damage (to others) as that same teenager in a much heavier vehicle travelling at say 90 mp/h; possibly with three or four other humans in the same vehicle.
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Old 2019-01-14, 00:26   #11
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Quote:
Originally Posted by jvang View Post
And since I'm bored, I decided to check what my monthly claim would be for a CBR1000RR,
Hello again, Dr. Gregory House! :-)
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