Auto and Home Insurance for the Recent Graduate

Part I in a Series for Graduating Seniors

Whether graduating from high school or college, receiving a diploma often means more than an academic achievement. For many students, it's a rite of passage into an array of new responsibilities.

Among these is buying insurance.

Moving out of their parents' home or college dormitory comes with a slew of new insurance needs, including auto, home/renters, health and life insurance. Investing in these early can help individuals obtain affordable premiums.

Auto insurance coverage is important for those getting their first, last or any other set of wheels. Most states require drivers to have auto insurance or sufficient wages to pay for damage incurred during an accident or theft.

Personal umbrella liability coverage is one way young motorists may protect against losses incurred by being sued after an accident, according to a recent article by Bankrate.com. In addition to the legal implications of such action, those who are unable to pay may have their wages garnished.

"Some horrible mistake that was not intended could devastate your future unless you've done something as simple as purchase an umbrella liability policy for only about $150 per year," Jon Yankee, a certified financial planner for Fox, Joss & Yankee, told the Web site.

Maintaining a high credit score and strong driving record are both ways consumers can obtain favorable auto insurance rates. Unfortunately for those who have never owned a car or credit card, following these habits is not easily accomplished. Young adults who do not have a credit history may be able to turn to a co-signer for their first auto loan, according to Americans Well-Informed on Auto Retailing Economics.

"A co-signer assumes equal responsibility for the contract, and the account history will be reflected on the co-signer's credit history as well," AWARE said. "Before asking someone to co-sign with you, be prepared to demonstrate that you are responsible and intend to make timely payments."

Students moving into a dorm may be eligible to remain on their parents' home insurance policy. This level of coverage, however, may not be enough to protect some of the valuables young people often bring to college.

For example, if a parent's homeowners insurance policy is worth $70,000 and covers 10 percent of their child's possessions, this child would be responsible for any losses exceeding $7,000. The Insurance Information Institute advises that young people leave valuables at home and take an inventory of those they must have at school.

Locking doors while in class and using a laptop security cable may also reduce likelihood of theft, while using hot plates and microwaves carefully may avoid fire.

Recent graduates who move into their own apartments, however, will sometimes be responsible for purchasing their own renters insurance. This type of coverage protects the policyholder's possessions, and any additions they make to the property, against the all 16 types of disasters they could fall victim to, acccording to the III.

Having renters insurance can make the difference between being able to recover from these incidents and not, according to a report by NBC affiliate KTUU. Low premiums may make this a small price to pay for such protection.

"It's a very inexpensive coverage to have, you know, it's a trip to McDonald's every month basically and it covers the peace of mind and seeing this so many times it's a cheap peace of mind," Craig Nelson, from Taylored Restoration, told KTUU.

Like with other types of insurance, those purchasing home or auto coverage may be able to reduce premiums by raising their deductibles. Consumers who take this approach, however, should be prepared to pay costs on smaller losses.



Insurance Information for Graduates, Part II:
Recent Graduates May Benefit from Health, Life Insurance
Are You Currently Insured?