If you have a child in college or will be sending one off soon, car insurance may not be a high priority given the high price of tuition, room and board.
However, with car insurance premiums rising sharply in recent times, it’s more important than ever to review your policy to ensure you’re not paying more than you should. Whether your child takes a car to college or not, there are easy ways to save on car insurance that you don’t want to overlook.
Summary
Ways to save on car insurance for students
To ensure you get the right car insurance coverage at the lowest cost, an auto insurance check is a smart move before your student goes to school. Even if you made it to midterm without thinking about car insurance, it’s not too late to look for savings. Here are the three steps to follow.
1. Notify your agent or insurance company
Before you do anything else on this list, contact your insurance company or agent and let them know where your student hangs out and whether they will drive.
Assuming they will be bringing a car to school, “reporting the new location where the car will be stored is necessary to ensure full coverage in the event of an accident or theft,” according to independent agency Grange Insurance. If the vehicle is already covered by the policy, it may remain so as long as the student’s permanent address while at school remains the family address. This is generally the best course and certainly the easiest.
However, if the student drives a new vehicle – or at least one new to the family – the name on the vehicle’s title can determine whether the vehicle can travel on the family policy. As Allstate’s advice to students about insuring a car for college says: “If your name is on the title, you will likely need to purchase your own auto insurance policy in your own name. If the car has a joint title (contains your name and that of a parent) you may be able to keep your parent’s car insurance policy.
Bottom line: If you plan to purchase a car for your student while they are enrolled, contact your insurer first, especially if you are considering having your student own or co-own the vehicle they will drive.
2. Get the benefit of student discounts
A variety of price reductions aimed at student drivers can offer big savings. This is important given that the cost of adding an 18-year-old driver to a full coverage family car insurance policy can be significant, sometimes doubling the annual price, although actual costs can vary widely.
Discount on good grades
Car insurance companies recognize that students who perform well academically tend to be responsible individuals, which can translate into good driving habits. According to online insurance broker Policygenius, all major insurance companies offer discounts to high school or full-time college students who are under 25 (or sometimes 23, as with Progressive) and can show proof of their academic achievements.
Depending on the insurance company, this evidence may include demonstrating a grade point average of B or a GPA of 3.0, high scores on the SAT, ACT, or PSAT tests, a signed letter from an administrator attesting to your academic achievements, or a position among the top 20% of the class.
According to Policygenius, the savings are typically between 10% and 15%, but some companies offer more, including State Farm, which promises a discount of up to 25%.
You can also benefit if your student joins certain campus organizations. Policygenius notes that some insurers, such as GEICO, offer discounts to members of certain fraternities, sororities and honor societies.
Discount for non-resident students
What happens if your student goes to school and doesn’t bring their car with them? There’s a discount for that too. So-called “distant student discounts” come into effect if your scholar is studying at least 100 miles from home. They typically provide a break of between 15% and 30%, according to carinsurance.com. Check, however, the age restrictions. For example, Progressive only allows the discount to those who are 22 years old or younger.
Accepting the distant student discount is generally a better option than completely excluding the student from the policy while they are absent from school. For one thing, continuous coverage will allow them to drive when they are home for weekends and holidays.
But there’s another benefit to keeping a student on the policy, according to Jim Tolliver, with the insurance consulting firm Woodruff Sawyer. Insurance companies don’t like spotty insurance histories. “Having continuous automotive coverage offers additional savings to students when they are ready to purchase a vehicle of their own,” Tolliver writes. “They can demonstrate that there was no gap in their insurance protection compared to being classified as a brand new driver.”
3. Consider reducing coverage if your student drives an older car
The youngest driver in the family often drives the oldest vehicle. If the car headed to college is old enough, some optional insurance coverages may no longer make much financial sense. You can save significantly on premiums by eliminating it.
The types of coverage in question are the so-called collision and comprehensive ones. Often purchased together, but also available separately, collision coverages cover the cost of damage the driver does to their vehicle, while comprehensive coverage covers theft and repairs of whatever Mother Nature and bad luck might cause, including broken windshields and damage from hail.
Although rates vary widely from state to state, average combined premiums for “C&C” coverage are about $425 per year, according to the Insurance Information Institute. Consumer Reports is among the expert sources who recommend eliminating “collision and/or global [coverage] when the annual premium is 10% or more of your car’s cash value.” Using that measure and assuming you pay average premiums, you might consider eliminating C&C coverage if the car your child will bring to college worth less than about $4,500.
However, some caveats are in order. Before giving up on these policies, consider: if the car were lost or damaged, due to theft or an accident caused by your student, would you be able to cover the cost with what is in your bank account or what is otherwise easily available? If not, you may want to think twice before moving. Additionally, if the car is financed, “you may be required to purchase both collision and comprehensive coverage” from the lender, warns the Insurance Information Institute.
Tips for finding the best deal on car insurance for students
When looking for the best deal on student car insurance, you can use many of the same strategies you would use when looking for other types of insurance products. Consider these tips to lower your car insurance premiums and find the cheapest insurance for your young driver:
- Look round: Take the time to get car insurance quotes from several companies to find the most affordable policy that meets your needs. You can start by reviewing Money’s picks for the best cheap car insurance for teens.
- Complete a defensive driving course: Taking a defensive driving course can improve your driving skills and demonstrate liability to insurers. This driver training may qualify your student for a discount on auto insurance premiums.
- Evaluate deductible options: Choosing a higher deductible may reduce your insurance premium. But this means you will pay more out of pocket in the event of an accident, so carefully consider whether you can comfortably afford the deductible in the event of an accident.
- Maintain a safe driving record: Adopting safe driving habits is critical not only to your well-being but also to maintaining affordable insurance rates. Avoid accidents and traffic violations to prevent your premiums from increasing.
- Driving habits: When determining premiums, insurers take into account driving habits, such as annual distance traveled and driving history. If you know your student won’t be driving much, let your insurer know and see if they’ll lower your premium as a result.
As you compare different policies, look for the required insurance coverage minimums for your state. The four coverage minimums to consider are:
- Liability for personal injury: How much your policy pays if an individual is injured.
- Liability for property damage: coverage for damage caused by you to property not owned by you.
- Protection against personal injury: How much your insurance company will cover if the driver (you or your student) is injured.
- Protection of uninsured motorists: Coverage that applies if you are involved in a car accident involving an uninsured driver.
Many states will only require minimum levels of liability for bodily injury and property damage.
Frequently asked questions about car insurance for college students
What requirements do I have to meet to get the student discount?
If I am a student, can I keep my parents’ car insurance even if I leave?
Yes, it is often possible for students to keep their parents’ auto insurance policy even if they leave. However, this depends on the specific policy and the insurer. Many insurance companies require household membership and impose distance restrictions. If you move but maintain a permanent residence at your parents’ address (for example, while you’re in college), you’re probably still eligible to remain on their auto insurance policy.
Which company offers the best discounts on student car insurance?
State Farm offers numerous discounts for teen learner drivers. With the Good Student discount, State Farm offers savings of up to 25% for teen drivers with good grades. State Farm also offers a “School Transfer Student” discount, and the insurer offers discounts of up to 15% for drivers under 21 who complete a safe driving certificate.
What is the average cost of car insurance for a student?
The cost of student car insurance can vary greatly based on factors such as age, location, driving history, vehicle type and coverage limits. Younger drivers, including students, generally face higher car insurance rates due to their limited driving experience. According to carinsurance.com, the average car insurance rate for 18-year-olds with their own policy is about $5,500 per year. The costs are much lower to add a teen driver to a parent’s policy.