If you’re sending a kid to college with a car this fall, their auto-insurance coverage probably isn't top of mind, given the high price of tuition and room and board, alongside rising interest rates on student loans. Yet with car insurance premiums soaring this year — not to mention higher costs on day-to-day necessities — it’s more important than ever to review your policy to make sure you’re not overpaying to insure a car at college.
Table of contents:
- Ways to save on car insurance for students
- Tips to find the best deal on car insurance for students
- Car insurance for college students FAQs
Ways to save on car insurance for students
To ensure you're getting the right car insurance coverage at the lowest cost, a campus auto insurance checkup is a smart summer move before your student heads off to school. But even if you’ve hit mid-semester without thinking about auto 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 doing anything else on this list, contact your insurance company or agent and let them know where your student is attending, and whether they’ll be driving.
Assuming they will be taking a car to school, “reporting the new location where the car will be kept 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 on the policy, it can be kept on the insurance policy, provided the student’s permanent address while at school remains the family address. That’s generally the best course, and certainly the simplest.
However, if the student is driving a new vehicle — or one that’s new to the family, at least — the name that’s on the vehicle ownership may determine whether the vehicle can ride along on the family policy. As Allstate’s advice to students on insuring a car for college puts it, “If your name is on the title, you'll likely need to buy your own car insurance policy in your name. If the car is jointly titled — it contains your name and a parent's name — you may be able to stay on your parent's car insurance policy.”
Upshot: if you’re planning to buy a car for your student while they’re enrolled, reach out to your insurer first, especially if you’re considering having your student own or co-own the vehicle they’ll drive.
2. Get the benefit of student discounts
A number of price breaks aimed at student drivers can deliver big savings, given that the cost to add an 18-year-old driver to a full-coverage family car insurance policy averages $1,400 for a daughter and $1,700 for a son, according to carinsurance.com.
Good grades discount
Car insurance companies recognize that students who perform well academically tend to be responsible individuals, which can translate to good driving habits. According to online insurance broker Policygenius, all major insurance companies offer discounts to high schoolers or full-time college students who are under 25 (or sometimes 23, as with Progressive) and can show evidence of their academic achievements.
Depending on the insurance company, that proof might involve showing a grade average of B or a GPA of 3.0, high test scores on the SAT, ACT or PSAT, a letter signed by an administrator testifying to your academic achievements or a ranking in the top 20% of the class.
You can also benefit if your student joins certain campus organizations. Policygenius notes that some insurers, like GEICO, offer discounts to members of certain fraternities, sororities, and honors societies.
Student away from home discount
What if your student is going to school and not taking the car they drive at home along with them? There’s a discount for that, too. So-called “distant-student discounts” kick in 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, for age restrictions. For example, Progressive allows the discount only for those who are 22 or younger.
Taking the distant-student discount is generally a better option than dropping the student entirely from the policy while they’re away at school. For one, the continuing coverage will allow him or her to drive when they’re home for weekends and for holidays.
But there’s another plus to keeping a student on the policy, according to Jim Tolliver, with insurance consulting firm Woodruff Sawyer. Insurance companies dislike patchy insurance histories. “Having continuous auto coverage provides additional savings for students when they are ready to purchase a vehicle of their own,” Tolliver writes. “They can show that there wasn’t any gap in their insurance protection versus being rated as a brand new driver.”
3. Consider reducing coverage if your student is driving an older car
The family’s youngest driver often pilots its oldest vehicle. If the car that’s headed to college is sufficiently old, some optional components of its policy may no longer make much financial sense. You can save significantly on premiums by dropping them.
The coverage types in question are what’s known as Collision and Comprehensive. Often bought together, but also available separately, Collision covers the cost of damage the driver does to their own vehicle, while Comprehensive covers theft and repairing what Mother Nature and bad luck might cause, including cracked windshields and hail damage.
While rates vary widely by state, the average combined premiums for “C&C'' coverage are about $425 a year, according to the Insurance Information Institute. Consumer Reports is among the expert sources that recommend dropping “collision and/or comprehensive [coverage] when the annual premium equals or exceeds 10% of your car’s cash value.” Using that measure, and assuming you pay average premiums, you might consider dropping C&C coverage if the car your kid will be taking to college is worth less than about $4,500.
A few caveats are in order, though. Before dropping these policies, consider: If the car was lost or damaged, whether to theft or in a crash caused by your student, would you be able to cover the cost with what’s in your bank account or is otherwise readily available? If not, you might want to think twice about the move. Also, if the car is financed, “you may be required to purchase both collision and comprehensive coverage” by the lender, the Insurance Information Institute warns.
Tips to find the best deal on car insurance for students
When searching for the best deal on car insurance for students, you can use many of the same strategies you’d use when looking for other types of insurance products. Consider these tips to find the cheapest car insurance for your young driver:
- Shop around: Take the time to get car insurance quotes from different companies to find the most affordable policy that meets your needs. You can start by reviewing Money’s picks for Best Cheap Car Insurance for Teens.
- Bundle insurance policies: Many insurance companies offer discounts for bundling car insurance with homeowners or renters insurance.
- Complete a defensive driving course: Taking a defensive driving course can improve driving skills and demonstrate responsibility to insurance providers. This driver training may qualify your student for a discount on your car insurance premiums.
- Evaluate deductible options: Choosing a higher deductible can lower your insurance premium. But this does mean you’ll pay more out of pocket if there’s an accident, so carefully consider whether you can comfortably afford the deductible in the event of a claim.
- Maintain a safe driving record: Practicing safe driving habits is crucial not only for your well-being but also for maintaining affordable insurance rates. Avoid accidents and traffic violations to keep your premiums from increasing.
- Driving habits: Insurance providers consider driving habits, such as distance driven annually, and driving history when determining premiums. If you know your student won’t be driving much, tell your insurer and see if they’ll lower your premium as a result.
As you compare different policies, look up the required insurance coverage minimums for your state. The four coverage minimums to consider are:
- Bodily Injury Liability: what your policy pays if an individual sustains injuries.
- Property Damage Liability: coverage for damage you cause to property that is not your own.
- Personal Injury Protection: what your insurance company will cover if the driver (you or your student) is injured.
- Uninsured Motorist Protection: coverage that applies if you are in a motor vehicle accident involving an uninsured driver.
Many states will only require bodily injury liability and property damage liability minimums.
Car insurance for college students FAQs
What requirements do I have to meet to obtain a student discount?
Specific requirements vary among insurance providers, so it's best to check with individual companies or speak with an insurance agent for details.