In addition to clothes, books and other belongings, nearly half of all college students also bring a car with them when they head to campus in the fall, according to a 2016 survey by U.S. News and World Report. If you’re one of those college drivers, or the parent of one, consider these ways to keep insurance premiums at a minimum during the study months to come.
Keep the student on the parents’ policy
All things being equal, having a college-bound student on his or her parents’ policy should result in lower auto insurance costs for the family as a whole than buying them as a separate policy, especially if the other members of the family have good driving records.
Among the reasons that including the young driver on the family policy is cheaper is that the parents likely have a longer credit history with both lenders and insurance companies. That history, in turn, should result in a higher insurance-based credit score, which is one of the factors companies use to determine premiums. As Kris Kirchner, President of First Florida Insurance Network of Central Florida explains, parents typically have an established credit file and are likely eligible for a better tier of rating (especially if they have high limits of liability on the policy). The combined family insurance policy also promises access to multi-car discounts.
The flip side, however, is that a college student who’s on the family policy could raise rates for the parents in the event they run into trouble at the wheel. Leigh Needelman, President of Florida Assures, Inc., says a key risk here is of “rate hikes due to points accumulated by your college child’s accidents or moving violations.” There’s also so-called “liability exposure” in the event the young driver is involved in a serious accident. With a separate policy for the student, Needleman points out, the parents’ “deeper pockets” will not be accessible and any litigious action "will be limited to the college student’s policy.”
Obviously, then, it’s wise to explore pricing for both a separate policy for your college-bound child and for adding them to (or retaining them on) the family policy, and to consider both premium costs and your comfort, or discomfort, with their driving.
Explore discounts for a student who will drive less while away
If your child will spend less or no time driving when they’re at college compared with home, you or they may be eligible for reductions in premiums to reflect that drop in driving.
If your child is attending college more than a hundred miles away from home without the car, the family may qualify for an away-from-home discount, or even be able to remove the student entirely from the family policy for the time they’re away. The student will still be able to drive the car during spring and winter breaks, provided they don't so so for more than thirty days at a stretch. Also, with the student now driving your car less or not at all, you may be eligible for a further premium reduction based on the reduced mileage the family will be driving.
Once summer break comes around, however, and they presumably return home, and to driving for longer than a month at a time, you’ll need to add them back to the policy.
Naturally, if your student driver will be driving a car at college, none of this applies. If the vehicle involved is owned by a parent, though, you may still be able to reduce your family premium, provided the college is located in an area the insurance company deems to be less risky than where you live. (The converse will also apply, of course, and your premium could rise should the school be in an area the insurance company deems to be more risky than home.) Either way, be sure to update the main driving location when your child drives the car back home for the summer.
Get a discount for good grades
Good students drive better, according to insurance companies, and many companies reflect that fact in the price of their premiums. Most of these firms will discount premiums for full-time high school or college students whose grades meet or exceed a B or 3.0 GPA, or that rank within the top 20% of their class or of scores, received within the past twelve months, for ACT, SAT, PSAT, TAP, PACT, or the California Achievement Test.
The discount may even stay with the good student after college graduation. With State Farm, for example, graduates who have completed a two or four year degree and are under 25 years old, should receive the discount.
How much can you save on your car insurance premiums for being studious? State Farm claims up to 25%, and Allstate up to 20%. Research by ValuePenguin revealed discounts of between 1% and 39%.
Comparison-shop with companies large and small
While some large auto insurers, such as Nationwide, have fared well in ValuePenguin surveys of premiums for college students and teenagers, so have some smaller companies such as Erie. Our advice when shopping for auto insurance is to compare at least three to six companies in their area, and to include familiar and unfamiliar names.