Auto Insurance

Insurance May Cost College Students Up To $11,732 Per Year — Here's How to Save

Until now, you've been covered by your parents' insurance, and could count on it for peace of mind if something bad happens — but now you may need to start carrying your own. Here's what you need to know.

Fall is an exciting time for incoming college freshmen. But this newfound step toward independence and adulthood brings with it a host of concerns, and one you might not be thinking about is insurance. Children under 18 who live at home are covered by their parents' policies, but now that you're moving out of the house, protecting yourself financially is your own responsibility.

The three most important types of insurance you need to think about while you're at college are health insurance, renters insurance and car insurance. These key expenses add up fast: For a college student on their own, these combined expenses can add up to an average of $11,732 per year. Make sure you understand what coverages you need and the best way to get them, so you don't spend any more than necessary.

  • Average cost of health insurance: $4,840
  • Average cost of renters insurance: $179
  • Average cost of auto insurance: $6,767

Student insurance costs for top collegiate states

Undergrad population rankStateTotal cost of insurance: health, renters, auto% difference vs national average
1California$10,593-9.7%
2Texas$10,081-14.1%
3New York$15,83635.0%
4Florida$15,17029.3%
5Illinois$11,209-4.5%
6Pennsylvania$9,653-17.7%
7Ohio$9,690-17.4%
8Arizona$12,0883.0%
9Michigan$22,73793.8%
10Virginia$9,721-17.1%
Average insurance cost based on combined average price of auto, health and renters insurance for a student on their own in that state.

Do I need health insurance in college?

Health insurance is a practical necessity to see a doctor in the United States, and many colleges require you to have coverage before you start classes. Even if insurance isn't mandatory at your school, it's crucial that you have health insurance coverage in case you get seriously sick or injured while you're on campus.

Fortunately, if you previously had health insurance while you were at home under your parents' policy, you can keep using it — in fact, you can stay on your parents' policy until you're 26, whether it's through your parents' employers or an Affordable Care Act (ACA) marketplace plan.

If you're among the 14.4% of Americans who are ages 18 to 24 and don't already have health insurance coverage, or if you're from another country, there are still ways to get it. Many colleges offer health insurance policies tailored just for students, and you can also buy a policy directly from the marketplace. If money is an issue, you may also be able to get a more affordable — or even free — health insurance policy through Medicaid or CHIP, two federal programs designed to help low-income people get medical care.

Options for college students to get health insurance

  • Remain on parents' policy (until you're 26)
  • Buy coverage directly from your university
  • Enroll in a state marketplace insurance plan

Consider getting an in-state health insurance policy

Even if you already have health insurance from your parents, it might not be the best option for student health insurance. It's worth looking at the insurance provided by your university, especially if you're attending college in a different state from where your parents live. You may find that your parents' out-of-state insurance isn't accepted at many doctors' offices, making it hard for you to find care when you need it.

Second, the cost of a health insurance policy through the ACA marketplace or your college may be cheaper than your parents' policy. A 2016 study found that the ACA marketplace is typically 10% cheaper than employer premiums. If a policy from your marketplace or college is cheaper than staying on your parents' health insurance plan, then you may save money by making a switch..

Do I need renters insurance in college?

Renters insurance isn't legally required for college students, but it's an essential buy partly because burglaries are the most common form of crime on campuses nationwide. In 2016 alone, 12,000 campus burglaries were reported. Renters' insurance policies protect you from theft, fire and other risks with two main types of coverage:

  • Liability coverage protects you from financial liability if you're responsible for someone else getting hurt (like at a party in your dorm room).
  • Personal property coverage pays to repair or replace your personal property if it's stolen or damaged.
  • Loss of use coverage pays for alternate accommodations if your apartment or dorm isn't habitable.

Depending on your living situation, you might still be covered by your parents' policy. It all hinges on whether you live on- or off-campus.

Living on campus

If you're living in a dorm or other on-campus housing, you are most likely still covered by your parents' homeowners or renters insurance policy, if they have one. This is because most students who live on campus still legally reside with their parents, even if they are away most of the year.

Even if you have liability and personal property coverage from your parents' plan, you may still want to look into a separate student property insurance policy, also called dorm insurance. These inexpensive insurance plans cost between $5 and $10 per month, and they cover loss or theft of items such as laptops, bicycles and clothing. They're worth considering because deductibles for homeowners insurance policies are often $500 to $1,000, meaning you'd receive little to no payout to replace even the highest-value items you own as a student. A student insurance plan has a lower deductible, typically around $100. Many student insurance plans also include accidental breakage or loss, both of which are typically excluded from a home insurance policy.

Living off-campus

If you've signed a lease for an off-campus apartment or house, you are most likely considered to live there, not at your parents' house, and so won't be protected by your parents' home or renters' insurance policy. Instead, you'll need your own — and they typically only cost about $5 to $20 per month, depending on your coverage limits. Renters insurance includes personal property coverage up to a certain dollar limit, typically ranging from $10,000 to $20,000.

Make sure you're adequately protected by cataloging your possessions

No matter what your housing situation is, it's important to have an accurate record of your belongings. This will help you make a claim if your property is damaged, lost or stolen. Details are important, but you should prioritize the most expensive items such as your laptop, smartphone and bicycle. These items are the most costly to replace and the biggest target for thieves.

Tips for making a list of your possessions

  • Take a video tour of your dorm room, showing everything you own
  • Start with the most expensive items
  • Leave unnecessary valuables at home
  • Keep a digital record online

When you're signing up for renters insurance, only catalogue your own possessions, not your roommates' items. They'll need their own policy to protect their belongings.

Do I need auto insurance in college?

Car insurance is a necessity to legally drive a car in almost every state. But whether you'll need your own policy depends on whether you're bringing a car to school, as well as where you live — on or off campus, and near or far from where you lived before.

If you're bringing a car to school

If you are taking a car with you to school, you will need auto insurance. However, whether you'll need a new insurance policy once you head to school depends primarily on whether you live in a dorm or off campus.

If you live off campus and maintain legal residence there, you'll likely have to purchase your own policy. This is true whether the car is in your own name or your parents' names. Unfortunately, your rates will likely be much higher than they would if you shared a policy with your parents — as much as twice as expensive, in some cases. So keep insurance prices in mind when deciding whether to bring a car with you to college.

Students who live in dorms on campus are usually considered legal residents at their parents' house, so they can remain on their parents' policy. Sharing a car insurance policy with an older family member is one of the most effective ways for students to save on auto insurance, so we highly recommend doing so if you can. This is true whether you own the car yourself or it's in your parents' names.

Let your car insurance company know that you're taking the car to school, as insurers generally want to know where a car is primarily kept. If you don't notify the insurer and the car is damaged while on campus, there's a chance your claim will be denied.

If you're not bringing a car

If you're not bringing a car to campus, talk with your parents and their insurance provider about whether they should keep you on the policy. Removing you from the policy will be the cheapest option while you're away, but make sure they add you back when you return home for breaks. If you are a named excluded driver and get into an accident, you likely won't be covered by insurance.

Additionally, repeatedly adding and removing someone from a car insurance policy can have a negative impact on your parents' insurance rates over time, so they might not end up saving as much as you'd expect.

As an alternative, many insurance companies provide an "away at school" discount that lowers your rates whenever you're at college more than 100 miles from home without a car. This discount is to compensate for the fact that you won't be driving. Your parents' liability insurance (the most important part of car insurance) will protect you, no matter where you are or whose car you are driving.

Methodology

We calculated the total cost of insurance for students by combining the cost of health, renters and car insurance policies for a typical student in each state we surveyed. The health insurance policy selected is from the ACA marketplace for each state for a healthy college-aged adult, averaged across all metal tiers. The renters insurance policy is based on the statewide average for renters insurance. The car insurance policy is based on the cost of car insurance for a single college-aged driver with a good driving record.

Matt Timmons

Matt is a Technical Writer at ValuePenguin, focusing on insurance. He previously created educational content at Grovo Learning and MarketSmiths Content Strategists.

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.