Young drivers make up 13% of the total population of licensed drivers in the United States, and are typically viewed by insurers as the riskiest and costliest group of drivers to insure. Car insurance for college students and teenagers tends to be quite expensive, but there are opportunities to save if parents and young drivers know where to look. Our study of car insurance quotes for young drivers ranged from around $900 to $11,300 depending on where students lived. We'll take a look at the considerations and discounts on car insurance for college students, teenagers, and their parents.
- Cost of Student Auto Insurance
- Car Insurance for College Students
- Car Insurance for Teenagers
- How to Save on Student Car Insurance
We sampled quotes for student car insurance across the United States, and found the average to be $5,411 for a single male 18 year old with liability coverage just above the state minimum. Your individual rates may differ based on your background, the car you drive, and the coverage you seek.
The most salient question to answer is whether the student will remain on their parents’ policy or obtain their own insurance. To determine this, we’ll discuss insurance costs and liability risks for each scenario.
College Students Remaining on Parents’ Policy
As a parent, are you willing to keep your college student on your policy? Students, are your parents willing to continue to cover you? All things equal, this arrangement generally results in a cheaper overall auto insurance cost for the combined family.
As Kris Kirchner, President of First Florida Insurance Network of Central Florida explains, the parents will have an established credit file and likely be eligible for a better tier of rating (especially if they have higher limits of liability), as well as access to multi-car discounts. These factors typically translate into more favorable auto insurance costs overall. However, this means that the parents’ assets are still on the hook for any accidents that college students may get into (beyond the liability limits of the policy).
If your child is attending college more than a hundred miles away from home without the car, then parents may be eligible for an away from home discount, or be able to remove their students off their policy for the time they’re away. We’ll cover this in more detail in our discount section.
Should a College Student Buy Their Own Policy?
While young drivers typically are more expensive to insure, having a separate policy would typically reduce liability exposure for the parents. Any accidents or moving violations will only impact the individual’s policy premiums, and any liability beyond the insurance coverage amounts will be limited to the college student’s assets.
Leigh Needelman, President of Florida Assures, Inc., recommends that college students have their own policy for the sake of their parents. “Of primary importance, this separation limits the parents’ exposure to rate hikes due to points accumulated by your college child’s accidents or moving violations. Also, keep in mind that companies typically assign the highest-rated driver aka the youngest, to the highest-rated vehicle, thereby causing higher premium costs to the parents. Lastly, in case of a serious accident, the parents’ “deeper pockets” will not be accessible and any litigious action will be limited to the college student’s policy.”
Based on our study, the average cost for a basic policy with coverage slightly higher than mandatory state minimums is $5,411 for an 18 year old male driver across America. You can save with tips from our research into the cheapest companies for teen drivers here.
If your teenager has a permit, insurance companies will require them to be listed on the auto insurance policy. Teenagers learning to drive typically get rated as permit status, which has little to no effect on premiums.
The situation changes once your teen passes his or her road test. It’s only when teenagers become licensed operators that the premium changes on the parents’ policies, notes Kirchner. There are a few discounts that parents can take advantage of to help reduce the impact of the increase.
In spite of their reputation as costly to insure, young drivers have access to a number of discounts that can lower their risk and auto insurance costs. Here are several discounts to get cheap auto insurance quotes for your college student and teenager.
Good Student Discount
Auto insurance companies typically will offer discounts for single and full-time students with good grades, some even up to the age of 25 after college graduation. Requirements and amounts can be different from company to company. For example, for eligible students, State Farm cuts 25% off of your policy, Allstate provides discounts up to 20%, and GEICO can reduce premiums by up to 15%. To be safe, we suggest you send a copy of your student's report card into the appropriate representative at their insurance office. As their academic career progresses, you may need to send in subsequent copies of their report cards, although some carriers don't require this.
Young Driver Education Programs
Check if your insurer has an education program for young drivers. If your teenager successfully completes these courses, you may be eligible for a further discount. As an example, Allstate grants a 10% discount to eligible graduates of their teenSMART education program.
Student Away from Home: Resident Student / Permissive Driver / Reduced Mileage
If the student lives at least 100 miles away from home and doesn't have a car at school, you may be able to benefit from three types of savings. Your insurance company may offer a resident student discount if you meet the two requirements above. Otherwise, you can consider temporarily removing your child from the policy to save money, but then your student may risk not be covered in accidents on campus. They’ll still be able to drive the car during spring and winter breaks, provided it’s not for more than thirty days. During this time, they usually fall under the category of permissive driver. Once summer break comes around, however, they’ll presumably be living with you more than a month at a time, and will need to be added back to the policy. Without your student driving your car, you may be eligible for a reduced mileage discount, so be sure to check with your insurer.
However, if your child is taking the automobile to school with them, they are not eligible for any of these.
Student Driver at College
If your student driver will be driving your car away from home, you will need to update your insurance for a material risk change to adequately cover this. Your premium will change depending on where the car is garaged and driven. Therefore, if your son or daughter’s campus is in a less actuarially risky place, then your auto insurance costs may decrease. Remember to update this when your child drives the car back home for the summer too.
As mentioned above, companies can assign the highest-rated driver (usually the youngest) to the highest-rated vehicle, in Needelman’s experience. It’s worthwhile to check if you can minimize costs by assigning and restricting your teenager to the safest car or an older car.
In addition to the relative inexperience of student drivers, another reason they tend to see higher quotes is their thin credit file. One long-term approach to this is to begin building a credit card history with great repayment records and responsibility.
Here are several questions we typically get asked about student auto insurance.
How much insurance coverage should I get for student car insurance?
If the college student is on their own, they should at a minimum purchase the mandatory state liability coverage. If they have more assets to protect, then they should purchase as much as they can afford. Kirchner recommends striking the right balance between coverage and price, "but coverage should always be most important unless it is an issue of whether or not one can afford it at all". In his experience, this generally means keeping the child on the parents’ policy as they will generally have access to higher limits (more protection), with the higher costs being offset by multi-car and credit-scoring discounts the child otherwise would not have. For more information: how much auto insurance should I get?
What factors affect the cost of student car insurance?
General factors that typically impact the cost of auto insurance include: where the vehicle is garaged and driven, the age and marital status of a driver, the make and model of the car insured, the number of accidents and traffic violations, as well as credit file. These variables are weighed differently depending on your insurance company's underwriting methodology, and your state's auto insurance regulations. For example, insurance costs for a four-door family–style sedan like a Honda or Toyota are generally priced lower than insurance for a high performance vehicle like a Mustang, Camaro or Infiniti G35, according to Needelman.
Why are car insurance costs so high for young drivers?
Drivers under the age of 25 typically are costlier to insure because they have fewer years of driving experience and tend to have higher rates of accidents and claims filed. Furthermore, they also generally have less credit history, which can be interpreted adversely in certain states.
Are young male drivers more expensive to insure than young female drivers?
Yes. This is primarily because insurance companies' statistics show that young male drivers are more likely to be involved in car accidents compared to young female drivers. For example, in the state of California, rates for 19 year old males are on average 14% higher than rates for 19 year old females.
Does it matter who owns the car that a student is driving?
Yes, to a certain extent, according to Kirchner. If a parent owns a car that a student primarily drives, Kirchner suggests keeping the car insured under the parents' policy, since the parents would be brought into a suit in the event of an accident. If the student co-owns the vehicle along with their parents, he or she has the option of having an individual policy or being included on the parents’ policy. If the child owns the vehicle himself or herself and are 18+, they should be on their own policy, but can be on the parents’ policy if living at home.