College Students: Cheaper Auto Insurance, Why?

Car insurance for college students can be expensive, with younger drivers deemed to be high risk and therefore costing more to insure. However, there are ways for college students to reduce their car insurance costs. One way is to stay on their parents' policy, which is usually more affordable as the cost of certain coverages is split. Additionally, students may be able to get discounts on their car insurance if they have good grades or are enrolled in a distant student program. Comparing insurance quotes from multiple providers can also help students find the best rates. While car insurance for college students can be costly, there are options available to help mitigate the expense.

Staying on a parent's policy

Affordability

Sharing a policy with your parents is usually more affordable than having your own separate policy. By staying on your parent's policy, you can split the cost of certain coverages, which can result in significant savings.

Continuous Coverage

If you remain on your parent's policy while in college, you maintain a continuous insurance coverage history. This can positively impact your insurance rates in the future when it's time to obtain your own policy. Some insurers may even reject applicants with no history of continuous coverage.

Convenience

Managing a single policy is often easier than managing two separate ones. With a shared policy, you and your parents are both covered when driving each other's cars, eliminating the need to notify the insurance company about who is driving which car.

Coverage During Breaks

If you return home during breaks and need to drive, staying on your parent's policy ensures you are covered. This is especially important if you plan to drive your parents' cars during these periods.

Discounts

In some cases, insurance companies offer discounts for parents who have college students on their policy, including students who are away at school. These "distant student discounts" typically apply if the student attends school full-time and lives more than 100 miles away from home.

Primary Address

As long as your permanent residence is listed as your parent's home, you can usually remain on their insurance policy while in college. This is true even if you attend an out-of-state college, as most states allow students to stay on their parents' policies if their primary address is the parents' residence.

However, it's important to note that some states and insurers may require out-of-state college students to obtain their own separate policies. Additionally, if you fully move out and keep your car at your new residence, you will likely need to purchase your own insurance policy.

Student Discounts

Many insurance companies offer discounts for young drivers on a policy who are also good students. To qualify for a "good student discount," you typically need to maintain a certain grade point average (usually a B average or higher) or be on the Dean's List.

In conclusion, staying on a parent's policy can provide college students with financial savings, continuous coverage, and convenience. It's important to review insurance options carefully and consult with an insurance representative to determine the best course of action for your specific situation.

Student-specific discounts

Being a college student comes with a lot of expenses, and car insurance is one of them. While insurance providers typically charge younger drivers higher rates, there are student-specific discounts that can help lower the costs. Here are some ways college students can save on car insurance:

Student Away Discount

If a student is attending a college that is over 100 miles away and won't be driving their parent's car frequently, they may qualify for a student away discount. Many insurance companies offer a reduction in rates, usually ranging from 15% to 30% off select coverages, for students who are away at school and won't be driving regularly. This option allows students to maintain continuous insurance coverage, which can be beneficial when buying their own vehicle and insurance in the future.

Good Student Discount

Insurance carriers often offer discounts to students who perform well academically. Most insurance providers offer a good student discount for students up to the age of 25 who maintain a certain GPA or meet specific grade criteria (usually a B average or higher). The good student discount can vary across providers, ranging from 5% to 25% off the insurance premium.

Distant Student Discount

Some insurance companies offer a distant student discount for college students who attend a school that is a certain distance away from their permanent residence, typically more than 100 miles. This discount is applicable when the student doesn't take a car to college and can result in significant savings for the family.

Resident Student Discount

If a student is going away to college but plans to keep their car at home and remain on their parent's policy, insurance companies may offer a resident student discount. Since the student won't be driving as much, this can lead to reduced rates for the family.

Driver Training Discount

Insurance providers may offer a driver training discount for students under the age of 21 who take a course in safe driving or driver education. This discount encourages young drivers to improve their driving skills and can result in lower insurance costs.

Organization Member Discount

Certain insurance companies provide discounts to members of specific organizations, such as fraternities, sororities, honor societies, or other student groups. These discounts can help students who are part of these organizations save on their car insurance premiums.

While being a college student can increase car insurance rates, taking advantage of these student-specific discounts can help mitigate the costs. It's important to shop around, compare rates, and ask about available discounts to find the most affordable and suitable car insurance option.

Good student discounts

Car insurance for college students can be expensive, but there are ways to reduce costs. One way is to take advantage of good student discounts. Many insurance companies offer these discounts to students who are under 25 and can maintain a certain GPA (usually a B average or higher). The specific criteria and the amount of the discount vary by company and state. For example, Progressive offers a 10% discount for students under 23 with a B average or better, while State Farm offers a discount of up to 25% for students with good grades or scores in the top 20% on certain national standardized tests.

It's also worth noting that some insurance companies may offer higher discounts for students who are away at school and don't have a car with them, usually if they are more than 100 miles away from home. This is sometimes referred to as a distant student or student away discount. Combining a good student discount with other discounts, such as a distant student discount, can further reduce insurance costs for college students.

Distant-student discounts

Being a college student does lower auto insurance, and one way this happens is through distant-student discounts.

The amount saved with a distant-student discount varies by company but can be up to 7% on average. Progressive, for example, offers a distant-student discount of 10% on average.

The requirements for a distant-student discount vary by company but generally include the following:

• The student must attend college full-time at a school that is at least 100 miles away from home.
• The student must not have access to a vehicle while at school.
• The student must be under a specified age, typically 22 or 23 years old.

Pay-per-mile policies

Being a college student does not automatically lower your auto insurance costs, but there are several ways to reduce your premium. One way is to stay on your parent's policy, which is usually cheaper. Another way is to look for insurance companies that offer discounts to younger drivers.

One such discount is the "pay-per-mile" policy, which is offered by a handful of insurance companies. This type of policy is best suited for people who don't drive very often. With pay-per-mile insurance, you pay a monthly base rate, which stays the same, plus a monthly mileage rate, which can change. The monthly base rate is determined by factors such as age, gender, and vehicle type. The monthly mileage rate is typically a few cents per mile, and there is usually a cap on the number of miles included in the base rate (e.g., 250 miles per day). If you drive more than the included miles, you will be charged an additional per-mile rate.

• Metromile: Available in AZ, CA, IL, NJ, OR, PA, VA, WA. Metromile uses a wireless device that plugs into your vehicle's diagnostic port to track your mileage. They offer a range of coverage options, including liability, uninsured motorist, collision, and comprehensive.
• Esurance: Available in select states, excluding electric vehicles and hybrids. Esurance offers both traditional and pay-per-mile insurance policies, allowing customers to compare rates and choose the most cost-effective option.
• Nationwide SmartMiles: Available in most states and compatible with most cars produced after 1996. Nationwide offers a discount for safe driving and a mobile app that tracks mileage and provides a road trip exemption.
• Allstate Milewise: Available in DE, FL, ID, IL, IN, MD, MA, NJ, NM, OH, OR, PA, TX, VA, WV, WA. Allstate uses a plug-in device and an app to track mileage and driving habits, allowing customers to set weekly mileage goals.
• Hugo Insurance: A newer company offering a unique service that allows customers to turn their insurance on and off as needed through a smartphone app. Hugo only offers liability coverage at this time and is available in AZ, GA, IL, and OR.
• Mile Auto: Another newer company claiming to save customers 30-40% compared to standard insurance rates. Mile Auto offers standard coverages like liability and physical damage, as well as additional coverages like rental vehicle reimbursement and roadside assistance. Currently available in AZ, GA, IL, and OR.

It's important to note that pay-per-mile insurance may not be the best option for everyone. If you drive a lot, a traditional policy might be more cost-effective. Additionally, it's worth shopping around and comparing rates from multiple providers to find the best option for your specific needs.

Frequently asked questions