Auto Insurance: College Kids, Keep Them Covered Or Cut Loose?

As your child gets ready to leave for college, you may be wondering whether to keep them on your auto insurance policy. The answer depends on a few factors, such as whether they will be driving at college or commuting to a nearby school, as well as the associated costs. Keeping your child on your policy can provide peace of mind and ensure they are covered when driving, but it may also increase your premium due to the higher risk associated with student drivers. Removing them from your policy, on the other hand, could result in significant cost savings, especially if they won't be driving during their time at college. Let's explore both options in more detail.

Pros and cons of removing your college kid from your auto insurance

There are several factors to consider when deciding whether to remove your college kid from your auto insurance. Here are the pros and cons of removing them from your policy:

Pros of removing your college kid from your auto insurance:

• Cost savings: Removing a college-aged driver from your policy can result in significant cost savings, possibly more than $1,000 a year, as student drivers are considered "high-risk" and increase your premium.
• Lower rates due to location: If your child attends college in a lower-rate ZIP code, removing them from your policy may result in lower insurance rates.
• No car at college: If your child is not taking a car to college and does not plan to drive when at home during breaks, removing them from your policy can save costs.

Cons of removing your college kid from your auto insurance:

• Lack of coverage: If your child occasionally drives a friend's car or an uninsured car without your knowledge, they may not be covered by your insurance policy in the event of an accident.
• Loss of student-specific discounts: Keeping your college kid on your policy may make you eligible for student-specific discounts, such as the "good student discount" or "distant student discount."
• Uninterrupted insurance coverage: Maintaining continuous insurance coverage for your child can result in lower premiums when they obtain their own policy in the future. Removing them from your policy may disrupt this continuity.
• Primary address considerations: If your child maintains their primary address as your address, they may be considered your dependent, and you may assume their liability in the event of an accident.
• Driving during breaks: If your child returns home during breaks and drives, you will need to ensure they are covered by your policy or have their own insurance.

Reasons to keep your college kid on your auto insurance

There are several reasons why it might be a good idea to keep your college kid on your auto insurance. Here are some things to consider:

Cost savings

While it may seem counterintuitive, keeping your college kid on your auto insurance policy could result in cost savings. If you remove them from your policy, your insurance company may consider them an unlicensed driver in your household and increase your premium. Additionally, keeping your child on your policy can help build a record of continuous auto insurance coverage, which could result in lower insurance costs when they obtain their own policy in the future. Some insurers may even reject applicants without a history of continuous coverage.

Coverage for your child

If your child will be driving at all while at college, it's essential to keep them on your policy. This includes driving their own car, a friend's car, or even if they are just a passenger. If they are in an accident, having them on your policy can provide extra coverage. Additionally, if they are struck by a car while on foot, on a bike, or as a passenger in another person's vehicle, they will be covered.

Student-specific discounts

Keeping your college kid on your policy may make you eligible for various student-specific discounts. Many insurance companies offer good student discounts for students with good grades, with potential savings of up to a couple of hundred dollars. Additionally, some companies offer distant student discounts for full-time students who live away from home, which can save families hundreds of dollars.

Convenience and ease of management

Having a single policy that covers both you and your college kid is often more convenient and easier to manage than maintaining separate policies. This is especially true if your child returns home during breaks and needs to drive. With a shared policy, you don't need to worry about manually adding them back to the policy during these times.

Liability considerations

If your child is still financially dependent on you, keeping them on your policy can help protect you from liability in the event of an accident. A savvy insurance attorney could argue that you, as the parent, are responsible for their actions. By keeping them on your policy, you can ensure that they have the necessary coverage.

Discounts for good grades

Many insurance companies offer good student discounts to high school and college students who can demonstrate good academic performance. These discounts can help offset the typically high insurance premiums for young and inexperienced drivers.

Requirements for Good Student Discounts

To qualify for a good student discount, insurers usually require the young driver to be under 25 years old and enrolled full-time in high school or college. Additionally, students must maintain a certain level of academic performance, typically a "B" average or a GPA of 3.0 or higher. Some insurers may also accept standardised test scores, such as the SAT, ACT, or PSAT, or a letter signed by an administrator testifying to the student's academic achievements. Homeschooled students may need to provide alternative proof of their academic performance, such as scoring in the top 20% on certain standardised tests.

Discount Amounts

The discount amount varies depending on the insurance company but is generally between 10% and 25% off the insurance premium. For example, GEICO offers up to a 15% discount, while State Farm offers up to a 25% discount. The average good student discount is around 12.5% to 14%.

How to Apply for a Good Student Discount

To apply for a good student discount, students should contact their insurance agent or the insurance company's customer service representative. They will need to provide proof of their academic achievements, such as a transcript, report card, or letter from the school.

Other Discounts for Students

In addition to good student discounts, insurance companies may offer other discounts for students, such as bundling policies, vehicle safety features, or affiliation with certain organisations like fraternities or sororities. Students can also get a discount for completing driver's education courses or maintaining a safe driving record.

Comparison Shopping

It is important to compare insurance companies before purchasing a policy to find the best discounts and rates. Students can also consider sharing their car insurance policy with a parent, as this can result in significant savings.

The distant student discount

• They must be a full-time student enrolled in a college or university.
• The college or university must be at least 100 miles away from your home.
• Your child should not have a car at school or access to a vehicle while they are away.
• Your child must be under the age of 23. However, some companies, like Progressive, set the age limit at 22.

It's important to note that the requirements and discount amounts may vary depending on the insurance company. Be sure to shop around and compare rates and discounts offered by different companies to find the best deal for your specific situation. Additionally, remember to review your policy when your child returns home for breaks from school, as you may need to make adjustments to ensure they are properly covered during that time.

The non-owner auto policy

A non-owner auto insurance policy is a good option for those who don't own a vehicle but regularly borrow or rent other people's cars. It provides liability coverage for bodily injury and property damage, meaning that it will cover you if you're liable for damages or injuries in an accident. It does not cover damage to the vehicle you're driving or your own injuries.

Non-owner insurance policies are typically taken out by people who:

• Borrow cars often
• Use car-sharing services
• Rent cars often
• Need to file an SR-22 or FR-44 form with their state
• Want to maintain continuous coverage

Non-owner car insurance may not be necessary if you only borrow or rent a car a handful of times a year or if you borrow a car from someone you live with. In these cases, you may already be covered by the car owner's policy.

The cost of non-owner coverage depends on factors such as the driver's age, driving record, credit score, and chosen coverage. It is typically less expensive than standard car insurance policies.

Frequently asked questions