A teenage driver starting college is a very significant event when it comes to car insurance. There is a very strong chance you need to make some big changes to your car insurance policy. In some cases, parents may be able to reduce premiums significantly – especially when your teenage driver is going away for college and not bringing a car. If that’s your situation, pay close attention to the section below on the “away at school” discount.
In other cases, you may want to expand liability coverage to protect not just your teenage driver, but also yourselves and your own net worth if you are the owners or co-owners of the car the student is driving.
In any case, when a teen driver transitions from high school to college, or moves away from home, there’s a sea change in your risk profile, from a car insurance underwriter’s point of view. Your premiums may change. And it’s very possible that the car insurance carrier you are with may no longer be the best choice for you.
Review Your Current Policy.
First things first: Make sure that if there’s an accident, you will have a valid claim.
So if your child is going away to college – or even just moving out into her own apartment for the first time – make sure your car insurance documents reflect that.
This can be a problem if you have been carrying your child on the parental policy and listing him or her as living and storing the car at Mom and Dad’s house… but the accident investigation discovers that in fact the child has been living hundreds of miles away in a big city, and parking the car in a completely different city or state!
If the student is taking a car covered under an existing insurance policy to school, call your agent or carrier and let them know. You don’t want to get an unpleasant surprise when the student has a claim out of town, many miles away from where the car was supposed to be garaged according to the policy documents. You and the student could find out you don’t have the coverage you thought you did.
Another problem could arise if your child has been earning extra money driving for Uber or Lyft, or delivering meals for Doordash or other commercial services. You may not even know about it. Especially if your child is no longer living full-time under your roof.
Either of these circumstances could cause a carrier to deny your claim.
If there’s even a chance your youngster could be driving his or her vehicle – or your vehicle, for that matter – for rideshare or any other kind of commercial driving, have a talk with them, and call us right away. We want your college-age driver to be able to make some money. God know college is expensive. But let’s make sure you have the correct coverage in place.
At Select Insurance Group, our agents know the deal, and know what questions to ask to make sure the policy documents reflect the reality on the ground. So you get the insurance coverage you really need.
People often think of college students as not having deep pockets. And that’s true – if you’re only talking about assets already in hand. Young people usually don’t have a ton of cash sitting in their bank accounts or home equity.
But college students have one very large asset – and one that does not escape the notice of ambulance-chasing plaintiff’s attorneys: A lifetime of future income.
If a college student is driving, and causes a wreck, and someone gets seriously injured, and is just carrying the state minimum liability coverage, Mr. Student could still have a huge problem: The victim could get a judgment for $1o0,ooo or $200,000 – dwarfing a $10,000 limit that’s the state minimum in many states.
That problem doesn’t go away just because you met the state liability insurance minimum. What happens then is the plaintiff’s attorney will collect the $10,000 from the insurance company, and then come back at you to collect the difference. They could attach your bank account. They could also go to the court and garnish your wages for years.
If the student is a medical or law student or otherwise is expected to have a big income after graduating, plaintiffs attorneys may be very interested in that money.
That’s why it’s important even for college students to have an ample liability insurance cushion: Liability insurance isn’t just protecting the money you have in your bank account today; You’re protecting every asset you’re going to have in the future.
High liability protection is more important than a low deductible.
The optimal strategy isn’t to go for the cheapest premium. Teenagers and college students are inexperienced drivers. They drink more. They text while driving. They get in more accidents. They’re just like us at that age but with streaming video on their phones.
Insurance companies know this. They have the data. They charge 16-25-year-old drivers higher premiums for a reason.
When it comes to car insurance for college students, the optimal strategy is usually to increase liability insurance coverage. Carry the most you can easily afford. Especially if the young driver is under 18.
If you need to increase your deductible by $1,000 or $2,000 to free up some cash to buy the increased liability coverage, do it.
Whether you’re a parent, or you’re a young driver buying your own insurance, think of it this way: You can solve a $2,000 problem. It just takes a summer job or a bit of overtime.
You can’t solve a $200,000 problem.
That’s what insurance is for!
Shop Around for Car Insurance Every Year.
Insurance carriers all price risk differently. For a teenager or a driver in his or her early 20s, premiums can change radically every year.
Check out this chart from Value Penguin:
The average car insurance premium falls dramatically every year for these younger drivers. The difference between age 18 and 19 is more than a thousand dollars.
These carriers aren’t marching in lockstep. Some of them are reducing premiums more than others at each of these age breakoff points.
So every time Junior has a birthday, you should be running another car insurance quote… Ideally from an independent agent who can quote multiple carriers, not just one. You could find that one carrier is discounting more at a younger age than your current carrier. And switching to a more appropriate carrier may save an appreciable amount of cash every month.
What if my college-age student doesn’t own a car?
You need insurance, anyway. The good news is, you won’t have to spend nearly as much for it!
Why does a college student need insurance if they don’t own a car? To cover them if they borrow a car. Or if they’re acting as someone’s designated driver to make sure everyone gets home sage.
If you or your family member is going to school, the military, or otherwise going away from home for a long time and doesn’t have a car, there are a couple of possible solutions to get a discount on car insurance: Get a “distant student” policy, or get a “non-owner” policy.
Non-owner car insurance for students
As the name suggests, the non-owner car insurance policy is specifically designed to cover an individual who does not own a car, and does not have regular access to his or her parents’ car, or any other particular car. It’s for students and others who only drive occasionally, and generally do it in a borrowed vehicle.
The non-owner policy provides a large amount of affordable liability protection, as well as protection against medical bills and uninsured motorists. This coverage does two things: First, it protects others on the road. Second, it protects the insured (and, if a minor, the insured’s parents or guardians) against the potentially devastating liability that may arise if the insured causes a wreck and injures somebody, or causes significant property damage.
It does not, however, cover damage to the car the insured is driving. That insurance is up to the owner of the car. If the vehicle owner doesn’t keep collision coverage on the car, then they could potentially sue you or your college student to recover the damage.
Note that non-owner insurance also does not cover:
- Cars owned by the insured or their spouse.
- Cars driven during business transactions.
- Cars used by the insured on a regular basis. So a non-owner policy u not cover a college student who lives at home if he gets in an accident in his or her parent’s car.
We also use non-owner policies to protect drivers who have an out-of-state DUI or reckless driving incident or who don’t have a car at all (for example, they totaled their car in a drunk driving accident and can’t afford to replace it!) and who need an SR 22 certificate in order to keep their license in force.
The “Away At school” discount — Car insurance for students going away for college
Alternatively, if you do want to keep a college-age student on your policy, some carriers offer an ‘away-from-home’ discount: If the student does not have a car, and is attending school at least 100 miles away from the parents’ home, they know the student won’t be driving the parent’s vehicle very often. So the carrier will cut a break on the premium, due to the reduced risk.
If your carrier doesn’t offer an “away at school” discount, then definitely call us and let us shop around for you!
Have you seen Junior’s grades?!?!
Well, they matter. Car insurance analysts realized years ago that good students were usually good drivers. People who are conscientious in one field are usually conscientious across the board. And so they offer discounts to younger drivers who maintain at least a B average in school, or who are in the top 20% of their class. You’ll probably have to show transcripts. Details depend on the insurance company. But some carriers offer a good student discount through college, up to age 25.
If your young driver struggles in the grade department, it may be worth working out a little incentive program. Carriers vary, but good student discounts range from 5% to 20% off the standard premium.
If your student recently improved his or her grades, it might be worth it to call us and get a fresh round of car insurance quotes. It costs you nothing. But one carrier might happen to be very aggressive about earning ‘good student’ business, and will be willing to reward the academic effort with a discount on car insurance.
Safe Driver Course Discounts for Students
Car insurance companies frequently offer insurance premium discounts to people who take and pass a qualified safe driver course, either in-person or online. In fact, in some states, it’s the law.
Adept Driver offers a four=hour online safe driver course called TeenSMART geared specifically for teenagers. It requires some parental involvement as well.
Carriers are happy to offer a discount for teenagers who complete the TeenSMART course, because course graduates have 30% fewer crashes, and 51% bodily injury claims, according to Adept Driver’s website. Carriers in 49 states are discounting premiums for course graduates. In California, the TeenSMART discount is as high as 20%.
Adept Driver also offers the Advanced Driver course for drivers age 20 through 60. The course seems to be effective – the company claims that its graduates reduce crash frequency by an average of 28% and up to 49%, bodily injury by as much as 51%, and traffic violations by an average of 54% and up to 67%.
Insurance discounts for this course aren’t as common as discounts for TeenSMART graduates.
But the insurance discount isn’t the most important reason to take the course.
Military Car Insurance Discounts
Lots of college students are also in the military – especially the Reserves and National Guard. Members of the Armed Forces of the United States may be eligible for a discount. This includes members of the Reserve Component of all four branches of the military and the Coast Guard. As always, details may vary by carrier and by state. Additionally, some state National Guard (Army or Air Force) may kick in a tuition waiver for serving members, depending on the state and the service member’s rank.
Belongings aren’t (usually) covered.
Lots of people assume that if their belongings get stolen out of their car, or if the car gets stolen with valuable belongings in it, that the car insurance policy will cover it.
And lots of people get disappointed at claim time. Especially if they carry liability only, which won’t cover personal belongings at any rate. Or the car, for that matter.
The fact is, unless you pay extra for comprehensive coverage, and/or add a rider to the policy, car insurance isn’t going to cover that laptop computer or those guitars and amps stolen from a parked car overnight.
But belongings stolen from a car might be covered under a renter’s insurance policy.
Which brings us to…
Renter’s insurance for college students.
Renter’s insurance for college students helps cover damages the students (and their hard-partying friends) might do to their apartments. Students sometimes accidentally cause kitchen fires, floods in the bathroom, burn a hole in the carpet trying to iron their ROTC uniform on the floor (guilty), have crazy friends who punch holes in the drywall, and do all sorts of other damage.
College students need renter’s insurance because they have friends like this.
Yes, the landlord will have insurance on the property. But that protects the landlord. Not the tenant, and not the then
But that doesn’t mean you need a separate, stand-alone renter’s insurance policy. Your college student child may already be covered. Parents, if you’re homeowners, check your policy for something called off-premises coverage. This provides protection for a member of the household who is away from the primary residence. Coverage is normally limited to 10% or so of the total amount on the homeowner’s policy. But that’s usually enough to replace a laptop, clothing, textbooks, and a cell phone that gets, say, stolen or damaged in a flood or fire.
It may also help pay for a hotel room if the student’s apartment becomes uninhabitable because of a covered peril.
The downside is that the homeowners policy usually has a higher deductible than a renter’s insurance policy. If the student isn’t exactly swimming in dough (most of them aren’t!), then this is one of those rare situations in insurance when a lower deductible might make some sense.
Car insurance for College Students – The Bottom Line:
When it comes to buying car insurance for college students, you should definitely speak with an independent auto insurance expert who can help you look at all your options. Not just the ones the captive agents want you to know about. It’s very likely it’s time to change carriers.
Regardless of whether you change insurance carriers, it’s wise to speak with your car insurance agent and make sure you have the right mix of coverages that reflects your situation, the student’s situation, and your budget.
Most importantly, you should make sure your policy is up to date, reflects the student’s address, and where the car will be garaged while the student is attending school.
Get a Quote
If you or your loved one is heading to college this fall – or the military, for that matter… many of the decisions regarding car insurance will be the same – then give us a call today, or contact us online for. free, no-obligation car insurance review.
You could save money. More importantly, you could eliminate or prevent some massive holes in your insurance protection for you and your family!
See you on the road!
Steve “Mr. Insurance” Ludwig
President, SelectSR22insurance.com, Select Insurance Group.