Student Discounts: Does College Status Reduce Rates?
Recently, a parent bemoaned his insurance charging an annual price of $1,700 to carry his son on his policy. The hardworking dad noted the “obscene” price even included a “good-student” discount.
Most parents would be frustrated by this! Especially if they have a clean driving record, and they’ve taken the time to ensure their child isn’t a careless driver.
But, when an insurance company can’t gauge a child’s driving skills, due to a lack of driving history, the company typically proceeds with caution. Moreover, teenagers and college-age adults (at least at the undergraduate level) are involved in more serious or fatal accidents than any other drivers.
In fact, a recent study out of the University of Minnesota noted that young people, aged 15 to 24, are two- to three-times more likely to die from “injury” than children aged one to nine, with automobile accidents a major leading cause.
Still, $1,700 is high, and it does beg a question:
Does College Status Ever Reduce Auto Insurance Rates?
The short answer is “not necessarily.” The longer a child goes without any citations or accidents, the more they actually “prove” themselves in the eyes of an insurance company. That proving ground will usually be from ages 16 to 21, so college may indirectly influence a young driver towards lower rates, but the simple act of enrollment probably won’t do that much to improve the financial outlook.
However, there are some measures parents can take to ease the burden.
First, put your young driver in a sensible car.
A good first car, if you’re shooting for cheap insurance rates, is one without a lot of power — think four cylinders.
It will also be a car that comes equipped with airbags, ABS brakes, and perhaps an alarm system and daytime running lights.
Jesse Mallare of the insurance quote service Sureify.com explains, “Sometimes, teenage drivers are an insurer’s worst nightmare, due to their statistically high-risk behavior and limited driving experience. Males under 25 are usually the highest-costing demographic of drivers for insurance companies.”
Mallare advises college-aged drivers looking for cheaper rates to fight against the idea of a “brand new Mercedes or Lexus.”
He added, “Besides, everyone needs to experience their first ‘clunker’.”
Next, talk to your insurance agent about any safe driving courses that might make a young driver eligible for a discount.
According to Yahoo! contributor Steve Thompson, insurance classes like defensive driving, intensive driving, and driving school, may all factor in to lowering insurance rates. Of course, it differs depending on the company and what your state offers, but it’s worth considering.
Thompson calls safe driving courses “a great way to lower insurance premiums if you’ve got a teenage driver about to earn his or her license.” Those classes can continue to pay dividends through continued student discounts as your child moves toward a degree.
Then, get good grades.
Every insurance company offers good student discounts, and those can often be very rewarding, saving students a percentage of their premium every month up to the age of 25. Companies like GEICO and Nationwide require the student to be full-time and maintain a “B” average.
State Farm does, as well, and says that a qualifying student can get “up to 25 percent off.”
While you’re at it, drive safely.
As Mallare notes, the best thing that a college student can do to ease the insurance burden is to “drive safely and not take any risks.”
“It’s important to build a good driving history at a young age, so it benefits your insurance in the long run,” Mallare said.
While it may not be “sexy” to exercise personal responsibility behind the wheel while your peers are playing mailbox baseball, it will still be easier on your wallet. (And you’ll live longer.)
If you’ve exhausted the above efforts and you’re still not satisfied with where your premium has landed, consider a pay-as-you-go policy, particularly helpful if the college student is still living at home and doesn’t drive very much. Also, use the web to your advantage and shop around for different prices.
Through responsible driving and making the most of the available options, you and your college student can ensure the best possible rates.