Finding Cheap Car Insurance for College Students
College life is full of exciting new experiences, but it also comes with its fair share of financial challenges. For college students who own a car, auto insurance can be a significant expense. Fortunately, there are strategies to find affordable car insurance without sacrificing essential coverage. This article explores various factors that affect insurance rates for college students and provides practical tips on how to save money.
Why Car Insurance Rates Are High for College Students
College students often face higher car insurance rates compared to older, more experienced drivers. Several factors contribute to this:
Age and Driving Experience
Young drivers, particularly those between 18 and 22, are statistically riskier drivers due to their limited experience behind the wheel. Insurers view them as more likely to be involved in accidents, leading to higher premiums.
Credit Score Considerations
Auto insurance providers often use credit scores as an indicator of risk. Drivers with low credit scores are seen as higher-risk individuals, potentially leading to increased insurance rates. Some insurers may view the lack of a credit score the same as a low credit score. The national average cost of auto insurance for drivers with low credit is $3,377 annually, or $281 per month. Drivers with low credit can see their auto insurance rates increase by as much as 80 percent.
Vehicle Type
The type of vehicle a college student drives also affects insurance costs. Luxury vehicles typically have higher premiums due to their increased value and potential repair costs.
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Coverage Level
The level of coverage chosen impacts the premium. Minimum coverage, which only meets the state's legal requirements, is cheaper than full coverage, which includes collision and comprehensive protection. However, opting for minimum coverage means higher out-of-pocket expenses in the event of an accident.
Location
Your state and city affect your insurance rates.
Strategies to Save on Car Insurance
Despite the challenges, college students can take several steps to lower their car insurance costs.
Staying on Parents' Policy
One of the most effective ways for college students to save on car insurance is to remain on their parents' policy. On average, adding an 18-year-old driver to a family policy increases annual premiums, but this is still often cheaper than purchasing a separate policy. College students may have the option to stay on their parents' auto insurance policy if their primary address matches the address on their parents' policy. In most cases, college students can stay on their parents' car insurance when they go to school - if they haven't moved out permanently. It saves money. You can share cars. It's more convenient. It's generally easier to manage a single policy rather than two. Students should remain on their parents' car insurance policy if they drive their parents' cars when home on weekends or school vacations.
If you share a permanent address, or if the car is usually kept overnight at your parents' house, you can continue sharing a car insurance policy - regardless of your age.
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Good Student Discounts
Many insurance companies offer discounts to students who maintain good grades. Progressive, for instance, offers a good student discount in most states, typically starting at 5%. To qualify for Progressive's good student discount, your child must be a full-time student, under the age of 23, and have a B average or better.
Student-Away-From-Home Discounts
Some insurers offer distant student discounts for college students who go away to school and don't take a car. Depending on the state, you can get a discount for any full-time college students on your Progressive auto insurance policy if they're 22 or younger and enrolled at an educational institution that's more than 100 miles away from home.
Driver Education Courses
Completing a driver education course can demonstrate a commitment to safe driving and may qualify you for a discount.
Telematics Programs
Signing up for a telematics program, such as Progressive Snapshot or USAA Safepilot, allows the insurance company to monitor your driving habits. Safe driving habits can lead to significant savings. Usage-based insurance offers personalized rates based on how safely you drive using Snapshot®, a mobile app or device that plugs into your car. A key component of safe driving is the time you spend behind the wheel.
Increasing Deductibles
Raising your deductible can lower your monthly premium. If you’re a safe driver and don’t anticipate filing any claims, this can be an effective way to reduce your insurance costs.
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Bundling Insurance Policies
If your parents are looking to lower their rates, bundling insurance could help. Many companies offer discounts when you combine auto policies with things like homeowners or renters’ insurance.
Maintaining a Clean Driving Record
Practicing safe driving habits and keeping your record clean are some of the most effective ways to keep your rates low.
Comparing Multiple Policies
Comparing quotes from different insurance companies is one of the best ways to find affordable options. Insurance prices vary widely between providers, so shop around to find the best deal. College students looking for their own auto insurance can quote online in minutes and get the right coverage. Each insurance provider uses their own unique formula to determine your insurance rate.
Consider Dropping certain coverages
If you're a college student and your car is paid off or of minimal value, you could lower your rate by dropping comprehensive and collision coverage.
Special Considerations
No Credit Score
College students with no credit generally pay $200 to $300 monthly for full coverage auto insurance, but rates vary significantly by personal circumstances. You can still find auto insurance if you don’t have a credit score. However, some auto insurance providers view the lack of a credit score the same as a low credit score, so your rates could be significantly higher. It’s especially important for drivers without a credit score to shop around and compare quotes to find the lowest rates. One exception is for drivers in California, Hawaii, Maryland, Massachusetts. Both GEICO and USAA offer low rates for young drivers and drivers with low credit, making both providers great options for college students with no credit.
Out-of-State Students
Most states allow out-of-state college students to stay on their parents' car insurance if their primary address remains their parents' residence. However, depending on your state, insurer, and other factors, an out-of-state student may be required to get their own policy.
International Students
International students studying in another country need their own car insurance policy that's valid in the country where they plan to drive.
Popular Insurance Providers
Several insurance providers are known for offering competitive rates to young drivers.
USAA: USAA has the lowest average rates for young drivers at $171 monthly, but is only available to military members, veterans, and their families. USAA offers the cheapest auto insurance for young drivers, with an average annual rate of $2,048 and an average monthly rate of $171.
GEICO: GEICO has the second-lowest auto insurance rates, on average: $2,328 per year, or $194 per month.
The General: The General provides flexible car insurance options tailored for students.
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