Typically, new and young drivers face higher auto insurance rates compared to older drivers. This is because their lack of driving experience makes them more likely to meet with an accident and file a claim. However, if you’re a young driver, you can significantly reduce your car insurance premiums in a number of ways, one of which is a good-student discount.
Why Do Auto Insurance Companies Charge Young Drivers Higher Rates?
Auto insurance companies want to minimize their financial risks. So, the more risk you pose to an insurer, the higher your premiums will be. In contrast, you can expect to get more affordable rates if you are a safe driver. The situation is more complicated for students.
Even though some young people are good drivers, insurance providers don’t actually sit in the car with their customers to evaluate their driving skills. Rather, they use equations to determine the average risk of a specific group of drivers, says The Balance. Some of the factors in these equations include how long you’ve been insured and whether you’ve filed any claims in the past. Students don’t have a solid driving record because they’re new to driving. Therefore, insurers regard this lack of experience as an additional risk.
What Car Insurance Discounts Are Available to Students?
Depending on your insurance provider and your state, you may be eligible for an array of auto insurance discounts while you’re in college. According to NerdWallet, the following are some of the common car insurance discounts available to college students:
- Good student: Many car insurance companies offer discounts to full-time students who get an average grade of B or higher, have high standardized test scores, or make the honor roll or dean’s list. You’ll have to meet the age requirements and provide test scores or school transcripts.
- Student away from home: If you’re attending a college located over 100 miles away, you may want to leave the vehicle at home. Some insurance providers will give you a discount if you drive the family car only when you’re home for breaks or holidays. Leaving the car behind also lowers your risk of getting into an accident or committing a traffic violation, which can help keep your auto insurance costs low in the long run.
- Fraternity, sorority, or honor society: If you’ve joined an eligible fraternity, sorority, or honor society, you may be able to get a discount from your insurance company.
- Selected university or alumni association: You may also qualify for a car insurance discount simply by going to an eligible university or being one of its alumni. It’s important to note that only some universities participate in this discount program, so you should ask your university’s administrative office or insurance agent if you qualify.
- Affiliation: Many college students have affiliations with other organizations or groups. Depending on your insurer, your group affiliations may make you eligible for an auto insurance discount.
- Military: Some car insurance companies offer discounted rates to active and reserve military members. If you decide to enroll in a university or college after serving in the military, you may qualify for a car insurance discount when you return from deployment. If you’re currently deployed, you may enjoy lower premiums because you aren’t using your vehicle. If your vehicle is in long-term storage, Policygenius recommends that you buy comprehensive coverage only, which protects your car from the elements, theft, and vandalism.
- Young driver training: Another way for new and young drivers to reduce their auto insurance premiums is to complete a driver education class. Ask your school or another participating organization how you can register for the driving class. Additionally, you may be able to lower your rates even more by taking additional driving training, such as a defensive driving course. Some insurance companies, such as GEICO and State Farm, have their own young driver training programs. State Farm’s program is called “Steer Clear,” which is offered to students below age 25.
How to Qualify for a Good Student Discount
To receive or maintain a good-student discount, you may have to show proof of eligibility to your insurance company, according to Investopedia. For example, your insurer may require a report card or school transcript. If you are a homeschooled student who doesn’t have a traditional report card, you may be allowed to provide another form of proof, such as SAT scores that put you in the top 20 percent of all test takers. Therefore, a good-student discount doesn’t only incentivize you to perform well in school, but it also helps you and your parents save money.
An auto insurance provider may regard you as a good student if you are able to show one or more of the following:
- Grade average of B or higher
- Good scores in standardized tests such as SAT, ACT, or PSAT
- Ranking in the top 20 percent of your class
- Honor roll or dean’s list
- Associate degree
- Bachelor’s degree
- Letter with your administrator’s signature testifying to your academic excellence
Bear in mind that the discount rate may vary, depending on the insurance company. One insurer may give a 25-percent discount to full-time high school or college students with a grade average of B or higher until the age of 25. Another provider may offer a 15-percent discount to single drivers who have a GPA of at least 3.0 in high school or college. For example, GEICO gives a discount of up to 15 percent on certain auto insurance coverages for full-time students age 16 to 24 who have a grade average of B or better.
If you’re in your teens or 20s, be prepared to pay significantly more for auto insurance than other drivers. Fortunately, you can get a good student discount to make your policy more affordable. Additionally, you should try to qualify for other discounts, such as the bundling discount, safety equipment discount, and defensive driver discount. You can also save substantially if you join your parents’ auto insurance policy.
Check this out if you need additional information, resources, or guidance on car insurance.
Sources:
https://www.thebalance.com/car-insurance-discounts-for-students-527530
https://www.nerdwallet.com/article/insurance/student-young-driver-discounts
https://www.policygenius.com/auto-insurance/car-insurance-discounts-for-students/
https://www.investopedia.com/terms/g/good-student-discount.asp
https://www.caranddriver.com/car-insurance/a35590749/factors-that-affect-car-insurance-rates/
https://www.caranddriver.com/car-insurance/a35710606/benefits-of-car-insurance/
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