Do I need car insurance for my college freshman?

There are a few factors to consider when determining if college students need to have car insurance while they’re in school:

  • Are they taking a car with them to school?
  • Will they be staying at home or going away to college?
  • If going away, will they have access to or need to drive a vehicle when home for breaks?

Your answers to these questions will help your agent or insurance company decide if they need to be covered. Most car insurance companies have a "rate or exclude" rule. This rule means every licensed driver in the household must be either rated or excluded from your car insurance policy.

If this is a rule with your car insurance company, they will require your college student to be rated as a driver on your policy. It won’t matter if they are staying home or going away, or if they have access to a vehicle in the household.

You may not be able to exclude a college student from your policy, even if the student doesn’t drive your vehicles, unless one of two things happens: The student changes the driver’s license residence address or gets an individual car insurance policy.

If the college student must be rated, then there are ways to offset a youthful driver's higher cost on your auto insurance.

Student away at school

A college students takes notes and works on homework in her dorm room

If your college student is going more than 100 miles away from your home address for school, you may be eligible for a discount.

Keep in mind that this car insurance discount only applies to college students who don't take a car to school. Students who do take cars with them will need to remain as drivers and rated on the vehicle in their possession. This rule may differ by company.

Get a new policy

Another way to potentially save money and get affordable car insurance coverage is to get a new policy for student drivers.

The only way to know if this will save money is to get a car insurance quote for the driver and vehicle they'll use the most. If the car is titled in their name, you'll have to do this anyway.

The cost of car insurance on a separate policy may be cheaper than staying on the family policy. Due to the number of personalized factors required, quotes will vary by company. It's best to get several auto insurance quotes from different companies to compare.

Keep the student driver on the existing policy

A mother and daughter have a talk before the daughter heads off for college, while the rest of the family can be seen in the background.

Sometimes, the best way to save is not to take any action. If your college student has to remain on your policy, there may not be much you can do to lower the car insurance rates.

However, most, if not all, auto insurance companies offer discounts for college students and teen drivers. These discounts can help offset the cost of having a youthful driver remain on your car insurance policy.

Bundling policies

Car insurance companies offer bundling discounts so consumers will keep all their insurance policies together. By combining your home, auto and other policies together, you get a discount on each policy.

If your college student requires their own policy, consider bundling it with your existing home and car insurance policies to keep the coverage affordable.

Pay-per-mile insurance

A student multi-tasks with her computer and phone while she's in her university apartment.

A newer option for affordable car insurance with student drivers is pay-per-mile insurance. Only offered in certain states and with some companies, drivers of all ages can be eligible if they meet company-specific criteria.

If your college freshman won’t be driving much, this coverage might be a good option for savings. The monthly premium is based on a daily rate plus a set amount per mile driven on any given day.

Allstate offers their low-mileage policy version, called "MileWise," in 13 states, with more states expected to offer this type of car insurance plan. Coverages stay the same, but the savings may be worth it for those who don't drive much.

While vehicle usage and time spent away from home can help with affordable car insurance coverage, so can discounts. Combining policy offers and discounts can help reduce the cost of insuring a student driver.

Discounts for affordable student coverage

One of the best things about car insurance discounts is most of them are stackable. This means that if you qualify for several discounts, you can get most, if not all, applied together.

Bundling discounts are a great way to get affordable student auto insurance coverage. Some discounts are merit-based, which can help incentivize students to do well in their classes to save money on car insurance policies.

Good driving programs

Some car insurance companies offer good driving programs for student drivers. They must maintain a clean driving record (no tickets or at-fault accidents) in order to remain eligible for this program.

Each company's program is different. State Farm, for example, has a course they call "Steer Clear" that high school and college-aged student drivers can complete. Once finished, they can maintain the discount while on their parent's car insurance policy until they reach 25 years old or no longer have a clean driving record.

The discount percentage and requirements vary by company, but this is a great way for a safe student driver to get more affordable car insurance coverage.

Good student discount

A father and son have a heart-to-heart talk as the father pre

For high school and college student drivers who maintain good grades, the good student discount can also offset car insurance premiums.

Company criteria are not all the same, but most will apply the discount as long as the student maintains a “B” (3.0) or above GPA. Farmers Insurance has one of the highest discount percentages for the good student discount. With Farmers, you also can have a lower GPA, as long as you are in the top 20% of your class.

Occasional driver discount

This discount is not offered by all companies but can help those with multiple student drivers in the household. Some car insurance companies cap this discount at the age of 20, but some go up to 25 years old, which is when a driver is officially considered an adult to many car insurance companies (unless they get married first).

If there are more youthful drivers than vehicles insured, one of the student drivers can be considered an occasional driver. They still have full access to drive the household vehicles, but you get the savings on your car insurance policies.

Defensive driver discount

This discount is not offered in all states and isn't always offered to student drivers. By taking a defensive driving course (usually through the Department of Motor Vehicles), drivers may be eligible for additional discounts.

You'll need to check with your state and car insurance company to see if this discount is offered. Some only offer this to senior drivers over the age of 55, while others offer it to all age groups. If your college student maintains a clean driving record, they may be able to save with this discount.

Affiliation discounts

A son and father take a walk through campus as the son prepares to start college

These car insurance discounts are open to drivers of all ages, but there are ones that are geared towards student drivers.

Some auto insurance companies offer discounts for eligible drivers who are members of certain organizations. GEICO and Nationwide are two car insurance companies that offer affiliation discounts.

Affiliation discounts could include:

  • Banking services
  • Military
  • Certain colleges
  • Alumni of colleges
  • Sororities and fraternities
  • Honor societies

Car insurance companies have different tiered discount options for affiliated organizations. You can only choose one for the discount, so it's worth it to discuss with your agent which affiliation will give you the best auto insurance rate.

Mandy Sleight is a writer for MoneyGeek and has been an insurance agent since 2005.

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