Car Insurance for College Students

You might as well accept your fate now — if you're a driver younger than 25, you're probably going to spend a fortune on car insurance. A typical college student will fork out from $1,000 to $5,000 a year, and rates will be on the higher end of that range for guys. As a poor student, spending your money on a Friday night outing sounds much more appealing than giving it up to an insurance company. So why bother?

Why You Need Insurance
Even the safest, most cautious drivers are required to have car insurance in most states.

Even the safest, most cautious drivers are required to have car insurance in most states.

In simple terms, driving without insurance is on par with holding a lightning rod in an open field during a thunderstorm. As an uninsured driver, even a simple fender bender could affect your record for years to come. Furthermore, driving without the minimum insurance required by state law could get your license revoked or land you in prison.

Taking Your Car to School

For many teens and twenty-somethings, college is synonymous with independence, but before you break all ties with your parents, you may want to consider staying on their insurance plan to save yourself some money. Weigh all your options before you make the decision; it might be cheaper to fly solo, but you shouldn't feel bad if you have to depend on Mom and Dad. Make sure you are listed under their insurance policy as the primary operator of the car.

Factors That May Affect Your Rates

Though it may seem like insurance agencies have a vendetta against young people, there are good reasons for the higher rates. According to AAA, students (particularly teens) rank among the most dangerous drivers on the road. The only other age group that even comes close is the 85-and-older category. Don't despair — there are some tactics you can use to work the system in your favor:

  • Get your grades up: Most big insurance agencies offer lower rates to college or high school students who maintain a minimum GPA of 3.0, and to students who make the Honor Roll or Dean's List. As if you didn't already have enough pressure to do well in school.
  • Gender: Here's one reason why it's good to be a chick: Guys are considered more of a risk behind the wheel and therefore pay higher rates.
  • Location: The one time you'll be glad your school is out in the cornfields: Insurance rates are higher in big cities than in the 'burbs or the boonies. You can also score some mileage discounts if you live within three miles of your school and/or job.
  • Type of car: You might want to rethink that hot convertible you've been eyeing. Many sports cars use lots of fiberglass, which makes them more susceptible to damage in an accident. Larger cars are generally made of steel, which is easier to fix and thus results in lower premiums. Splurging on that newer model may also make a difference in your rates. Newer models have less wear and will require less maintenance.
  • Credit: Think you're too young to be worrying about your credit rating? Think again. Insurance companies go through your credit history and come up with premiums depending on your record. A good credit rating may save you up to $1,000 a year in insurance.
  • Safety features: Make sure to mention those side airbags on your car, or the electronic stability system. These and other safety features, including alarms, may help lower your costs.
  • Driving record: The most obvious, and the most important of the lot: Even something as miniscule as a speeding ticket can make your rates skyrocket. So either come up with a foolproof excuse to bypass that next speeding ticket, or slow down.
Shopping for Insurance

There are many ways to find the right car insurance for you, but a few simple tactics can make the process a bit less painful:

  • Shop around: Don't just pick the first company you talk to, and don't base your decision on how well-known the brand — or their spokesman — is. A smaller, lesser-known company may end up being the better deal. Get different quotes, then compare.
  • Work with an agent: They are trained professionals. You are not.
  • Double-check: Go over your driving record to make sure everything you're giving your agent complete, accurate information.
  • Consider taking a safety course: It will only take a mere three hours of your day (perhaps less if you watch a video) and will help refresh your driving skills and lower your premium.
Choosing Your Plan

Make sure you evaluate your options in terms of which company and plan to go with. You might want to get a bit more coverage than the minimum required by law (which varies by state), but you probably don't need that extensive plan the company is trying to sell you. It may sound repetitive, but do your homework. Be honest with yourself as to how good a driver you are and how likely you are to get into an accident.

These are the basic insurance levels:

  • Liability: This protects you if you get into an accident and you were at fault. Damages to the other car and any medical bills or other expenses that the injured party claims are covered. Liability doesn't cover you or your car.
  • Collision: This covers your car for any repairs it may need, or for its cash replacement if it's totaled.
  • Comprehensive: This pays for repairs or replacement of your car if it's stolen or damaged in a fire, flood or high winds (and any other natural disasters you can think of).

Each company has different adjustments to these levels of coverage, but overall these definitions will hold true. Remember that, although you may be covered, your rates are still subject to change if you get into an accident. Your best bet is to maintain a clean driving record.

© 4/30/13