Student life. It's a busy time for them and an expensive time for you. On top of all the mounting college costs, you still need to find the money to keep them on your family insurance policy.
Or do you?
There may be options, including temporarily removing them or getting their own policy. But when does that make sense? And are there options to save money on their coverage?
For the answers, read on…
Should You Keep a Student on Your Family Auto Policy?
The first and most important decision to make is whether you should keep your student on your family auto policy.
For example, if he or she won’t be driving or taking a car with them while they're away at college, you might consider removing their coverage.
That will likely produce a big saving of perhaps thousands of dollars a year. But there's a significant downside.
For a start, their continuously-insured record will be disrupted, which could result in higher initial premium costs when they resume coverage. In fact, some insurers won't allow you to temporarily suspend them from your policy.
Plus, of course, you'll have to put them back on the policy when they come home during breaks.
Furthermore, they may not be insured if they drive someone else's car while they're away -- for example, driving without an owner's consent, driving a friend's vehicle that's not insured for an additional driver, or driving during an emergency.
And they won’t have the additional protection that an auto policy provides if they're injured while traveling as a passenger.
If you decide to keep your college attendee on your car insurance policy, which is the likely outcome in the majority of cases, they must continue to use your home address as their primary address too.
You could, of course, consider buying a separate policy for them but this almost certainly would be more expensive than including them on a family policy. Even so, this is worth discussing with your agent, especially if the student will be living in a particularly low-risk zip code and their car will be securely garaged.
If your student is not taking a car to college but you decide to keep them on your policy, you may be entitled to a reduction in premium.
For example, you may get a discount if their college is more than 100 to 150 miles away from home because the insurer knows there will be extended periods when they are not likely to be driving. This is known as a distant student discount.
But, if they are taking their auto to college, there are also a number of ways in which you might be able to reduce the premium.
· Low mileage discount. If the student is likely to drive a lower mileage than previously -- because of the reduction in the amount of daily travel -- they would probably qualify for a low mileage discount. Typically, they're required to drive an annual mileage of 7,000 to 8,000 miles or less, though this number can vary by insurer. Your premium saving could be around 2 or 3 percent.
· Good student discount. Some insurers will reduce premiums for high academic performers up to the age of 25 because, statistically, they're less likely to be involved in an accident. You'll need to be able to show they have a B average or above during their previous semester and provide a letter of proof.
· Sorority and honors society discount. Going beyond pure grade averages, some insurers will also reduce premiums for membership of certain groups representing high academic achievers. And you may get a reduction if the student already holds a graduate degree.
· Location discount. If your son/daughter will be living in a lower risk area than your home is in, this could qualify for a lower premium.
· Safe-driving discounts. This saving is not just for students. By passing an approved safe-driving course, any and all drivers in your family could entitle you to claim this discount.
· Raising your deductible. If you decide to increase the amount you pay from your own pocket to meet the costs arising from an accident, your premium will almost certainly go down.
You may also be able to save on your premium if the family has a car with a lower value than the student's vehicle. You could assign that vehicle to their name, which could qualify for a lower premium.
Find Out More
With the multiple discount options that may be available, plus the weighty decision of whether to keep your student on your auto policy, it's crucial to get sound expert advice.
So, it's time to discuss your student and family auto policy with your agent, who will be able to explain your options and advise you on the best approach.
(You should also discuss you son's/daughter's coverage under your homeowners or renters policy at this time.)
For instance, if they are going to be living out of state, you will need to be sure that your policy coverage meets the liability requirements of their resident state, and even whether the current insurer provides coverage in that state.
Don’t forget too that different insurers charge different rates even for the same vehicle, so you may have potential to save money by switching your policy to another carrier.
The best approach is to ask your agent to shop around for you. An independent agent, like Newbridge Coverage, works with multiple insurers so you can be sure you're getting a competitive deal no matter what level of coverage you opt for.
Don't struggle by yourself with these difficult decisions. Whether you're an existing client or not, we can help. And we might be able to save you money. Just get in touch with us here at Newbridge Coverage.