UPDATED: Mar 13, 2020
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Last Updated: October 16, 2018
Just a few decades ago, not many people brought their cars with them to college. Nowadays, it’s almost a necessity to have a car at school. Between off-campus activities, classes being spread out, and students driving to work, cars have become a part of the college lifestyle. In fact, U.S. News now reports that 46.8% of all college students bring their cars with them to school.
Being on campus, however, does not make college students immune to the rules of the road. College students must maintain valid auto insurance coverage throughout their 4 years at college in order to drive legally. Below, we take a look at the basics of auto insurance for college students, including how much they need, how to choose the right coverage, and how to find discounted rates.
Choosing An Insurance Policy As A “College Kid”
When it comes time to choose insurance coverage for the vehicle you’ll take to school, be sure to evaluate your choices wisely and familiarize yourself with the different types of insurance.
As a poor college student with little assets, you probably won’t need the absolute highest amount of insurance coverage. At the same time, you also won’t want to buy so little coverage as to leave yourself financially vulnerable.
To get a better idea of how much coverage you need and how high you should set your limits, the best course of action is to simply ask your insurance provider. Explain to them your situation. Be honest about your driving frequency, your driving history, and how you will use your vehicle. They will be able to put together an insurance policy that fits both your needs and the minimum insurance requirements set by law.
What Your Average College Student’s Car Insurance Policy Will Entail
When college students buy a car insurance policy, it most likely will include some combination of liability coverage, collision coverage, comprehensive coverage, and uninsured motorists coverage. This is what these coverage types are:
Liability coverage will protect you in case you get into an accident and are determined to be at-fault. This type of coverage will pay for your liability in the accident, whether it’s monetary damage to property or medical bills you have to pay. Most states require at least $25,000 in bodily damage liability coverage, which pays for injuries to other people involved in the accident. They also usually require at least $15,000 in property damage liability coverage, which pays for damage to property you caused in an accident.
All college students looking to buy auto insurance will need to have liability coverage as part of their policy. In fact, it’s required by law. How much coverage you buy depends on your risk tolerance. At the very minimum, you will need to meet your state’s minimum liability requirements.
Collision coverage will pay for damages sustained to your vehicle in an accident. If you aren’t at-fault in the accident, the other party’s liability coverage will pay to repair your vehicle (assuming they have insurance). If you are deemed to be at-fault in the accident, your collision coverage will kick in and pay to repair your vehicle.
Assuming you are a poor college student driving an inexpensive used car, it might not make sense for you to purchase collision coverage. This is an optional insurance coverage and is often times reserved for drivers of newer, more expensive vehicles.
Comprehensive coverage will pay for repairs and replacement of your vehicle caused by anything that isn’t a collision. This can include theft, vandalism, and damage from natural disasters. As a college student looking to save money, you might opt-out of comprehensive coverage as it is optional, and probably only makes sense for higher valued vehicles.
Uninsured and Underinsured Motorists Coverage
For a variety of reasons, an increasing number of people are driving on American roads uninsured or underinsured. If you get into an accident with one of these people, you won’t see a penny from their insurance, as they do not have it. Therefore, you will either need to pay for damages yourself, hope they pay you out-of-pocket, or sue them to recoup your losses. Another option is for you to purchase uninsured or underinsured motorist coverage (UM/UIM), which will pay for damages caused by these underinsured drivers.
Recent reports from the Insurance Information Institute estimate that 13% of all drivers in America are uninsured. Surprisingly enough, many of those driving around without insurance are students. Driving around a college campus, there are bound to be quite a few uninsured drivers (who either couldn’t afford insurance payments, accidentally forgot to pay their bill, or simply didn’t want to pay for it). This is why having UM/UIM coverage is so important. This type of coverage is optional in about half of the 50 states. Your state might require you by law to purchase it, but even if they don’t, you should strongly consider buying it anyways.
Is Car Insurance For College Students Expensive?
Insurance rates for college students fluctuate depending on the circumstances. Typically, the major factors used to determine your insurance premiums include your age, driving history, car make/model, where you live, your credit score, and how much coverage you need. Because college students are young, don’t have extensive driving experience, and have a limited credit history, their auto insurance rates are usually higher than normal.
The average car insurance policy for an 18-year-old student with liability limits of 100/300/100 costs $4,055 annually.
For a 22-year-old student at the end of his/her college career, the average annual premium drops to $1,883.
Compared to the average annual rate across the United States ($941), it’s easy to see why auto insurance for college students is considered to be expensive.
While insurance premiums for college students are high, that does not mean that deals for cheap insurance cannot be found. There are many ways to save on car insurance as well as many discounts available exclusively to college students. Let’s take a look at some of them.
Ways College Students Can Save On Auto Insurance
Stay On Your Parents’ Policy
The harsh reality is that if you, as a college student, try to buy an insurance policy by yourself, you’ll be hit with sky-high premiums. Therefore, the best way for college students to save on their auto insurance rates is to be added to their parents’ policy. Like we stated above, the average student does not have enough driving experience to qualify for lower insurance premiums. Hopefully, your parents have years of good driving history that you can “piggyback” off of until you can go out on your own. The good news is that once you turn 25, your auto insurance rates are expected to drop.
Good Student Discount
One of the most popular and sought after discounts for college students is the “good grade discount” given to good students. Most insurance companies will give discounts to college students that have at least a 3.0 GPA (B- average). These discounts usually amount to around 10-20% off of your current rates. In order to determine eligibility, most insurance companies will look at grades from your most recent semester’s report card.
College Pay-Per-Mile Auto Insurance Discount
Pay-per-mile insurance, or usage-based insurance, charges you based on how many miles you drive each month. Because you are less of a risk the less time you spend on the road, insurers will offer you a discount for not driving as much. If you are a student who lives on campus but still needs to drive occasionally, you should strongly consider this type of insurance program. Not all insurers offer usage-based insurance, so please check with your insurance agent first to see if it’s an option.
Choose Your Car Wisely
Although we are all jealous of the international student who drives a Maserati to class, the reality is that we would never want the burden of paying his insurance bill each month. CarFax wrote a helpful article detailing the 7 best used cars for college students. That list is a great place to get ideas on which cars will be cheaper to insure. Kia’s, Honda’s, and Subaru’s make much more sense for thrifty college students than Maserati’s do. For more ideas, please also check out our list of the cheapest used cars to insure.
Regularly Comparing Car Insurance Rates
To get cheaper insurance as a college student, the best thing to do is to shop around a lot. And when I say “a lot”, I mean that you should spend an entire week getting quoted by every insurer you can find. Each time you get a quote, you should jot down the rates and details of the policy. After comparing quotes from a number of providers, only then can you be confident that you are getting the cheapest rates possible. Here, at 4AutoInsuranceQuote.com, we have a quote comparison tool you can use (enter your zip code at the top of the page to begin), but, honestly, any third party comparison tool will do the trick.