Parents do not always realize that when a child leaves home and goes away to college, the situation can affect the premium rate they pay for auto insurance. Before your young driver heads off to college is the time to review your auto insurance coverage, especially if your child will be attending an out-of-state school.
The person who owns title to a vehicle usually insures it. In most cases, a teen driver is listed as an additional driver on the parents' policy. This is because the child resides in the same household where the insured lives and the car is parked. However, if your child will be taking a car that you own to college with him, you need to let your insurance company know. This could change the premium rate, which is based on the risk factors involved.
Weighing the Risk
Insurance companies primarily weigh the risks when determining premium rates. In cases where parents leave a young driver on their auto insurance policy even after a child goes away to college and does not take a car, the premium rate may actually go down. The insurer then assumes that a young, high-risk driver in the household will no longer be driving the car frequently.
When it comes to buying auto insurance, there is no age limit when a child can no longer be insured on the parents’ policy. As long as a child lives with the parents and drives a vehicle owned by one or both of the parents, then the child can remain on the parents’ auto insurance policy. But if a college student owns her own car, then she will have to insure it under a policy of her own. Unfortunately, young drivers face high premium rates because of being categorized in a high-risk group of drivers.
If a child purchases his own car and takes it with him to college, it may still be possible to have the vehicle insured on the parents’ policy to save money. Coverage will depend on the insurance company, as underwriting guidelines can differ. One way that a child can remain insured on a parent's policy is if the name of a parent also appears on the loan and vehicle registration along with that of the student. Adding a parent's name to the title gives that person an insurable interest in the vehicle, even if the student purchases the vehicle on his own.
The risk factors can change if a student takes a vehicle owned and insured by a parent out of state to college. Minimum insurance requirements vary from state to state, affecting premium rates. It’s important to contact your insurance company about the change beforehand in order to make certain that your insurance coverage is adequate if your child is involved in an accident in another state while driving to or from college. Liability can become a critical issue if a child is driving a parent’s car and is not fully covered by insurance.
Even though age and gender make car insurance rates higher for college students, there are some things you can do to help lower the premium. Many auto insurers offer discounts to college students who maintain a grade point average of 3.0 or better. Drive defensively, as you do not want any marks against your driving record. Obey all traffic laws. and do not exceed the speed limit. Statistics published by The Children’s Hospital of Philadelphia show that in 2005, nearly 40 percent of fatal crashes with young males age 15 to 20 at the wheel involved speeding. Pass up on the sporty models that go faster, and select a more practical vehicle. Finally, if having a car is not really necessary while you are away at college, leave your vehicle parked at home. Many colleges do not allow freshmen to park cars on campus that first year. Auto insurance will cost you less because you will not be driving as often. Insurance companies speculate that the fewer times you climb behind the wheel of a car, the more you decrease your chances of being in an accident.