College is a wonderful and sometimes slightly scary time for most parents. Their son or daughter is spreading their wings, stepping out on their own, and beginning to prepare for life as an adult while they figure what their future holds. It is also a time when a son or daughter begins to make decisions for themselves, some of which have adult level consequences.
When it comes to college kids and car insurance, there is one thing parents should discuss with their student, permissive drivers. It’s also a time where the parents may discover potential discounts on their car insurance.
Permissive Drivers: I wrote the car insurance for a friend of mine a few years ago. She’s a single mom with two kids: the oldest had graduated and was living on his own but her youngest was attending college at one of the universities in Texas. I discovered an accident when I ran the CLUE report, which shows any claims they have had for the past 5 years.
It turns out, the daughter loaned her car to a friend one evening and the friend was involved in an accident. While the daughter’s friend claimed it was the other driver who was at fault, so did the other driver. Since there were no witnesses, the insurance companies quickly classified the accident as a not at fault accident with each company paying to repair the damage on the car they insured. The accident still counted against the mom’s rate the insurance companies offered.
My advice to any parent of college students living away from home is to discuss not loaning their car to a fellow student.
- The moment a car is loaned to someone else, that driver becomes a permissive driver meaning you’ve given them permission to drive your car.
- Insurance follows the car, not the driver. If the friend is involved in an accident, it will be your policy that’s liable for any damage incurred in an accident, not the friend’s insurance company.
- A permissive driver can also put you at financial risk if someone is hurt or killed as a result of the accident.
Anytime you loan your vehicle to another person you are putting your insurance company at risk if something goes wrong. It also exposes you to risk for a law suit. Even if no one’s hurt, an accident will affect your car insurance rate for 3 to 5 years.
Potential Discounts: There are a few car insurance discounts and strategies that help reduce the amount paid for your student including:
- Driver away at school
- Good student
- Rating the student where they attend
If a son or daughter is attending school 100 miles or more away from home and does not have a car with them, you’re able to take advantage of a discount. This discount is available primarily because the student doesn’t have a car with them which reduces their exposure and the rate you pay for car insurance.
Making good grades still counts! If your student has an A/B average (you’ll have to show a transcript about once a year) they will receive a lower rate than if they are partying more than they are studying. If your student is attending graduate school this discount may still be available, but it will run up against a potential age cutoff. Most carriers terminate the good student discount somewhere between the age of 22 and 25.
People who live in a smaller city or town pay less for their car insurance than those of us in Houston, Austin, San Antonio, Dallas and Fort Worth. If your student is attending college in College Station, Lubbock, Abilene, Alpine, Waco, or some other smaller community, their car insurance will be less. You’ll have to change the garaging address for your student. This does not work, however, if they are attending school out of state (Oklahoma, Arkansas, etc.) as they would need to get car insurance specific to that state.
Do you have a question, suggestion, or experience to share? Please do so on our Google +, LinkedIn, or Facebook pages. I’d love to hear from you!