When it comes to car insurance and college kids every parent should discuss a couple of topics with their student. These topics have financial ramifications in that they can increase or decrease what you pay for car insurance. Let’s revisit permissive drivers and car insurance discounts.
Permissive Drivers: What can go wrong if your son or daughter loans their car to a friend? A lot! If the friend wrecks the car you and your student need to know it will be your car insurance that will pay for damages resulting from their friend’s accident. If someone is hurt or injured, you can be found liable.
My advice to any parent of college students living away from home is do not loan their car to a fellow student.
- The moment a car is loaned to someone else, that driver becomes a permissive driver.
- 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 you and your insurance company at risk if something goes wrong. You are risking a law suit or higher car insurance rates 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 take a car with them, most companies offer a nice 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.
If your student has an A/B average 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.
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