There are a couple of car insurance related topics every parent of a college student should discuss with their son or daughter before they head off to school. Both have a financial impact on the family’s car insurance rate. The biggest one is allowing a friend or roommate to drive their car or truck if they take one to school. The other one relates to grades. Let’s review this issue and ways to lower your car insurance rate.
Friends Driving Their Vehicle: Most students don’t think twice about letting a friend or roommate borrow their car. They’re not using it at that moment, so why not? The reason they shouldn’t is what happens if the friend is involved in an accident, regardless of who’s at fault. Any time your son or daughter allows one of their friends to drive their car, they put the family’s car insurance in jeopardy. It will be your car insurance which will pay for damages if their friend is involved in an accident, not theirs. If someone is hurt or injured, you may be found liable for medical expenses or worse.
I recommend all parents advise their student to not loan their car to a friend.
- 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 not the friend’s.
- A permissive driver can also put you at financial risk if someone is hurt or killed because of the accident.
Accidents and injury claims will impact your rate with most car insurance companies for 3 to 5 years.
Grades Still Matter: Why pay more for car insurance than you have too? Remind your son or daughter good grades keep the cost of car insurance lower! Students with an A/B average (they can still have one or two C’s on their transcript) earn a discount while attending college. A copy of the most recent transcript will need to be presented to underwriters to receive this discount.
Students With No Car: Many car insurance companies offer a discount if the student attends a school 100 or more miles away from home and doesn’t take a vehicle with them. The reason for the discount is the student doesn’t have a car with them which reduces their exposure for being involved in an accident.
Geographical Rating: Those students who attend a school in a smaller community than the one they live in may help reduce the premium by rating that vehicle with the new garaging address. For example, if the family residence is in Houston, Austin, or Dallas / Fort Worth and the student attends school in Lubbock, College Station, Abilene, Alpine, Waco, or another smaller community, changing the garaging address of their vehicle will lower the premium based on being in a smaller community with fewer cars, and hence, fewer opportunities to be in an accident. This does not work as well if they attend school out of state (Oklahoma, Arkansas, etc.). The reason is it may be less expensive to keep them on the family policy than rate them on their own policy in another state.
What do you think? Share your questions, suggestions, and experiences with me on my Facebook, Google +, or LinkedIn, pages. I’d love to hear from you!