Having a child go to college is a wonderful and sometimes slightly scary time for most parents. 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 age kids and car insurance, there are two things I want to focus on in this post:
- Permissive drivers
- Potential discounts
Permissive Drivers: I wrote 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 state universities in Texas. I entered the information into the insurance companies systems that had the most attractive pricing for the mom, Linda (not her real name) and her daughter, Susan (not her real name). There was an accident showing on the CLUE report but the data on it was limited so I called Linda to ask her about it.
The explanation that Linda gave me was Susan had loaned her car to a friend one evening and the friend was involved in an accident. Susan’s friend claimed it was the other driver who was at fault and the other driver claimed Susan’s friend was at fault. 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.
My advice to Linda or any parent of college students living away from home is to not loan their car to another student.
- The moment a car is loaned to someone else, that driver becomes a permissive driver; 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 is 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. In Linda’s case, had Susan’s friend or someone in the other car been injured or killed, she could have been sued by one or more parties involved in the accident and that could have been financially disastrous.
The good news for Linda in this case was no one was hurt. The only financial sting Linda felt from the accident was that it counted against her rate when we quoted her car insurance. The accident affects her car insurance for 3 to 5 years depending on the insurance company and caused her to pay a higher premium than if Susan had not loaned her car to a friend that evening.
Potential Discounts: A college education is expensive. The cost for a higher education has outpaced inflation for years, and yet, for many individuals, it’s the entrance fee to a good paying career. There are a few car insurance discounts and strategies that help reduce the amount paid for your student and that may help soften the sting for college a little. Keep these in mind when you next talk to your insurance agent:
- Child 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 the rate paid 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 so ask your agent.
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. More cars on the road mean a higher premium for car insurance. 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 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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