What parents and college students need to know about staying protected.
For new college students and their parents, the transition to college can bittersweet. The sweet part is that your child is all grown up (or you’re flying the coop) — the bitter part can be all the expenses associated with going to college and moving out.
Car insurance is one major expense to consider for college students and their parents, and there are several factors to consider when deciding whether you should keep your kid on your own policy or kick them off (or whether you should stay on your parents’ policy or get your own).
Answers to parents’ questions about car insurance and college students.
In general, your college student can stay on your policy as long as he is a student and your home is his primary residence — that is, listed on his driver’s license — no matter where he is attending college or how old he is. Full-time students can list your home as their primary address, regardless of where they are attending school.
You should, however, talk to your insurance company about keeping your child on your policy and let them know your child is going to school, especially if it’s out of state. You may need to adjust your insurance coverage based on that state’s car insurance requirements.
If your child isn’t taking a car with him, you could also be eligible for a resident student discount, which could significantly lower your rates (see below).
There are few considerations to make when deciding whether you keep insuring your college student or whether you should remove him from your policy:
1. You own vehicle he drives
If you own the vehicle your college student drives, you need to keep them on your policy. The registered owner of a car needs to have an insurance policy on a car they own.
If you give a car to your student and you no longer want to insure it, you need to put the title in the child’s name. If your child owns the car, he will need his own car insurance policy.
2. Your student lives at home or lists your home as his primary address
If your student still lives at home or if your home is still his primary address, you should consider keeping him on your policy. Otherwise, in order to stop insuring him, you’ll have to list him as an excluded driver on your policy, meaning he cannot drive any cars you own, for any reason — even in emergencies.
If your student has moved out and has his own primary address — and updates his license — he likely won’t need to be listed as an excluded driver on your policy and can still drive your car over breaks under permissive use. Check with your insurance company about their rules.
3. You want to provide coverage for him even when he's not behind the wheel
Even if your student doesn’t have a car with them at school, there is still important coverage they can get if they’re listed on your car insurance policy.
If you have personal injury protection coverage (PIP) or uninsured/underinsured motorist coverage (UI/UIM, both would provide protection to your child if they’re hurt in a car accident as a passenger in a vehicle or if they’re hit by a car while biking or as a pedestrian.
If you’re a college student and you drive, you either need to be listed on your parents’ car insurance policy or you need to have your own car insurance. But even if you don’t regularly drive, there are still reasons to say on your parents’ plan.
1. If the car is owned by your parents, they need to insure it
Owners of cars are responsible for insuring their own vehicles. If you parents are lending you a car to take to college, they still own it and need to insure it.
2. Your rates may be cheaper if you stay on your parents’ plan
Car insurance for young people is expensive, and if you’re on your parents’ car insurance plan, your rates may be cheaper than if you bought your own plan.
3. You could give them a student discount
You may be able to get a discount for your parents’ policies if you get good grades (see below).
1. If you own a car, you need to insure it
If you have purchased your own vehicle or have a vehicle titled in your name, you need to buy your own policy so that you’re covered.
2. Your rates may be lower
If you’re moving to an area with significantly lower car insurance rates, you may save money by getting your own policy. Check out the average cost of car insurance by state, but note that your rates may be much higher than the averages since you’re still a young driver. If you are driving a car owned by your parents and decide to get your own policy, they will need to transfer the title for you so you can insure it.
1. You’ll still be covered when driving
You will still have liability coverage if you drive a friend’s car or a rental car and you’ll be covered when you drive your parents’ cars on breaks.
If you still live at home or list your parents’ home as your primary residence and they take you off their policy, you’d be named excluded driver and would have no coverage at all.
2. You’ll have continuous coverage
When you do eventually apply for your own policy, your rates will be lower because you had continuous coverage under your parents’ plan.
3. You may be protected while a passenger, cyclist, or pedestrian
There are two types of auto insurance coverage that still provide protection to you even when you’re not driving a car.
Personal injury protection coverage (PIP) — Provides medical payments and other expenses if you’re injured while a passenger in a car, as a pedestrian, or while biking.
Uninsured/underinsured motorist coverage (UI/UIM) — Provides protection if you’re hurt by an uninsured or underinsured motorist while a passenger in a car, while biking, or as a pedestrian.
The cost of car insurance for young and teenage drivers is high, and it’s still high even when those young drivers and teenage drivers are college students.
The good news is that car insurance premiums tend to go down as you age, and once you reach age 25, you can expect to pay much lower car insurance rates and finally get cheap car insurance.
There are several car insurance discounts for students, and three that are especially important for college students and their parents to ask their insurers about:
Resident student discount — For college students under a certain age (usually 23) and still on their parents’ car insurance plan. Also called a distant college student discount of a student away from school discount. If you live 100 miles away from your parents and don’t have a car with you at school, you can get a discount applied to the policy premium.
Good student discount — For college students up to age 25 with their own policy or on their parents’ policy. Requirements depend on the carrier, but common qualifications include having a B average or higher, being in the top 20% of your class, or having achieved a certain score on a recognized standardized test.
School discount — Some schools partner with insurance companies to offer discounts to their students. Talk to your university’s student affairs department to see if you qualify.
Logan Sachon is the co-founder of The Billfold, a groundbreaking personal finance site for millennials that was named one of Time's 25 Best Blogs of 2012. Her work has been published in New York Magazine, Glamour, The Guardian, BuzzFeed and more.