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Auto Insurance for College Students

If you're headed off to college or you're already in college and about to buy a car, you should take some time to study up on the basics of auto insurance for college students so you can get the best deal. 

Your knowledge won't be tested on a final exam, but learning what you need to know about auto insurance may save you money and give you and your parents peace of mind that you're covered while away at school.

Auto insurance for college students − what you need to know

Here are three scenarios related to auto insurance for college students and what you should know about getting the right auto insurance coverage for each situation:

1. You're a college student leaving your own car at home

If you're headed to a university and you plan to leave your own car behind in your hometown, you maybe tempted to cancel coverage. But that's a bad idea and may not be legal. Here are three reasons you shouldn't cancel your auto insurance before you go to college:

  • Coverage may be required by law. In almost all states, cars must be covered by auto insurance. In some states, that law applies to all cars regardless of whether they are currently being driven. And you'll need coverage to register the car or keep your registration valid.
  • Your car should get driven periodically. It's bad for a car to sit for a long time without being driven unless you properly prep your car for storage. So, you may want to ask a parent to drive your car periodically. (Make sure the person who will drive your car while you're away is listed as a driver on your policy.) Also, if you plan to visit home periodically, you'll probably want to drive your car occasionally. 
  • A gap in coverage can raise your rates. If you plan to leave your car behind during freshman year while you live on campus, then you should consider keeping your car insurance. A lapse in coverage can make you seem like a bigger risk, causing insurers to charge you higher premiums in the future.

If you own an older car, you may be able to comply with state law and cut costs by dropping collision insurance keeping only liability coverage on your vehicle. If you go this route, though, you could end up paying for repairs out of pocket if you have an accident.

A little research into auto insurance for college students can save you money as well as ensuring you car is legally ready to drive.

2. You're a college student without a car who drives a parent's car

What if you don't have a car of your own but you drive your parent's car and you're on their policy? Your parents might be tempted to drop you from their policy when you head off to school, but talk to them about keeping you covered while you're away.

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Staying on your parents' policy is a good idea because you'll probably go home to visit for holidays and over the summer. Chances are good that you'll want the option to drive during breaks, and you may need to get behind the wheel to get to and from a summer job, says Carole Walker, executive director of the Rocky Mountain Insurance Information Institute.

However, your parents may be able to save money by asking if their insurer offers a distant student discount, which is a price break on auto insurance specifically for parents of students who are attending college far away and only driving during visits home. Different insurers have different requirements.

3. You're a college student taking a car with you or planning to buy car 

If you already have a car and you're taking it with you to college, you should notify your insurer before you leave, Walker says. You may be required to notify you insurer of a change of address for you and your car, also known as a garaging change. The new location may cause your car insurance premium to go up or down, and rates tend to be lower in rural areas than urban areas.

"If you're going to school in a farm town, rather than a big city, that's going to affect what you pay," Walker says.

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Also, if you're moving out of state, your insurer must make sure you're complying with minimum liability auto insurance laws in your new state.

If you're shopping for car insurance as a college student for the first time, you may experience sticker shock when you get rate quotes. Car insurance does cost more for younger, less experienced drivers because they're statistically riskier to insure, Walker says.

The good news, though, is you may qualify for one or more discounts that can make car insurance cheaper for college students. Here are some discounts to shop for:

  • Good student discount. Many insurers offer discounts for student drivers who make the grade, generally with a 3.0 average or better, Walker says. Auto insurance for college students discounts usually can be had by furnishing an official grade report or letter from a school administrator. 
  • Low-mileage discount. Maybe you walk to all of your classes but keep a car on campus so you can go to the grocery store a few times a month and make an occasional trip home. In that case, you may be eligible for a low-mileage discount. If you drive less than 15,000 miles a year, you may be able to save 10 to 20 percent, and if you drive less than 2,500 miles a year you may get as much as half off your premium. 

Auto insurance issues when loaning out your car

Once you're at school you may end up in a situation where a friend asks you to drive his or her car, or wants to get behind the wheel of yours.

It's risky to drive someone else's car because insurance is on the car, not the driver, Walker points out. If your friend is underinsured or has inadvertently let their policy lapse by failing to pay a bill, driving their car could mean trouble for you. If you do drive others' cars regularly, you may want to consider a non-owner car insurance policy, which would cover you if the car owner's policy falls short.

And if a friend wants to drive your car, think twice.

"It's going to be your insurance that's affected if they get in a crash," Walker says. "That could mean higher premiums for you."

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