Car insurance rates for college students are very affordable. There are many companies that specialize in offering low prices that can potentially save you up to 50%. We show the cheapest premiums available for students between ages 16 and 25. Many special discounts are offered regardless of age, and you can qualify whether you are full-time or part-time. You do not have to keep your car on campus to pay less, and many carriers extend discounts beyond graduation. Students away from home can often qualify for larger discounts. International drivers may also qualify for specific price reductions.
As a parent of two college students, we understand the importance of finding the best auto insurance options for young drivers. By shopping, comparing, and being aware of, and taking advantage of published and unpublished discounts, the cost you pay can substantially reduce. Of course, as they approach and pass ages 21 and 25, rates often decline each year. Female rates also remain about 20%-40% less than males at ages 16-19. Marriage will reduce premiums, and additional discounts are offered by all companies. If work does not require a long commute, most companies will charge a lower rate. Carpooling can save time and money.
No Need For A Separate Policy
One of the easiest ways to save money is to continue coverage under a parent's existing policy. All of the bundled discounts will automatically flow to youthful drivers, which can potentially save hundreds of dollars per year. However, it is typically required that the household address of parent and student must be the same. And there are many companies that offer attractive low-cost single full-time student pricing. If the address is different, the underwriter must rate the risks differently, and often must separate the policies. This can result in a much higher premium if the student attends college in a large metropolitan area.
Another advantage of staying on a parent's policy is the treatment of moving violations and at-fault accidents. Often, if you own a single-car and single-driver policy, the first claim can result in a substantial rate increase. However, you are partially insulated when other drivers and vehicles are covered on the same policy. Multi-car and multi-policy discounts will be applied to all drivers. NOTE: Although student aid for attending college is available through the Department of Education, unfortunately, it does not impact the cost of covering your vehicle.
The resulting rate increase (from at-fault claims) may actually be hundreds of dollars less per year. If a student regularly keeps the vehicle at school, some of the reduction may be forfeited. However, if the vehicle is parked on campus for selected holidays and possibly long weekends (which saves Mom and Dad from picking them up and returning them), any available discounts could remain in place. Driving from home to school, even if it is located out-of-state, will not forfeit coverage. The length of stay at home, especially during a pandemic, will also not likely impact your cost of coverage.
However, if a vehicle is kept on campus for an extended period of time, the "student away" discount may no longer apply. Also, the cost of coverage may be based on the zip code where the vehicle is kept, instead of the parent's zip code. Often, a parent's vehicle is garaged at home instead of the student's college address. This situation results in a lower premium compared to the student having vehicle access at all times.
Although there is often a temptation to purchase a separate vehicle for a child, generally, this results in a higher overall premium compared to simply adding it to an existing policy. Also, the higher liability limits will automatically flow to the newer driver, who needs this protection more than any other family member. NOTE: Often, personal possessions are covered, but not necessarily through your auto policy. Making a "dorm inventory" and establishing a value to all items will help save time (and perhaps money) if you file a claim.
Electronic and musical equipment, cameras, and fine arts often should be "scheduled" separately. "All risk" coverage is often available on most items. Depending on the policy, a deductible may apply, or a limitation of benefits on certain items. Many homeowner's policies extend personal property coverage (subject to policy limits) to students living on campus. When living off-campus, a separate policy may be needed.
Regardless if you have your own policy or are covered on a parent's contract, lending the vehicle to a friend or another student may have consequences. We wrote about it here so that younger drivers can understand the potential risk and ramification of sharing their driving privileges." The chances of an at-fault accident occurring are much higher compared to lending a vehicle to someone 20 years older. Also, if that same driver has easy access to your vehicle, the insurer may request an exclusion rider be signed to protect against possible future claims. This generally includes persons in the household only.
Find Cheap Cars To Insure
It sounds too easy, but it makes an incredible difference in what you pay. Driving a new vehicle is fun, comfortable and feels great. But your pocketbook may not like it, and your budget will certainly take a hit. The combination of a higher finance payment and insurance rate could easily cost you $5,000 per year. Add a few at-fault accidents and you may double the amount with the combination of deductibles and rate surcharges. Additional comprehensive claims (fire, vandalism or theft) will further raise premiums. License suspensions and/or DUIs or DWIs will require a high-risk policy. An SR-22 Bond is very expensive for a young driver.
However, there are many vehicles you can purchase that will keep your insurance rate fairly low. Based on our extensive and exhaustive research, we found 10 vehicles that are affordable, safe, and will also keep repair and maintenance costs to the bare minimum. They are also very dependable and the manufacturer offers a great warranty. And most teens and students love to drive them! If you lease (rather than purchase), most maintenance costs will be covered for the first 12-24 months. Of course, with these dependable cars, there might not be any maintenance needed! By shopping multiple dealerships, hundreds of dollars can be saved.
1. Mazda 3 -- Great gas mileage and front-wheel drive are two big pluses. There are many luxury options and the hatchback model gives you extra room. A sedan is also available. It's fun to drive and the engine is surprisingly powerful. Several affordable lease options are also offered. Mazda also offers a 72-month finance option that will keep your payments low. i-ACTIVESENSE provides many safety features including front and rear parking sensors, Smart brake support rear crossing, and traffic jam assist. The 2.0 model (155 hp) is available for far below the new price of about $22,000. Additional low-priced models are the 2.5 S, Select, and Preferred. Lease rates are very reasonable (12-month 36,000 miles).
A Carbon Edition package is offered on the hatchback and sedan models, with red leather seats, special gray exterior paint, 18-inch wheels, and a special audio system. However, the base price increases to more than $28,000 for the hatchback, and $27,000 for the sedan. All-wheel-drive (if not already included) is available on most models for about $1,500 extra. Non-turbo models get about 26-28 mpg (city and 35-36 mpg (highway).
2. Honda Accord -- I know. It seems as though everyone either has an Accord or used to own one. But they are dependable, and high-mileage models are cheap, and perhaps an ideal solution for dependable transportation on a small budget. Maintenance costs are typically low and reaching 100,000 miles without any major mechanical issues is highly likely. There are many dependable high-mileage Accords for sale from one-owner households. However, always research the VIN number for accidents and claims before purchasing a used vehicle. The 2022 LX is the least expensive option at about $26,000 (new). And of course, used models are easily available for under $14,000. Newer models include Honda's sensing suite, road departure migration system, and collision mitigation braking system. The EX-L, Sport, and Touring trims are popular options.
3. Honda Civic -- Yes...Another Honda! There are plenty of Civics on the market, so you should be able to negotiate a good price. They can be a bit noisy at times, but they are a dependable car. Repair and gasoline costs are usually very low, and it's easy to find a cheap used model with under 100,000 miles. From a safety standpoint, they will not be in the same class as an SUV, but perhaps less costly to operate. Not a lot of frills, but a very reliable vehicle. Four persons can comfortably fit inside the car, but not five persons. The 2016 and 2019 models are very popular.
4. Ford Focus -- Great gas mileage and dependable. Also a lot of room if you transport more than four persons on a regular basis. The sporty look with rear seats that fold down for more space are attractive features for teens. Hands-free voice activated commands reduce the temptation of texting while operating the automobile. Of course, the safety packages make parents very happy! The Focus is front-wheel drive and performs adequately in snowy conditions. Leasing a Ford SUV may not substantially increase your car-payment, although used vehicles can not be leased.
5. Kia Soul --The good: It has more room inside than you think, it's not very expensive and if you drive a lot of miles, it's a good choice. It's a boxy-looking car but a lot of fun when you're on the road. If you like a standard-shift, many of these models are equipped with them. Although they're not for everyone, the improved gas mileage helps. The bad: Nothing terrible but the interior noise level is higher than most other comparable cars. Upgrade options are limited, although the base model is the most popular.
Additional vehicles that almost made our "Top 5" list included the Volkswagen Golf, Chevrolet Cruze, Hyundai Elantra, and Volkswagen Jetta.
1. Honda Fit -- It is a small front-wheel drive vehicle that can easily scoot around and get you where you want to go on very little gas (37 mpg). And of course, fuel economy is still an important feature for young drivers. It's priced under $20,000 and consumer reviews are usually very positive. It's roomier than it appears, and all owners seem to love the high-tech dashboard, and especially the "Magic" rear seat that rotates in different directions. Since the fuel tank is located under the front seats, there's more leg room than expected. However, cargo space is limited, so don't take too many big suitcases if you travel. Full Android integration is still not available.
2. Toyota Prius c -- At more than 53 mpg on the highway, you won't be spending a lot of money on gas. The price is reasonable and the "c" model (subcompact) is very popular with younger drivers. It's not as big or as heavy as the regular Prius, but it's also less expensive! It is anticipated that the sticker price of a new Prius will gradually reduce over the next few years. An Eco model is also available that gets higher mpg. Passenger space is fairly small, while luggage/trunk space is larger than expected. Of course, that feature is not necessarily appealing to teens. However, the high-tech interior is very impressive.
3. Dodge Dart -- Base models start between $16,000 and $17,000 so the price is right. It's very stylish, has spacious interior, and is comfortable to drive. The front-wheel drive will help in adverse road conditions, although since it is a fairly heavy vehicle, it's not going to outrace other similar cars. The five-star rating on federal crash tests is good news for any parent, and the ride is smooth. One problem is that if there's an adult in the house, they will want to take it out on the road as much as younger persons. If it's a red Dart, the parents may not give it back! Also, the 23 city mpg is just average, and the noise level is high.
4. Scion tC -- There's a lot of standard equipment that you rarely find in cars under $20,000. Toyota is the parent company and they have done a great job with this vehicle. The 160-watt Pioneer sound system probably doesn't make driving any safer, although it's a great feature. The push-button ignition, crisp turns, and two-year free maintenance are nice features. However, the car is loud. No. It's VERY loud!
5. Ford Fiesta -- Perhaps one of the cheaper options ($14,000-$15,000), the Fiesta has decent pep, and is a big hit in many European countries. It has front-wheel drive so it will handle well in the snow, and the Fiesta can fit five persons. The engine has won the "International Engine Of The Year" award three times and mileage is over 30 mpg, so there's plenty to like about this vehicle. Although there is not a lot of leg room, the "infotainment" system is very popular. The "ST" model is more expensive, but provides much more power.
NOTE: Paying for your coverage "per mile" can also reduce your costs. New companies such as "Metromile" offer "per-mile" plans that could initially save you money. If you drive less, you pay less. But, of course, if there are months that you unexpectedly drove significantly more than planned, you'll have to pay for it the following month. However, with MPG tracking, engine diagnostics, "compare trip," street sweeping alerts, and roadside assistance offered, Metromile may become more popular in 2021.
Metromile's base rate is approximately $30 and the per-mile charge is approximately three cents. Thus, for most college students, based on approximately 250 miles per month, the charge is approximately $50. A Metromile "Pulse" device is installed to verify usage. Another positive is that Uber drivers are covered for business transportation and personal use.
Get Good Grades!
One of the biggest discounts available on policies (other than "good-driver" and "accident-free") is the "good student" discount. It's not unusual, depending on how many vehicles are covered, to qualify for a discount of $300-$600 per year. Although specifics vary from one carrier to another, usually, maintaining a 3.0 GPA along with full-time status will earn the savings. The most important quarter is the Spring quarter/semester since you won't have another chance at improving your grades until after the summer. Often, you can use either your total accumulated GPA, or the last semester GPA.
And it is an "all or nothing" discount, so if you sense a 2.9 GPA is forthcoming, it may take a bit more studying, or the addition of an easy 2-3 hour class to maintain the discount. But considering the massive savings, a few hours of extra studying is a great investment. The rate reduction continues as long as full-time hours are taken. Proof of grades may be required every six months. An easy three-hour summer course may bump you up to the needed 3.0 GPA. Often "full-time" status is required.
Go To College Far Away!
As a parent, I am happy that our kids attend college within a few hours of home (Ohio State University). When I went to college, I was about 10 hours away (Miami University in Oxford), and that's quite a distance. But many companies offer a "Student Away" discount, which can substantially lower rates. The annual savings is often between $150 and $300 per year. Students older than age 25 may no longer be eligible.
Typically, to qualify a student must attend a school at least 60 (sometimes 100) miles away and stay there most of the time. Of course, it's assumed that the student will come home for Christmas, Thanksgiving and Spring breaks along with other recognized holidays. The rate reduction is usually a few hundred dollars per year, so it's worth asking about. But no...Don't send your child to Oklahoma State if you live in Pennsylvania, just to get the discount!
If a student is at the school the entire year (including summers) an insurer may "non-rate," which means coverage is still in effect although there is no cost since the number of driving miles is minimal. This also allows the student to come home for major holidays. If the status changes, it is important to notify your carrier. Discounts will continue to be offered to students in medical school or graduate school. However, the vehicle must not be titled in their name, and they must remain legal residents of the household.
Young people are looking for cheap auto insurance rates. We show you how to get the best student pricing from the "big-name" companies so you pay less. It only takes a few moments to compare the lowest offers. Grad School and Medical School students can also qualify for large reductions.
When purchasing a new or used vehicle, and you are about to graduate college (or perhaps just did), lack of credit and a work history often makes financing a vehicle nearly impossible or much more expensive than you expect. But help is on the way from many of the large car manufacturers.
Special financing arrangements for new graduates is now available from Acura, General Motors, Honda, Toyota, and a few other companies. Typically, rebates and generous interest rates are offered if you are within 24 months of your graduation date. Occasionally, discounts may be taken off the sticker price, and may also be combined with other available seasonal programs.