As young adults, college students are likely to make a few mistakes as they learn to manage their finances. Some of these mistakes relate to auto insurance. For example, students on a budget may be drawn to a low rate, but the cheapest auto insurance will not always be the best deal for students. Here are some other mistakes that college students may make with their auto insurance and how to avoid them.
Not Factoring in Time Away at College
It is very common for college students to drive less when on campus, especially if they aren’t bringing a car with them. Some insurers offer a discount for the time that you are not at home and, therefore, not driving. For example, State Farm auto insurance offers a discount for the time you spend on campus. This type of discount is sometimes called a resident student discount.
Not Checking for College Student Specific Deals
Another common financial mistake related to insurance is not looking for deals that are specific to college students. Some car insurance companies have detailed plans or deals designed to meet college students’ unique needs. Some of the best auto insurance for college students will offer discounts for students who meet certain requirements, such as a safe driving record or maintaining good grades.
Between potential deals and discounts just for college students and those available to all qualifying drivers, there are many opportunities. Some of these may include a good student discount, safe driving discount, automatic payment discount, and data tracking discount. Other offers include safety equipment discount, anti-theft discount, volunteer discount, multi-policy discount (if you can bundle it with your parents’ insurance), driving school discount, and early signing discount. Not all insurers will offer all of these, though.
Dropping Insurance While at School
It may seem tempting to just drop your auto insurance while you are at school, especially if the car is at home. However, this is a big mistake. It means that every time you go home for a break or even a weekend and plan on driving the car, your parents would have to add you back to the insurance policy.
It becomes even more complicated if there is any chance that you will bring the car to school, even for a week or two. This type of situation will typically leave your parents stuck calling the insurance company every few months to take you on and off the policy. If they forget, then you will not have coverage and have a major financial risk.
It is also worth noting that if you don’t have car insurance and drive someone else’s car, you may be liable for damages to it.
Besides, you don’t need to go through the hassle of being taken off and added to car insurance multiple times if you choose a policy that offers a discount for being away at school, as mentioned above.
A Note About Your Parents’ Policy
As a side note, keep in mind that you can only stay on your parents’ auto insurance if their name appears on the car title and you have the same permanent address. When possible, this is typically the best option.
Failing to Compare Auto Insurance Rates
As with any other type of insurance, students should make sure to compare auto insurance rates. While they will likely all be in a similar range, as this allows companies to stay competitive, there are still many opportunities for savings. Even small savings per month can add up over the course of four years of college. Comparing insurance rates can even find you larger savings, especially if you find an insurer that offers extra deals to college students.
Lending Your Car to Friends Without Their Own Insurance
No matter your age or stage of life, you should never lend your car to someone who does not have insurance. This is a common mistake among college students. They are less likely to understand the intricacies of insurance and why this is such a problem.
The main issue is that the only way to guarantee that your insurance policy will cover any damage is to list the driver as an approved driver on your policy. Most policies will also cover damage if you gave the person permission, but that is not always the case. There may be exceptions. Your policy may also turn to the other person’s insurance to cover some costs. If they are uninsured, you are on the hook for those costs.
Even more concerning, some insurers will cancel your insurance instantly if someone drives your car without being listed on your policy and is pulled over or in an accident. Not only would you be without car insurance until you find a new policy, but insurers are less likely to offer you coverage if you were dropped by another company. Those that do offer coverage will likely do so at a very high price.