If your child is going to college, you might plan to offset those big tuition bills by dropping your teen from your auto insurance policy.
But that could be a risky way to save money. It's no secret that having a young driver on your policy can be expensive.
In fact, adding a daughter can increase your rates by 50 percent while a son can hike them by 100 percent, according to Insure U, a public education program from the National Association of Insurance Commissioners (NAIC).
But if your son or daughter regularly drives your car and is currently on your auto insurance policy, or if your looking for an auto insurance policy, it’s smart to keep it that way when a child is going to college, says Sonja Larkin-Thorne, a NAIC consumer representative.
First, your college student likely will visit home over holidays and during summer vacations. During breaks, he or she probably will want to drive to the store, visit friends and get to and from a summer job. Your auto insurance should reflect this reality.
Second, if you take your child off your policy when they are going to college but your home is still listed as his or her primary residence, then your auto insurer might require you to sign an exclusion stating that your child will not have access to or be allowed to drive your vehicles, Larkin-Thorne says.
A child going to college who’s excluded from your auto insurance policy won’t be permitted to drive your car even in case of emergency – for example, if you were driving, with your kid in the passenger seat, and you had a medical crisis.
“You couldn’t put your child behind the wheel even to drive you to the hospital,” she says.
Your child going to college will affect your auto insurance
If your child will move out of your home to attend college, whether across town or out of state, notify your auto insurance agent or insurer, says Carole Walker, executive director of the Rocky Mountain Insurance Information Association.
Discuss your specific situation, your concerns and all of your options when you have a child going to college. The effect on your policy will depend on a variety of factors, including where your child is going to college, the minimum liability insurance requirements of the state where the university is located and whether your child will take a car to school.
No matter what the situation, you may need to provide the agent or auto insurer with the address of the university and proof of your child going to college, Larkin-Thorne says.
Auto insurance discounts for parents of college students
Keeping your college student on your auto insurance policy can be expensive, so it pays to look for ways to save on premiums with a child going to college.
Your opportunities to save will vary by company, but when your child is going to college, some insurers may allow you to change your policy to list him or her as an occasional driver or a “pleasure driver,” Walker says. That means your college student drives only for pleasure, not to and from classes or work.
“That does make it cheaper,” Walker says.
In general, most auto insurance companies will consider how much access the child has to your vehicles when setting premiums, so the move to college may decrease your premium, Larkin-Thorne says.
However, be honest with your insurer about when, and how often, your college student will be driving your car, Walker says. If your son or daughter is going to take your car to college, don’t tell the insurer they’ll be driving only occasionally, she says.
Not being forthright about a child going to college could cause problems down the road if your son or daughter has an accident and you have to file an auto insurance claim, Walker says.
Also ask your agent or insurer about these discounts for young drivers:
- Distant student discount — If your child is attending college far from home, you may be eligible for the distant student discount. The specifics vary by insurer, but generally the student must be attending school at least 100 or more miles from home, according to Walker. In most cases, your child must be a full-time college student and must drive only when visiting home during breaks from school.
- Good student discount — If your child makes a B average or better, you may be eligible for a good student discount that can significantly lower the cost of keeping a young driver on your policy, Walker says. Parents tend to think of good student discounts as applying to high school students, but many companies also extend them to college students up to about 25 years old, she points out.
What if your college student has a bad driving record?
There’s one situation with a child going to college where it may make sense to take your child off your auto policy and sign an exclusion in which you agree he or she will not drive your vehicles, Larkin-Thorne says.
If your child has a bad driving record — for example, multiple speeding tickets, crashes or a DUI — it may simply be unaffordable to keep him or her on your auto insurance policy.
If you exclude your child from your policy, it’s crucial to make sure he or she never has access to your vehicles. But that may be difficult.
“You can’t always control other people,” Larkin-Thorne says.
Talk about driving safety with a child going to college
Before your child goes off to college, sit down and discuss the dangers of texting behind the wheel, drinking and driving, and borrowing or lending cars, Walker recommends.
Let your child know that it’s extremely risky to drive someone else’s car or to let friends drive their car, she says.It can affect auto insurance coverage.
If your child drives a friend’s car, they’re relying on that person’s insurance, which is a gamble. If a friend drives your child’s car and causes a crash, your child and their insurance would be on the hook for auto repairs and medical bills.
And if you bought the car for your child going to college and it’s titled and insured in your name, then your assets could be at risk if there’s a serious accident, Larkin-Thorne points out.
“It’s important to discuss the fact that risky behavior can affect your child’s safety as well as their car insurance,” Walker says.
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