Common Student Auto Insurance Discounts

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Key takeaways...
  • The most common discount for students is a good student discount
  • In addition to discounts on the student, you can also get discounts on the car that the student is driving
  • Usually, you’ll save around 10 to 15 percent on your homeowner’s insurance on top of the discount on the car insurance when you buy both from the same company
  • You can be eligible for them even if you already have the good student discount. One such discount is a credit for taking an additional driver’s safety course

Having your teen get his license for the first time is an exciting and scary time for any parent. While it is an important step in the child’s development, it is also an expensive one.

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While car insurance for teens is very expensive, there are ways to bring the cost down a bit. Here are some of the most common car insurance discounts for students.

Good Student Discount

The most common discount for students is a good student discount. This discount is only available for high school, college, or technical students under the age of 25.

However, not all students will qualify for this good student discount.

They first have to meet the requirements set by the insurance company. These vary a bit from one company to the next, but they basically reward students who make good grades in the classroom by taking a little off of their insurance premiums.

Most companies require a minimum grade point average of 3.0. This translates to nothing lower than a B.

A few companies might have other requirements like that college students be on the Dean’s list. Others may require a certain score on a standardized test, especially if the student is homeschooled.

Why does your insurance company care what your grades are? After all, how does being good at math or knowing names and dates in history have anything to do with how you drive? Actually, quite a lot.

There are two major reasons teens have more accidents than any other age group, according to the state of New York: immaturity with risk-taking and inexperience.

Statistically, teens are much more likely to participate in risky behavior, like speeding, driving without wearing a seatbelt, and using cell phones or allowing other distractions in the car.

Studies have shown that students who are responsible with their school work tend to act responsibly and maturely in other situations, including driving.

Students who make good grades are statistically far less likely to speed, drive drunk, or do other risky things behind the wheel than their peers.

This is why nearly every insurance company offers good student discounts to teen drivers who buck the trend of immature driving.

This good student discount is usually around 10%, though some companies offer as much as 20 percent.

Adding a driver under the age of 25 to your insurance can cause your insurance to jump up dramatically. The normal increase is in the 50 to 100 percent range.

Yes, your insurance costs could double just by adding a teen, especially if the teen is a boy, to your policy. That’s why any little discount like this can help.

Teen Drivers Safety Course

While a good student discount is the most common discount offered to students, there are others available. You can be eligible for them even if you already have the good student discount.

One such discount is a credit for taking an additional driver’s safety course. This is an additional course on top of the driver’s education course most teens take to get a license in the first place.

Remember those two top reasons teens have such high accident — and thus, insurance — rates? Immaturity with risk-taking and inexperience. A course like this addresses aspects of both, but primarily the inexperience.

These courses equip young drivers with additional tools to deal with different situations they’ll face on the road. There’s no way a driver’s education course can address every scenario a driver can face.

This additional course can help teen drivers learn to deal with them in a controlled environment, so they hopefully will be better equipped to face them in everyday driving.

Sometimes insurance companies offer their own such courses. Others are taught by driving schools that also teach driver’s education and defensive driving classes. Even some automakers, such as Ford, offer additional safety classes for teens.

Most insurance companies will give teens an additional discount for completing one of these driving programs, just as adults get discounts for taking defensive driving or traffic school.

Call your agent or the insurance company’s 800 number, to find out if yours offers this and if there are any restrictions.

Monitoring Discount

There is another, newer discount that some auto insurance companies are offering to their customers with teen drivers.

It is a driving monitoring discount. In order to get this discount, the teen must drive with a small device installed in the car. This device transmits information about how safe the driver is behind the wheel.

While some companies offer this for all their clients, others have a special program for teens who agree to the monitoring. This program has a couple of great benefits for young drivers and their parents.

First, they get yet another discount off those high premiums that come with a young driver if he shows that he is a safe driver.

Second, since the teen knows that the insurance company will be receiving information about how he drives, he’ll be more likely to drive in a safe manner.

It adds another level of accountability, according to the Insurance Information Institute.

Discounts on the Car

In addition to discounts on the student, you can also get discounts on the car that the student is driving. Cars that have certain safety and theft-deterrence features often result in more credits put towards the premium.

U.S. News and World Report points recommends that, in order to keep the insurance costs down to the lowest amount while having a young driver on the policy, parents don’t get a teen his own car.

Instead, add him as a secondary driver to the parents’ vehicles, which will greatly reduce the premium increase.

The absolute worst kind of car for a teen from an insurance perspective is a sports car. Since they are built for speed, insurance companies will charge anyone more for one over other types of vehicles.

This is because they tend to induce drivers to speed and commit other reckless behavior. Keep in mind that insurance companies classify almost all two-door coupes as sports cars.

In fact, U.S. News & World Report says that the best cars for teens are mid-size to large sedans and SUVs. This is due to their higher safety ratings.

Look for vehicles with airbags — the more the better — and anti-lock brakes, stability control, and any other safety feature you can afford. The article goes on to suggest the ten top cars for teens.

Any car will get more discounts for theft-deterrent devices. These could be alarms, but there are also more recent technologies that can be even more effective.

Something like a LoJack, which helps locate a stolen car, can also earn you a discount, as can an engine immobilizer installed on the car.

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Raise Deductibles

Another way to save money is to raise your deductibles. This isn’t a discount, per se, but it is a way to lower your premium.

If you have comprehensive and collision coverage on any of the vehicles on the policy, look at what your deductible is set at.

The deductible is the part of the repair you agree to pay. If it is $500, you pay that to the repair shop, and the insurance company covers the rest.

The more you agree to pay if you file a comp or collision claim, the less the insurance company will charge you for those coverages. So if you have a $250 or $500 deductible, consider raising it to $1,000. This can save as much as 40 percent off your premiums.

Just remember that you never know when you’ll need access to that $1,000. So make sure you have it in a savings account where you won’t spend it.

While raising your deductible won’t completely make up for the cost of adding a young driver, it can make a serious dent in the costs, as long as you set aside the amount of your deductible in an emergency fund.

Other Ways to Save

In addition to these steps, there a few other ways you can save money on your car insurance, even when you’re adding a teenager to the policy.

Take this time to go over your policy with your agent to see if there are any discounts you have missed. If you don’t have your homeowner’s policy with your car insurance company, get quotes on them to see if you can save money.

Usually, you’ll save around 10 to 15 percent on your homeowner’s insurance on top of the discount on the car insurance when you buy both from the same company.

Evaluate the actual cash value of your older vehicles. If the value has dwindled down to just a few thousand dollars, it might be more cost effective to drop comp and collision coverage.

Put the money you’re saving away towards replacing the vehicle or making repairs.

Remember that companies charge different amounts for insurance. So it’s worth taking the time to compare rates from a few different companies, especially now that there is a young driver in the household. The company that was the cheapest before might not be anymore.

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