Why do college students pay more for car insurance?
College students often face higher car insurance costs than older drivers due to the added risk that comes with their perceived inexperience.
Car insurance rates depend on several factors and one of the most important is your age. Younger drivers, especially those aged 16-25, have more accidents and are less experienced than older ones, so they pay higher premiums.
Car insurance discounts for students away at college
Although car insurance for college students is expensive, there are ways to reduce your premiums. Some will only work if you don't plan to use your car while away, while others can reduce your rates even if you are driving.
These savings tips also apply to snowbirds and anyone else who will be away from home for a long period of time.
Planned non-operation (PNO)
Do I need insurance if my car is non-operational? No, but you'll have to pay a fee to register the car this way. This is the least expensive way to cut auto-related costs by avoiding both standard registration and insurance expenses. Be aware that a PNO-designated car cannot be driven. In fact, it can't even be towed or parked on public streets, and in some states (such as California), drivers must turn in the vehicle's license plates.
The PNO certification is most appropriate for those who store cars for long periods without driving them. PNO is not a great solution for students or anyone who might need their cars at some point during the year. But, if you travel extensively, own more than one home (and keep vehicles at each location), or go away to college, other strategies let you drive occasionally while still saving money.
Affidavit of non-use
New Mexico's motor vehicle division stipulates that if your vehicle is not being driven, you must submit a completed and signed ANU form annually. Your registration will be reflected as "unknown" for insurance purposes, but you should not incur a penalty as long as you don't drive on New Mexico roads.
Pay-per-mile car insurance
Pay-per-mile plans usually require your mileage and driving to be monitored. That means allowing some sort of tracking device to be installed on your car or recording your mileage through systems, such as On-Star. Some of the best car insurance companies, including Allstate, now offer pay-per-mile plans.
Classic car insurance
Classic car policies actually may limit the number of miles you can drive (and specify that the car be garaged when not in use), so be sure to check the fine print when signing up.
Stored car insurance
Remember if you're storing a vehicle that is financed, your financing company will not allow you to drop down to only comprehensive. It will likely require you to carry both collision and comprehensive on your stored vehicle. You should also be aware that you can't legally drive a car on a stored policy, even to the gas station.
Occasional driver discount
If the insurance policy is in your parents' or guardians' names and you are only driving the car when you come home for breaks, you should be listed on the policy as an "occasional" driver, which accesses your parents' (probably) lower rate while protecting you.
Car insurance discounts for college students
Car insurance companies offer discounts for college students. Some carriers offer discounts for completing driver education courses or having good grades in school which could be beneficial if you want to save more money over time.
- Good student discount. When you have good grades, it is likely that you are a responsible person. As a responsible person, your insurance premiums will be lower, thereby saving you money in the long term.
- Driver education discount. One way to save money on car insurance is by taking a driver education course. While the exact discount varies by insurers, a young driver who has completed a defensive driving course may earn a discount on most coverages.
- College student away from home discount. When you're studying away from home, you can save money by leaving your car at home and relying on public transportation. As long as the car is still on a parent's car insurance policy or guardian's policy, they can list you as a student away from home and get a discounted rate on the insurance.
- Navigation system and anti-theft devices. With an intuitive GPS navigation system, you can drive more safely, which in turn allows you to drive more slowly and safely. Also, a car alarm or other anti-theft device can help you save on auto insurance premiums by reducing the risk of theft or vandalism.
- Low mileage discount. If you aren't driving much when away from home, you can save with a low-mileage discount.
Can you cancel your car insurance when you're away from home?
Never let your coverage lapse without first getting the OK from your state DMV. You could face heavy fines and penalties for having an uninsured car, and it will cost you more to get insurance again after a lapse.
If your car is financed, there are other possible penalties. While the state might not care if you drop insurance coverage on a parked car, your auto lender will care a great deal. Once your car insurance company notifies the lenders that you are no longer carrying full coverage, lenders can slap on the most expensive coverage. Force-placed insurance, also known as creditor-placed or lender-placed insurance, is purchased by your auto lender and the premiums are added to your monthly payment. It's very expensive and not worth the risk.
It's never a good idea to cancel car insurance without going through the proper channels, and could cost you more than you'll save.
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