Car insurance can be a significant expense, especially for families with teenage drivers. However, there are various discounts available that can help alleviate the financial burden. One such discount is the distant student discount, which can provide savings for parents when their children are away at college at least 100 miles away from home. This discount does not apply if the student intends to take the insured car to college and drive it there. The primary rationale behind this discount is that young drivers tend to use the insured vehicle less frequently when they are far away from home, as opposed to when they are staying at home or attending a college nearby.
The Distant Student Discount:
The distant student car insurance discount is offered by many companies to parents or guardians who have a college-bound student. This discount recognizes that when students are away at college, they tend to drive the insured vehicle less frequently, thereby reducing the risk profile associated with young drivers.
Qualification Requirements:
To qualify for the distant student discount, certain requirements must be met. These typically include:
- Distance from home: The student must attend a college or university located at least 100 miles away from their permanent address.
- Vehicle location: The insured vehicle must remain at the permanent address and not be taken to college by the student.
- Full-time student status: The student must be enrolled as a full-time student, typically carrying a minimum course load defined by the insurance company.
- Age restrictions: Insurance companies may set age restrictions for this discount. For example, State Farm allows the discount up to age 25, while others like Progressive only consider drivers under the age of 22.
Discount Percentage:
The distant student discount percentage varies depending on the insurance company and policy. On average, the discount ranges from 4% to 16%, with around 8% being a common figure. Notably, some insurers offer more substantial discounts than others. For instance, GEICO, State Farm, American Family, and Auto-Owners are known for providing larger discounts of approximately 15% on automobile insurance.
Other Insurance Providers:
While the previously mentioned insurers offer significant discounts, there are other companies that also provide savings for parents with students away at college. These include Farmers, Nationwide, Erie, Progressive, and Travelers. Although the discounts offered by these providers may be more modest compared to the top four mentioned, they still contribute to potential cost savings.
Duration of the Discount:
It’s important to note that the distant student discount is typically applicable as long as the student continues the education. However, it’s advisable to check with the insurance company regarding any limitations or restrictions on the length of the discount. Some companies may require periodic updates or proof of the student’s enrollment status to continue receiving the discount.
Insurance Policy Renewal:
During the renewal process of the car insurance policy, it’s crucial for parents to inform their insurance provider if their student is no longer eligible for the distant student discount. For example, if the student decides to transfer to a college closer to home, the discount may no longer apply. Failure to update the insurer about changes in the student’s situation could result in policy discrepancies or potential claims issues.
Maximizing Savings:
Aside from the distant student discount, there are additional strategies to consider for maximizing savings:
- Good student discount: Students who maintain good grades may qualify for an additional discount. Vehicle insurance companies often reward responsible academic performance by reducing premiums for students with high grades.
- Exclusion strategy: Parents may choose to exclude their college-bound student from their car insurance policy while they are away at college, potentially resulting in savings. However, it’s crucial to note that during this time, the student cannot drive the insured vehicle. If the student frequently returns home and requires access to a vehicle, this strategy may be difficult to manage or not suitable.
- Telematics-based policies: Opting for telematics-based policies may provide more significant discounts. These policies involve installing a monitoring device that tracks driving habits and mileage. By demonstrating responsible driving behavior and driving lower mileage, students can potentially unlock lower premiums.
Importance of Shopping Around:
While the distant student discount can provide savings, it’s essential for parents to compare quotes from multiple insurance companies. Each insurer has its own pricing structure, discounts, and eligibility criteria. By obtaining quotes from different providers, families can ensure they are getting the best possible rate for their circumstances.
Conclusion: The distant student discount on car insurance offers a valuable opportunity for parents to reduce their premiums when their children are away at college. By meeting the qualification requirements and researching insurance providers that offer substantial discounts, families can save a significant amount of money.