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How Some Students are Paying Less for Car Insurance

Jun 30, 2014

Like it or not, young people usually end up paying more for coverage than more mature drivers. Even so, there are a few perfectly acceptable strategies that young adults can employ to bring down their premiums—especially if they are students. But before we get into the discounts that are available to students, it’s worth taking a look at how insurers calculate risk. Generally, they take the following factors into account:

  • Type of car
  • Marital status 
  • Occupation
  • Driving record
  • Place of residence
  • Credit rating
  • Gender
  • Age

The latter is the most obvious strike against students. Statistics show that young (i.e. inexperienced) drivers are much more likely to be involved in an accident than their more mature counterparts. However, many of the other variables on the list apply as well. For example, students haven’t spent as much time generating a paper trail in their adult lives, and that means that they aren’t going to have, for example, as clear or strong a credit rating or driving record. Likewise, students have yet to establish an occupation or—in most cases—tie the knot.

So why do factors like this matter? For starters, the variables listed above can tell us a lot about how (and how much) you’re going to drive your car. A person who owns a sports car probably bought that car—at least in part—because they intend to do some fast driving. Faster driving equals higher risk, plain and simple. In this case, it’s better to own up to the situation and purchase performance car insurance, which is tailor-made for vehicles like this.

Likewise, policyholders that are married and have children are statistically inclined to drive more carefully. Those that work far from home are going to spend more time on the road on their daily commute; and the more time you spend in traffic, the more likely you are to be involved in an accident—regardless of how careful you are. Got a good credit score? That probably means that you err on the side of responsibility. In such a way, insurers can paint a portrait of us in probabilities without ever having met us.

Of course, it would be wonderful if ever insurer were able to get to know their customers on a personal level. But as that’s not even a remote possibility, we’ll have to settle for the statistical equivalent.

How Can Students Lower their Premiums?


Fortunately, it’s not all doom and gloom for university students. In fact, there are several ways that a young person who is focused on studying can bring down their premiums. Here are a few ideas to get you started:

Ask for a good student discount.


While students may not have much in the way of a history to demonstrate their responsibility, they do have a constantly updated academic record that hints at the kind of person they are. Insurers know that students who get good grades are less likely to take unnecessary risks. Again, we’re talking about statistical likelihoods here. It’s nothing personal, but better grades mean you’re probably a better driver.

Get added to your parent’s policy.

This is only an option if you are not the primary driver for the vehicle in question. Being added to your parent’s policy can result in a discount, because the assumption is that the primary driver will spend more time behind wheel. But be careful with this one. The act of fronting, or naming a lower-risk person as the primary driver when this is not the case, is illegal. If found out, it can void the existing policy, put the driver at risk for driving without coverage and lead to major points on the license. It’s not worth the risk.

Look into telematics.

Some insurers will equip your car with a sort of ‘black box’ that measures the way you drive and reports back to headquarters. When there’s not much data about your personal habits for insurers to review, this is a practical way to prove what kind of driver you are. Over time, your premiums will adjust based on driving habits (propensity for speeding, etc.) as well as for how much time you spend driving in general.

2 comments

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