What Is a Good Student Discount?
The term good student discount refers to an auto insurance policy discount available to young drivers who earn good grades in school. This discount assumes that young drivers who are responsible when it comes to their studies are more likely to be responsible drivers. As a result, they deserve to pay lower insurance premiums since they are less likely than teens with poor grades to file a claim with their insurance company. A good student discount provides an incentive to do well in school, as teenagers face some of the highest insurance premiums.
- Good student discounts reward high-school and college-age drivers who earn good grades with lower premiums on their car insurance.
- Individual insurance companies that offer good student discounts set their own guidelines for the level of the discount and requisite grade-point average.
- Premiums are generally higher for young males because they tend to be riskier drivers than young females.
- Completing driver education, driving safely, avoiding accidents and traffic violations, and piggybacking on a parent's policy are all good ways for young drivers to keep their premiums low.
Understanding the Good Student Discount
Consumers purchase auto insurance policies to protect themselves against damages that stem from crashes and other events. Policyholders are required to pay regular premiums in order to receive coverage. Drivers can file claims to mitigate the costs associated with repairs and vehicle replacement in the event of an accident. Insurance is mandatory in every state except for New Hampshire and Virginia.
Some insurance companies offer a variety of discounts based on a number of factors, including good student discounts. Companies that offer this program set their own guidelines, including the age range that discounts are offered, the minimum grade point average needed to qualify, and any terms that may disqualify a student during a period of insurance.
Good student discounts—and any other applicable rebates—are a boon to teens and parents in the United States, as teenagers are charged some of the highest insurance premiums compared to other age groups. That's because young drivers lack driving experience, are more likely to get into car accidents and commit traffic violations.
Policyholders may need to provide proof of eligibility in order to receive or continue receiving a good student discount. For instance, the insurance company may require a school transcript or a report card. For homeschooled students who can’t show a traditional report card, insurers may allow alternative proof, such as SAT scores that are in the top 20% of the national average. As such, good student discounts not only incentivize students to do well in school, they also them and/or their parents save money.
Some good student discount programs may be combined with others, including driver's education discounts and rebates when students are away at school.
While a good student discount is helpful, insurers say the best way for young drivers to keep their premiums low is through safe driving. Avoiding accidents and traffic violations means avoiding the steep increase in premiums that can accompany these events. Being added to a parent’s policy rather than having one’s own policy can also save young drivers money through the multi-car discount.
Contrary to most people's belief that men pay more than women do for auto insurance, a 2017 study by the Consumer Federation of America found that the reverse is often true. However, the CFA also found that premiums for 20-year-old women were generally lower than for 20-year-old men. Young men are simply riskier drivers. In one study that analyzed gender and age differences in fatal crashes, male drivers between 15 and 19 were more likely than female drivers of the same age to be:
- Involved in fatal crashes
- Speeding and driving outside their lane at the time of the crash
- Drinking alcohol and driving recklessly
- Charged with a serious violation, such as hit-and-run or manslaughter
Male teens also tend to drive with more passengers in their cars. And compared with other age groups, teens and young adults often have the lowest rates of seat-belt use. In 2019, 43.1% of U.S. high school students did not always wear a seat belt when riding as passengers.
The following additional tips to keep premiums down for young drivers:
- Choose a safe vehicle with electronic stability control
- Opt for higher deductibles
- Complete driver’s education
- Leave your car behind when you go to college
You can also look into graduated driver licensing systems, which provide longer practice periods, limit driving under high-risk conditions for newly licensed drivers, and require greater participation from parents as their teens learn to drive. Research suggests that GDL systems, available in all states, can reduce both overall crashes and fatal crashes among 16-year-olds.
Examples of Good Student Discounts
One insurer may offer a 25% discount on premiums to full-time high school and college students who earn good grades—a B average or higher—until age 25. Another insurer may offer a 15% good student discount to unmarried drivers with at least a 3.0-grade point average in high school or college. GEICO, for instance, offers up to 15% on certain coverages for full-time students between the ages of 16 and 24 with a B average or better.