Insurance and Financing Blog

5 Ways to Save on Student Car Insurance

Saving on student auto insurance may be trickier than how most people think it is.  This is because insurance premiums are determined by a lot of factors and student car insurance is influenced most by the higher risk of having a young driver mitigated by the lower risk brought about by the fact that he or she only drives short distances in a day.

Young drivers under 25 years old are thought to be riskier.  According to the National Highway Traffic Safety Administration, drivers in this age range are four times more prone to die in an accident compared to older drivers.  This additional risk brings up insurance premiums for students under 25.  However, students tend to drive less distance and less often compared to adults.  For college students, they often live on campus or near it, which brings the risk down.

There are, however, other ways for students to save on car insurance premiums.  Aside from the usual comparison shopping, paying a higher deductible and other typical ways of saving on car insurance, students can also avail of discounts that are especially created for them.  Here are some:

1. Club memberships often offer discounts on your auto insurance policies.  Being a member of a fraternity, or AAA, the National Honor Society, can give you discounts from certain insurance companies, so ask around which companies offer what types of discounts on student car insurance.

2. Drive safely and do not drink and drive.  Driving drunk not only increases the chances that you would encounter an accident on the road; it will also increase your student car insurance premiums if you are caught.  A clean driving record is a manifestation that you are a responsible and low risk individual.  You can use this leverage to bargain for a smaller premium the next time.

3. Install safety features on your car.  You can also save up on your car insurance premiums by installing anti-theft devices, alarm systems, theft recovery systems, automatic seat belts, air bags and other safety features on your car.

4. Get special student discounts.  There are a lot of auto insurance companies that offer student discounts to those who meet certain criteria like a certain grade point average.  You can also avail of student insurance discount through your university.

5. Get driver’s education classes.  Qualified driver’s insurance courses make you eligible for discounts on your student car insurance.  This is because these courses will equip you with basic driving techniques, defensive driving strategies, and even simple traffic and road rules, making you a better driver and less risky to insure!

The threat by McDonald’s to discontinue its health-insurance coverage is one recent aftershock of the health care overhaul, as my column this week discusses. In the end, McDonald’s seems unlikely to follow through on that threat. But another part of the new law will lead to real changes: the requirement that insurers offer coverage to all children, including those with pre-existing illnesses.

As Reed Abelson has written, the new rule has caused “some insurers to balk at the idea that they will be forced to cover too many sick children. Aetna, Cigna and WellPoint, among others, have said they will stop selling new [child-only] policies in some states.”

This situation perfectly illustrates why many economists say the health care law rightly mandates that everyone have health insurance. Without it, the market for health insurance won’t function very well. That has long been clear with individual policies — that is, those not offered by employers — which are terribly expensive. Why? Because the market is dominated by people who are sick and who expect to get sick. Healthy people who don’t get insurance from their employer, by contrast, are often willing to remain uninsured (which, of course, can prove to be a really bad idea).

Similarly, families who react to new legal treatment of children by trying to buy insurance will be disproportionately those with children who need a good bit of medical care. Some insurers know this and are reluctant to be in the market.

The situation will eventually sort itself out, because all families will have to get insurance starting in 2014. But until the law’s provisions are fully in place, Aaron Carroll — an Indiana University doctor who writes for the Incidental Economist blog — points out that “this kind of situation will crop up again and again and again.”

Between now and 2014, federal regulators can deal with such problems by offering temporary exemptions where they seem to be needed. Without a health-care mandate, though, there would be no good ultimate answer.

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As a college student, your supply of funds may be limited. However, because you are in constant contact with large amounts of people your susceptibility to becoming ill is not as rare as your funds. The last thing you need as a college student is to have unpaid medical bills piling up on your desk or to be missing a lot of your classes because you are unable to visit a doctor because you have no health insurance. Fortunately, you can obtain health insurance that will not cause you to empty your piggy bank in order to pay for it.

Most health insurance providers offer health insurance for students. These health insurance plans are normally at an affordable rate because insurance companies realize that college is a time when the majority of student’s money is being spent on computers, tuition, books, labs, and other school requirements. Student health insurance policies normally provide students with a discounted rate as long as the student visits health care facilities that are affiliated with the insurance provider or health care facilities that work in conjunction with the health insurance provider.

Another great thing about student health insurance is that you can make it as affordable as you want. This means that a lot of student health insurance providers allow the students to create a customized insurance plan. If the student requires a high level of insurance coverage, then their insurance premium would be higher in cost. If the student just requires coverage to receive check ups or routine visits to a family or primary physician then their coverage price will be much lower. What it all boils down to is that you pay for what you acquire.

Most health insurance providers offer some sort of student health insurance coverage so it is important to check with various different health insurance providers and inquire about their student health insurance plans. This will allow you to compare coverage, customize coverage, and compare the prices of each student insurance plan so that you can pick the most affordable plan.

The selection is likely to be even less appealing this year than last. According to experts and industry insiders, recent trends suggest rates will continue to rise and employers will continue to shift more of the cost of health insurance onto workers – asking them to shoulder a larger share of premiums, for instance, or increasing out-of-pocket costs such as deductibles and co-pays.Easy To Insure ME has the answers

This past year, overall premiums for employer-sponsored coverage – meaning the amounts paid by employer and employee combined – rose a relatively modest average of 3 percent for family coverage, according to a study by the Kaiser Family Foundation and the Health Research & Educational Trust. But the share of such premiums covered by the worker increased from 27 percent to 30 percent, with the result that the amount paid by workers rose an average of 13.7 percent.

The most comprehensive statistics on plan offerings for 2011 won’t be available for months. But a September survey of employers by Mercer, a leading benefits consulting company, suggests last year’s patterns will continue.

Overall, the employers said that they expected their health-care costs to increase between 9 and 12 percent – but that they planned to use cost-saving measures to effectively bring that increase down to 6 percent. Some 57 percent said one way they would do this would be to have their employees pay a greater share of the cost of coverage.

Many employers also said they would try to lower their costs by prompting employees to improve their health: Forty-four percent said they will add health management or wellness programs. An additional 38 percent said they will add incentives for employees to participate in existing programs.

Impact of the new law

Because this is the first major open-enrollment period since key provisions of the new health-care law started taking effect, many workers will wonder how much of the plan changes they see is due to the legislation. Not much, say analysts.

The law’s most market-altering changes – including provisions that may or may not control premiums – don’t kick in until 2014.

“We’re three years away from that,” said economist Paul Fronstin of the nonprofit Employee Benefits Research Institute. “For the most part, the plans don’t know what they’re going to be doing [in response]. It’s just too soon.”

There is a notable exception: On their next annual renewal date, all plans will be required to comply with certain mandates such as eliminating lifetime dollar limits on benefits and allowing parents to put adult children up to age 26 on their plan. Insurers that make certain changes to existing plans or employers that switch insurance carriers will have to offer additional benefits such as free preventive services.

It’s possible that bare-bones employer-sponsored plans – particularly small-group plans bought by businesses with only a few employees – may need to substantially increase premiums to cover the extra cost. And a number of insurers have already blamed the law for coming large rate hikes. But estimates by researchers suggest that on average premium increases for employer-based plans due to the new requirements will be less than 2 percent.

“And we’re talking less than 1 percent in many cases,” said Sara Collins, head of the insurance program at the Commonwealth Fund, a health-care research group.

Watts was less sanguine, noting that the small businesses surveyed by Mercer expected the new law’s requirements to add 3 percent to their costs. “As someone who works with employers, I can say it’s hard to get even a 1 percent increase out of your plan costs” through cost-saving measures, she said.

At other companies, particularly mid-size and smaller ones, the workers’ health status may be the determining factor. “For instance, if someone got sick in your group, especially with a disease that [your insurer] thinks is going to continue, they will take that into account when they set your premiums, and you are going to take a whack for it,” said Gary Claxton, who directs the Kaiser Family Foundation’s Marketplace Policy Project.

Large companies can be affected by shifts in the makeup of their work force. “A company will look at, for instance, are they going to be hiring or downsizing?” said Claxton. “Do they have a bunch of early retirees who are going to move from one plan to another?”