Do school grades affect car insurance?
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UPDATED: Oct 18, 2021
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- Car insurance carriers may offer good student discounts
- Certain carriers will exclude grades from their premium calculations
- Student drivers with good grades are usually less likely to get into an accident
There are a variety of factors that are going to come into play when you go to purchase an auto insurance policy. As a student, you introduce a whole new set of variables for the insurance carrier to measure you on. Teens and young adults as college students have some of the highest auto insurance rates for one simple reason: inexperience. Young drivers don’t have years of experience to show responsibility in the same way older adults would. They’re also more likely to have tickets and accidents on their records due to inexperience. Young drivers don’t have the same habits and reflexes an older driver would have developed.
As you get older, companies can issue an insurance discount based on factors personal to you. Early on, they have to rely on trends in your age group. While a young driver can easily double their parents’ rates, good grades provide some relief for high school and college students.
The exact GPA required will vary between insurance providers. Some require a higher grade average than others to qualify for a good student car insurance discount. A good student discount can make auto policies more affordable for young drivers.
Young drivers have other options to lower their annual premiums. For example, a young driver might take a defensive driving class. This would teach you valuable skills to avoid accidents and claims while also getting you an immediate discount. Good grades impact multiple areas of your life, though, and it shows an overall trend of responsibility.
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How much do grades impact an auto insurance company?
There is no easy answer as to whether or not your grades are going to have an impact on your car insurance premium. Sure, you get a small discount immediately. We know students with good grades generally file fewer claims and get fewer tickets, which can add up over time. We don’t have an exact dollar amount one might save when you combine all these factors for auto policies. For most of the savings opportunities parents and students will see, grades are a symptom, not a cause.
Insurance carriers also use all sorts of data in very different ways. They may use your grades for any of the following:
- indication of risk
- discount for good grades
- no consideration
Some car insurance carriers will use the grades that you have received in school as an indicator of how high of a risk you are going to be behind the wheel and price your policy based on that as one of the factors in the calculation. Of course, as you get older and graduate, other factors come into play. So even if you go back to school, grades will matter less.
Some insurance carriers will help you by offering a discount for good grades.
Your car insurance premium is going to come out and be calculated to a certain dollar amount, then if you have good grades and prove that via a report card, they will offer you a discount of a percentage off of that premium price.
The third scenario here is that car insurance carriers will ignore your grades entirely. Even if you have had an A+ in every single class for your entire life, it may not matter to individual carriers.
In this example, they will be pricing your car insurance policy exclusive of what grades you are receiving in school.
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What else should you know about the good student discount?
The most common scenario that you are going to find is the insurance carrier offering what is known as the good student discount. This is a reward that can be offered from car insurance carriers to students in exchange for them getting good grades.
The discount is not just a goodwill gesture from carriers, though. Instead, it is a calculated decision that they make based on statistics.
Statistics and work by actuaries of these carriers have found over the years that when students get good grades, they are less likely to get into a car accident. Car insurance carriers know that, and they want to be able to take advantage of that and win the business of that driver. Of course, this is meant primarily for the full-time student.
In It for the Long-Term
Car insurance carriers know that people usually do not switch car insurance companies. Most will stay with a car insurance company from when they are a teenager through adulthood.
This is yet another reason as to why carriers want to get students with good grades on their book of business now.
They want them locked into their car insurance carrier and will offer a discount to get them there.
The hope is that by taking on a bit more risk now and offering a lower premium overall for the coverage that you need as a student, you will stay with them when you are, in theory, a safer driving adult.
Car insurance companies are always in competition with one another to get the best risks on their books, those that pose the most favorable loss ratio to them. Consumers need to take advantage of that.
As a student, make sure that you are only looking at the carriers offering those good student discounts.
Use those grades to your advantage and save financially today and into the future as well. Price comparatively before buying car insurance, and you will benefit from it as a result. Enter your zip code below to begin comparing quotes today!