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College auto insurance 101

By Jay MacDonald · Bankrate.com
Tuesday, August 10, 2010
Posted: 8 am ET

Every autumn, a new batch of college freshmen and their parents wrestle with the same three issues: tuition, nutrition and auto insurance. I can't do much about the cost of college or the similarity of dorm food to soylent green, but I may be able to clear up a few car insurance questions.

If your son or daughter attends college away from home, it may have an impact on the rates you pay to cover them as a dependent. That's not necessarily bad news, as we'll see shortly.

According to State Farm, if your college student plans to have a car on campus, your auto insurance rates may change to reflect where they're attending school. For instance, urban drivers typically pay higher rates than their country cousins. No wonder Dad always hoped I'd be an Aggie.

If your student is driving at an out-of-state school, Progressive suggests you make sure their vehicle coverage includes the applicable minimums in your home state and their college state. "For instance, Pennsylvania limits would legally be insufficient to cover you in case of an accident while you're at school in New York," says Progressive.

Now for a little relief: If your student doesn't plan to take a vehicle to school, your rates may actually decline when their status is changed from a "primary" driver on a family car to an "occasional" driver of other people's rides. However, in some cases you could pay slightly more if an "occasional" driver at home moves to a higher-risk locale.

Progressive offers a Distant Student discount to students who attend school more than 100 miles from home without access to a vehicle. Other insurers offer similar programs; terms and mileage vary by insurer.

The key to worry-free college auto insurance is you must notify your insurance agent that your kid is off to soylent green land, to make sure they will be adequately covered and to possibly reduce your insurance premium if they're leaving their car at home.

What's weird is nearly half (47 percent) of all parents of college students fail to make that call, according to the Independent Insurance Agents & Brokers of America. As a result, they wind up overpaying as much as $3,000 on car insurance by the time graduation rolls around.

Do you know how many pizzas that is?

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