Empty Nest? Call Your Insurer

Last Updated Sep 14, 2010 8:06 PM EDT

Dropping kids off at college? If you call your auto insurer as soon as you get home, you might save a bundle.
Why? If the child goes to college without a car, your auto insurer is likely to give you a steep discount or re-rate your policy to acknowledge the fact that your highest-risk driver won't be behind the wheel most of the year.

Insurance savings
What might that save? It varies all over the map, says Amy Danise, senior managing editor at Insure.com. That's because auto rates vary widely based on location, driving experience, age, number of miles driven, and even grade point average for a student.

Different insurance companies may also approach dealing with kids at school in different ways. Some re-rate the policy to cover the child only as an "occasional driver," while others simply provide a discount based on the notion that they'll be driving less.

Still, the savings can be dramatic, particularly if the child is going to school a substantial distance from your home. A typical discount would amount to 10% or more of the policy's cost when the child is attending school at least 100 miles from home, said Loretta Worters at the Insurance Information Institute in New York. But it can be more --especially if your child had their own car to drive.

When I recently dropped my 18-year-old son off at college, for example, GEICO sent me a refund of $182.55 for the one month that was left on my previous two-car auto policy. If you annualized that savings, it amounts to more than $2,000 a year and cut my overall premiums by more than half.

Teenage boys -- even when they have good grades and good driving records -- are generally the most costly to insure. And GEICO has a particularly generous policy for college students. When I was insured by Farmers, the discount was considerably less.

If the child has had tickets or accidents or was driving a lot of miles, you'll also see huge savings when the policy is re-evaluated. On the other hand, if you're dropping off a girl with good grades, or the child is attending college close-enough to home that he or she is likely to be home (and driving) on weekends, your savings will be less noteworthy. But it's almost always worth the phone call.

What if the child takes a car to college? You still need to call your insurer because the car will now be garaged in a different location, said Worters. Sending the car with them might save -- or cost -- you money, in this case. Kids who leave big cities for suburban campuses are likely to get a discount on their auto insurance, while those going to big cities from the suburbs could pay substantially more.

Shop
This is also a great time to do a quick check of auto rates, to see if you're getting the best deal. The reason: Every insurer has a different rating formula. The company that offered the cheapest rates when you had kids at home might not offer the best deal when they're away.

Many state insurance departments make shopping easy by offering rate comparisons, based on sample families, on their web sites. Many insurers, including GEICO, Allstate, State Farm, Progressive and Esurance also offer online rate shopping.

Other insurance coverages
And it's not just auto insurance that can change when the kids head to college. You might want to check on your homeowners' coverage, too, said Danise. Why? If your child lives in the dorms, your homeowners insurance will cover their belongings, although any loss they suffer would be subject to your deductible.

If the student lives in an apartment, however, you'd need renter's coverage to handle losses to any of their belongings, Danise said. Renter's policies are cheap, she adds. So, if you're sending your child with costly computer equipment, a television and bike, it's probably worth paying the $150 it might cost to buy a separate policy.

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