Do school grades affect car insurance?

School grades affect car insurance for teen drivers. Good student discounts help teen drivers save money on car insurance since rates are likely to be higher for them as they are three times more likely to be in an accident.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP® Joel Ohman

UPDATED: May 4, 2022

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Here's what you need to know...

  • Teen drivers pay the highest car insurance premiums of anyone
  • This is because they are statistically the most likely to crash and therefore present the biggest risk to insurance companies
  • Young drivers can lower their premiums by keeping a good driving record and earning a good student discount
  • Most insurance companies offer discounts to full-time students who maintain good grades
  • Even if you’re homeschooled, you can qualify by scoring above a certain percentile on a standardized test, such as the ACT

Car insurance can be expensive, and for teen drivers, it’s even worse. Most insurance companies define “young” as 16 to 24 years old.

Premiums in this age bracket are usually high, sometimes prohibitively so but youthful drivers can lower their insurance premiums. One way to do so is by earning a good student discount for car insurance.

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Why Young Drivers Pay More


Teen drivers pay the highest car insurance rates of anyone. Their premiums can often be more than double what an older, more experienced driver pays.

It doesn’t seem fair, and many people have compared it to age discrimination but insurance companies get away with it for a simple reason: they have statistics on their side.

The data shows that young, inexperienced drivers have the highest accident rates. Older drivers with more years behind the wheel crash less often.

Therefore, a young driver is more likely than an older driver to make an insurance claim. When a valid claim is made, the insurance company has to pay out on behalf of the driver making the claim.

Insurance company expenditures are highest for their young customers. They compensate by charging these drivers more. It’s unfortunate for young drivers who do the right things, but it’s how the business works.

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How Teen Drivers Can Lower Their Premiums


A 16-year-old will always pay more for car insurance than a 40-year-old with the same following information:

  • zip code
  • vehicle
  • driving record

Young drivers have a few ways to keep their premiums to a minimum. The two most common are keeping a clean driving record and earning a good student discount.

Clean Driving Record

When it comes to car insurance premiums, the only thing worse than being a young driver is being a young driver with accidents or tickets.

Even one or two minor moving violations, such as speeding or a rolling right turn at a red light, can double your already exorbitant premiums. But each year you keep your driving record clean can lower what you pay.

The biggest drop in car insurance premiums happens when you turn 25. But each year from 16 to 24, your premiums should get lower if you’re a good driver. For one thing, you have another year of experience under your belt.

For another, you’ve proven you can make it an entire year without a traffic violation. This makes you a lower risk in the eyes of the insurance company.

Good Student Discount

The other way to lower your premiums as a young driver has nothing to do with how you drive. You can pay less simply by doing well in school.

This isn’t an altruistic move by the insurance companies. They don’t offer a good student discount because they want to see you succeed in school. They do it, once again, because of statistics.

Their analysts have determined good students have fewer accidents compared to mediocre or poor students. Since risk determines premiums, a less-risky good student pays less than a riskier not-so-good student.

How the Good Student Discount Works


Most insurance companies offer a fixed percentage discount to full-time students who earn certain grades. The discount offered usually ranges from 10 to 20 percent.

You can qualify by sending your insurance company your most recent report card or school transcript. If you’re homeschooled or your school doesn’t issue standard letter grades, you have other options for qualifying.

Qualifying for the Good Student Discount

The criteria for earning a good student discount is pretty standard across the major insurance companies. The qualifications are as follows:

  • Full-time enrollment at an accredited high school, college, or university.
  • Maintenance of at least a “B” average, or a GPA of 3.0 on a 4.0 scale.

Some insurance companies restrict the good student discount to drivers in the 16-to-24 age bracket. Others reward adult students for their good grades, as well. If you’re 25 or older and in school, consider shopping around for a company that rewards your good grades.

Schools with Alternative Grading Scales

Not all schools issue standard letter grades from “A” to “F.” Also, many schools use numerical grading systems other than the standard 4.0 scale. How do you show proof of a “B” average or 3.0 GPA if your school doesn’t issue grades in this way?

Insurance companies typically allow Honor Roll or Dean’s List membership to suffice as proof you’re a good student but what if your school doesn’t have an Honor Roll or Dean’s List?

You can submit a letter from your principal, dean, or administrator attesting to your excellent work in the classroom.

Home-Schooled Students

Home-school status presents a unique challenge for young drivers seeking a good student discount. Because home-school grades aren’t standardized and there’s no honor roll, it can be difficult to prove you’re a good student.

If you’re homeschooled, you can substitute standardized test performance for grades.

The specific rules vary by insurance company but generally, if you take the SAT, ACT, PSAT, or another nationally recognized test and score in the top 20 or 25 percent, you can receive a good student discount.

Driver Education Discount

Though not technically a good student discount, a driver’s ed discount offers another way to lower your premiums through schooling. Again, data serves as the motivation behind this discount.

Students who complete a certified driver’s ed course are less likely to crash. You can take driver’s ed through your school or an independent provider. Just make sure the course is certified through your state’s DMV.

Once you complete driver’s ed, you can submit your certificate to your insurance to receive a discount.

Discounts for Resident College Students

Here’s a common dilemma for students going away to college. The school is located far from home, and the student isn’t planning to take a car their freshman year. However, they still want to be able to drive when home for breaks.

Paying expensive insurance premiums while away at school and not driving can seem like a waste.

If this scenario describes you, then you might want to inquire about a resident student discount. This discount applies to college students who aren’t planning to drive at school.

Most insurance companies require you to be attending college a certain distance from home, such as 100 miles or more. As proof, you’ll need to submit proof of attendance at your college or university, along with the school’s address.

Receiving the Good Student Discount


If you have a “B” average or above, or you meet other criteria described above, contact your insurance company or agent about the good student discount.

If your insurance company doesn’t offer this discount, it might be time to do some shopping. Most car insurance companies reward good students in some way.

There’s no sense in paying 10 to 20 percent more than you could be paying when other companies will give you a discount for making good grades.

You should always compare at least three to four policies side by side before choosing one. You can determine not only which company offers the best coverage and lowest premiums but also which gives you the most opportunities to earn discounts, such as the good student discount.

The cost of car insurance can be brutal for young drivers. But you don’t have to wait until you’re 25 to enjoy lower premiums. Earning a good student discount can knock off a decent chunk of your insurance costs.

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