Why Does One's GPA Have an Effect on Car Insurance Rates?

When you achieve a high grade point average, or GPA, in high school or college coursework or testing, most auto insurance providers honor your achievement with a reduction in your premium. This discount is offered because auto insurance providers feel that a student responsible enough to earn high grades in school will also demonstrate responsibility while driving. To ensure you receive this savings on your or your parent's insurance policy, you need to meet your insurer's criteria.

Each auto insurer sets its own student discount as a percentage off your normal auto insurance premium or your portion of a parent's bill with a 15 to 25 percent discount serving as the standard range. However, you may not receive the maximum discount because insurers typically phrase student discounts as a reduction of your bill "up to" a set percentage. If any incidents appear on your driving record or if your grades barely qualify for savings, you may receive a minimal price reduction.

As long as you maintain your grades and retain your status as a full-time high school or college student, most insurance companies let you retain your student discount until age 25. However, you may need to re-establish your eligibility for the reduced price at different points between obtaining your initial policy and reaching the cutoff. Prepare to provide additional verification when your policy renews after both your high school and college graduation.

Insurers generally look at your GPA, class standing or standardized test scores to establish your eligibility for a discount. In addition to maintaining a full-time course schedule, you must keep a "B" average -- a 3.0 or above. Alternatively, you may submit a school record demonstrating your standing in the top 20 percent of your class. If you are home-schooled, you can also qualify for a discount with some insurance providers by submitting a copy of your ACT or SAT scores that show you are in the upper 20 percent of the nationwide performance averages. Always double-check with your insurer about the preferred way to verify your standing to ensure you receive the best discount.

Receiving too many traffic tickets or getting in accidents can end up eliminating the value of your good student discount. To maximize your chances of receiving and retaining the best insurance rate possible, drive carefully, observe traffic laws and keep your grades up. When your good student rate expires after you turn 25, a safe driving history and your years of driving of experience will help secure additional savings.