Students in class listening to lecture and raising hands.All that studying might finally pay off.

If you're a high school or college student, or the parent of one, you've probably heard of the good student discount. It can be a financial lifesaver for young drivers and their parents. After all, when you add a teenage driver to a parent's car insurance policy, their rates often increase, on average, by 130%. In other words, if you're a parent, you might see your bill go $2,000 higher than a household without a teenage driver.

Of course, there's a good reason for that. It's more expensive to insure younger drivers because they have less driving experience and tend to be involved in more accidents. As a result, insurance companies see them as high-risk drivers and charge a higher rate to insure them.

The good student discount can help lower those auto insurance premiums, by up to 25% in some cases, and by 7%, on average. Insurers tend to reason that if you're getting good grades, you're probably not the sort of youth who watches Fast and the Furious movies and mistakes them as driving training videos. So, if you get good grades and report your success to your insurer, your rates should come down.

Key Highlights
  • Most insurance companies require a minimum of a B average to qualify for the good student discount.
  • To apply for the good student discount if your grade average is a B or higher, you'll need to alert your insurer and will require proof of the grade average.
  • The average good student discount is 7%, based on a rate analysis.

What GPA do you need for the good student discount?

Most insurance companies require a minimum of a B average to qualify for the good student discount.

How much will the good student discount lower my rate?

That depends on the insurer. Most insurance providers aren't very clear on exactly how much they'll lower rates. It depends on various factors, including how good the grades are and what state the student lives in (every state regulates insurance differently; there is no federal standard).

Good student discount by insurance company

Allstate good student discount

Allstate says you may qualify for their smart student discount if you are under the age of 25 and have a grade average of B- or 2.7 or above, have completed the teenSMART driver education program, or attend school at least 100 miles away from where your car is garaged. Allstate encourages speaking with your agent to determine if you qualify and, if so, how much the discount will be.

Geico good student discount

Geico's good student discount is 15% -- if you maintain a B average or better. If you're a college student and in a fraternity or sorority, or if you're in the honor society, you might be able to get an additional discount. They also offer some discounts to alumni associates and if you're a member of some college, university and student organizations.

Progressive good student discount

The same type of language on Progressive's website: "A smart student makes you a smart shopper. Add a full-time student on your policy who maintains a 'B' average or better, and we'll add a car insurance discount." It also notes that the average student discount varies – and that in California, there is no good student discount (sorry, California).

State Farm good student discount

State Farm is refreshingly open about their good student discount. As it says on its website, "you can save up to 25% just for getting good grades! And the savings last after you graduate from college until you turn 25." You can save up to 25% with State Farm's good student discount.

Liberty Mutual good student discount

Liberty Mutual website states, "Attention class: If you (or your student) have a GPA of B or better, we're happy to reward your hard work with a discount on your policy." The website isn't more specific than that. Liberty Mutual also makes this statement about good student discounts, "discounts and savings are available where state laws and regulations allow and may vary by state."

Nationwide good student discount

According to Nationwide's website, they offer a student discount for drivers ages 16 to 24. Drivers must be full-time high school or college students and maintain a minimum B average to qualify for the student car insurance discount.

USAA good student discount

USAA states that they have a good student discount and that you need to be under age 25 and a full-time student maintaining a 3.0 or B average. The discount isn't available in Hawaii or North Carolina.

How to apply for the good student discount?

If your grade average is a B or higher, you'll need to alert your insurer. They will typically require proof of the grade average. You will need to do this every time your final grades are reported. It is up to you to let your insurance agent know that you qualify for this discount.

Read more on How often does an insurer check your report card?

What is the average good student discount?

The average good student discount is 7%, based on a rate analysis.

Let's say you spend $2,000 a year on car insurance. Saving 7% would be a yearly savings of $140. But, if you have a car insurance company that will discount 25% like State Farm, you'll save around $500 per year.

Are there other ways to get cheaper car insurance?

Yes, absolutely. The good student discount is one of many ways to reduce your car insurance costs.

Car insurance companies typically offer multiple discounts. Ask your insurance agent about discounts you may qualify for. Or you could have an insurer's tracking app on your car, like Progressive's Snapshot, Nationwide's SmartRide or State Farm's Drive Safe and Save to get discounts for safe driving.

A clean driving record and consistent safe driving goes a long way in lowering insurance premiums.

Another great way to save is to shop around. We recommend comparison shopping before every renewal to see if you're still getting the best insurance at the best price. Get quotes from at least three different insurance providers and be careful to compare the same coverage limits, deductibles and other optional coverages.

If you are a teen driver who has their own separate policy, it will almost always be cheaper to be added to your parents' policy instead. To reduce your car insurance cost, you should try to strike a deal with your parents to add you to their policy, but you pay your part of the insurance each month.

The verdict on the good student discount

Studying and getting good grades can pay off in many ways. One of the more immediate ways is a reduction in insurance premiums by qualifying you for a good student discount. If your teen is maintaining a B average or better in school, call your insurance company to inquire about applying for the discount. Car insurance for teens is expensive and every savings helps.