When meeting with new prospects or reviewing policies with current clients, the topic of whether a child should have their own auto insurance policy comes up regularly. This topic is especially discussed during monumental moments in their children's lives, usually around graduation and weddings.
A lot of parents will try and keep their children on their policy longer than they should. Parents may think that they are helping the child reduce their premium by taking advantage of the parent's multi policy discount from their home insurance, using the parent's higher credit score, using the parents other vehicles to create a multi vehicle discount for the child, but they maybe creating gaps in coverage.
When a child moves out of the house and has a place of their own, they probably do not meet the definition of a named insured per the parent's auto insurance policy. This is what creates the gaps in coverage for the child.
For example:
1) If the child was riding in an uninsured friend's vehicle, and the friend caused an accident the medical payments from the parent's policy may not cover the child.
2) If the child was on the sidewalk and struck by an uninsured driver they may not be able to make a claim against their parent's auto insurance policy to help cover their injuries.
3) If the child was traveling for pleasure and rented a vehicle the parents auto insurance policy may not cover the child. Therefore requiring the child to take the insurance from the rental car company. For more information on whether you need rental car coverage watch read this blog article: When Do I Need Rental Car Insurance?
Some of the triggering events of when to talk to your Independent Insurance Agent about when to remove your child from your auto insurance policy and get them their own auto insurance policy include:
1) The child has moved out of the parent's house. They may have graduated high school or college and got their first job and bought their own home or rented their own apartment. At this point the child should definitely talk with an insurance agent about getting their own auto insurance policy. Along with an auto insurance policy they should be getting either a home owners insurance policy or a renters policy to take advantage of multi policy discounts and to protect their investment in their home and their belongings.
2) The child has gone away to college. This situation requires you to talk to your agent. Generally as long as the child is living in a dormitory they will be covered and you do not need to worry about getting them their own vehicle insurance policy. However, if they will be living off campus you may want to verify with your agent how to properly handle this situation. Again, most carriers recognize this as a temporary living arrangement and it may not be an issue, but again talk with your agent.
If your child is more than 100 miles away from home and does not have a vehicle with them at school, talk with your agent about a possible discount.
3) The child has titled a vehicle in their name and the parent is not on the title. When a child purchases and titles a car in their name only the parent has no insurability interest in the vehicle and the child should take out an auto insurance policy in their own name. Even if the parents are listed on the loan or co-signed for the loan the vehicle should still be insured on the child's auto insurance policy.
When a child takes out car insurance of their own it helps to fill the gaps that were mentioned above. Talk with your local independent agent to make sure your family is making the right decision about whether they need a separate auto insurance policy for your child. If you are a recent college graduate or recently got married reach out to Clark Carroll Insurance agency so you can get set up with your home, renters, and car insurance.