Owning your car has its perks, but it also has some financial drawbacks. You’ll have to pay for the vehicle and related expenses that your parents used to pay for. We’re frequently asked: “If I buy a car, can my parents insure it?” Luckily, you may be able to get cheap car insurance under your parents’ policy. However, your parents car insurance rates may increase up to 300%.
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How much is car insurance under parents’ policy?
Car insurance rates depend on the company, your location, and several other factors that car insurance. When your parents add you to their car insurance policy, their rates go increase. However, your parents can get policy discounts if you’re a good student, if you’ve taken a defensive driving course, and if you’re away at college.
Let’s compare what car insurance rates would like for your parents if they insured and if they’re eligible for policy discounts.
|Annual Rate Summary||Annual Rates|
|Annual Rates Before Adding Teen Driver||$2,545|
|Annual Rate with Teen Driver||$6,145|
|Rates After Discounts (up to 25%)||$4,609|
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This is just an example of how discounts can lower car insurance rates. When your parents are eligible for student discounts and several discounts, it could lower the car insurance rate considerably. Watch this video from CBS News on how you can save money when you insure teens.
There are two different types of classifications on a car insurance policy. According to the International Risk Management Institute, Inc., some of the people are only drivers, and some of them are drivers and named insureds. It’s important to be able to distinguish between the two when you’re trying to get coverage for yourself. Your classification matters when it comes to buying a new car.
A “rated driver” is someone who either lives in the home or drives listed vehicles regularly. When the driver is rated, they have permission to drive the vehicles at any time, but they also affect the premiums.
A named insured will typically be a driver, but they also own the policy, which means that they receive claims payments and have the authority to make changes to the car insurance policy halfway through the year or other times.
How long can you stay under your parent’s car insurance?
You can be covered under your parents’ insurance as a teen and as a dependent. One of the main reasons why you’re allowed to get coverage under your parents’ policy as a dependent is because the parents are liable for damages that their dependent children cause in their car.
If the insurer didn’t cover dependents, parents would be stuck paying for damages even though they have insurance. The scenario changes when your adult child no longer lives in your home because they won’t be a resident relative. If they live outside of the home, they don’t have to be added to the policy unless you feel the need to add them.
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Do you need car insurance coverage when you buy your first car?
Yes. Anyone who has never owned a car might not know what they have to do when they purchase one. If you’re about to buy a car and you don’t know how to prepare, you need to find out what the requirements are first. You can either ask your parents, or you can call the car insurance company.
In almost all states, you have to prove that you have insurance at the dealership before you can drive off. The dealer must verify that the buyer has insurance that will cover the new car, or drivers will be at risk. You’ll have to prove you have more than just mandatory coverage if you’re financing the car.
Is it cheaper to be on your parents’ car insurance policy? Yes. Your parents can receive discounts on car insurance when they add you to their car insurance policy. This will save them money on car insurance, also.
What happens if I don’t add my child to my auto insurance? Your child will have to find car insurance if they’re going to drive. Car insurance will be more expensive for them. Some insurance companies may decide not to insure a child if they’re a minor. Anyone who’s 17 years old and older is usually able to obtain car insurance.
What type of car insurane coverage do you need to have if you’re financing a car?
You might be able to get away with covering your newly purchased car on a liability-only policy when you’re paying cash for a car but not when you’re financing a car. Taking out an auto loan is a good way to build credit, but when you drive a financed car, you’re required to cover the vehicle.
You’ll need at least the following coverage:
- Bodily Injury
- Property Damage
- Comprehensive Car Insurance Coverage (with acceptable deductibles)
- Collision (with acceptable deductibles)
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Car Insurance Policies Have Automatic Coverage Provisions
You don’t have to rush to buy insurance if you already have sufficient coverage in place. All standard car insurance policies have an automatic coverage provision in place that extends coverage to newly acquired vehicles for a limited time. In the state of Virginia, this provision will also apply to rented cars and vehicles that qualify as temporary substitutes.
If the car is eligible to be covered as a newly acquired auto, it will receive the same type of coverage that you have on your current policy. If you have multiple vehicles, the newly acquired vehicle will have the broadest form of liability and first-party coverage found on the policy.
If you don’t have full coverage on your policy and you’re buying a new vehicle, you will have a short time where the insurer will give you full coverage. In most states, you’ll get at least four days of full coverage on an additional vehicle if it’s purchased after the term took effect. You will have to add the car for full coverage after the four days are up.
Will your new car be eligible for coverage under your parents’ car insurance?
One of the problems with the automatic coverage provision is that you might not qualify for coverage to your vehicle if you’re not a named insured on the policy. If you’re buying the car in your name and you’re the only registered owner, you may not have automatic coverage.
There are ways to ensure that you’ll have automatic coverage under your parents’ insurance. One way is to buy the vehicle with one of your parents so they’re on the registration. Another way is to ask the insurer if you’ll qualify for the extension because you’re an adult child living in the home.
Being covered under your parents’ policy has its perks, but you’re not guaranteed to have that option.
If you can’t add your vehicle to the policy because of your age or your address, you need to buy your policy.
It’s not too late to start shopping for car insurance in your local area. Enter your ZIP code in the FREE comparison tool to get started!
Car Insurance Under Parents FAQs
The final section will go over questions people frequently ask on search engines across the web. We’ll also recap what you’ve learned and given you insight on what to expect when you insure a vehicle under your parents’ car insurance policy.
Can I stay on my parents’ car insurance if I move out?
Yes. Many drivers choose to stay on their parents’ car insurance policy to be eligible for more discounts such as the Family Plan discount. It’s also cheaper for all drivers on the policy.
Can a married child be on parents’ car insurance?
One of the most popular discounts on car insurance is the multi-car or multi-vehicle discount. This can save multiple people money on car insurance.
When should a child get their own car insurance?
There are many reasons why a child should get their insurance. As the primary car insurance policyholder, you can remove the child’s car at any time.
Can I be on my parents’ car insurance if I’m married?
If the circumstances are necessary, then yes.
Can a 26-year-old be on parents’ car insurance?
Family plans and multi-vehicle plans are some of the methods policyholders use to save money on car insurance.
Can I be on my parents’ car insurance if I don’t live with them?
Yes. If you’re a student college, working a job, etc, you are eligible you can be your parents’ car insurance policy.
Is my child covered under my car insurance?
You MUST add your teen and their vehicle to your car insurance policy for them to be insured.
Should parents pay for car insurance?
If the child is minor, yes. Teens usually pay more expensive car insurance rates, but with parents monitoring the teens driving, they can save money through their parents. It’s easier for teen drivers if the parent pays the policy.
Can I drop my child from my car insurance?
Yes. As the primary policyholder, you can drop them at any time, but make sure the child isn’t driving without insurance.
Compare car insurance under your parents’ policy online by entering your ZIP code, and you can find an affordable plan!