Start comparing car insurance rates now by using our FREE tool above! Being on your parent’s car insurance policy when you’re labeled an inexperienced operator can save you a fortune. This is especially true when your parents have held their car insurance with the same company for several years and have amassed loads of loyalty discounts. Staying on your parents insurance can benefit you, but it can only benefit you for so long. Teens and even adult children can be added and kept on a parent’s policy, but certain conditions need to be met. Read on, and find out when you can be insured through a parent’s plan and when there might be limitations.
Do drivers with a permit need to be listed on insurance?
If you’re about to start training to drive on your own, it’s important that you have applied for a learner’s permit in your state. Some parents are hesitant to notify their insurer when their teen is about to get a permit because they want to avoid steep rate hikes.
You can let your parents know that this almost never happens because virtually all companies will extend coverage to household drivers with their learner’s permit much like coverage extends to a permissive user. This is because the Department of Motor Vehicles requires youthful operators with their permit to be accompanied by an adult driver who can take the wheel.
When do you need to be listed under your parent’s insurance?
As soon as you go to your appointment to take your paper test and behind the wheel test, you need to contact your insurer. When you pass, you’re a licensed household driver and underwriting guidelines state that you must be disclosed on the declaration’s page for incidents that you cause to be covered. Failing to call the insurance company and update the policy can lead to severe penalties. These penalties include:
- Driver exclusion requirement
- Denials for liability claims
- Uncovered vehicle damage
- Policy cancelations or non-renewals
What happens when you’re no longer a minor?
A driver can be listed under their family member’s policy for as long as they are dependent on them. What can get confusing is that the definition of dependency can be very broad and doesn’t fit the same criteria that’s set by an agency like the IRS. When you turn 18 and you’re free to go about your business without answering to your parents, it doesn’t mean that you have to get off of the policy right away.
As long as you live in the home or you drive a household vehicle, you can be listed as a household driver.
When you move out, you might still be listed as a driver who has regular access to a car that you don’t own, but you can’t have to be listed as the primary driver of a car that’s registered in your name.
What happens if you own your own vehicle and live in your parent’s home?
If you live in your parent’s home, but you’ve purchased your own vehicle, things can get a little sticky. Every company handles this situation differently. Some companies will require you to purchase your own policy if you title and register the vehicle in only your name. This is because your parents technically have no insurable interest in the car so a standalone policy in solely your name would be necessary. If this happens, you may be required to sign a driver exclusion so that you’re not charged on both policies.
If, however, you decide to register the car in both your name and one of your parent’s names, it can eliminate the problem and the car can be added to the same policy to receive discounts and low rates. You’ll need to check the family policy requirements with each insurer to see how registration and named insured issues are handled. In many states, if the registered owner and named insured don’t match it can create issues with verifying coverage.
Benefits of Being Insured on a Parent’s Policy
It’s common for a teen who’s dependent on their parent’s support to be added to an existing policy while they live at home. While some young adults would like nothing more than to become independent and branch off from their parent’s accounts, it could be beneficial to your bank account to quiet your urges for as long as possible. There are many financial benefits and conveniences associated with staying on a parent’s policy that include:
- You will receive the loyalty discount that your parents receive
- You will be eligible for a multi-car discount on your vehicle’s premiums
- If your parents have multiple policies, you too will receive the multi-line discount
- If your state uses credit-based insurance scores, your parent’s credit will be used to set rates
- You can receive higher limits of protection for less money out of pocket
What happens when you go away to college?
If you’re going away to college, it can present even more issues. Most college students are seen as dependents if they still use their parent’s address as their primary residence.
Whether or not you take a car with you and where it’s registered will dictate how you can get your coverage.
If you don’t take a car, you can be listed under your parent’s plan as a ‘Student Away at College’. This means your parent’s are protected if you borrow a car, but you aren’t rated as a high-risk teen driver. If you take a car, it can only stay on your parent’s insurance if it stays registered in the state under your parent’s name.
Insurance is expensive when you have less than 9 years of driving experience. If you want to compare pricing, use an online rate comparison tool to see how much you’d pay on your own. You might be persuaded to stay with your parents for longer than you wanted before seeing the cost. Start comparing car insurance rates now by entering your zip code in our FREE tool below!