Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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UPDATED: Sep 24, 2021

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Here's what you need to know...

  • A standard auto insurance policy will provide coverage to listed drivers and occasional drivers who have permission to drive the vehicles on the policy
  • If the policyholder’s child is licensed and lives in the household, the insurance contract states that the driver must be listed and rated to be covered
  • There are exceptions to the rule, and one is when the insured’s child owns their own car and is insured elsewhere. In this case, they’ll be listed as a deferred operator.
  • Any child of the named insured who has their instructional permit will be automatically covered until they get their state-issued driver license
  • If a household family member is listed as a primary or secondary driver, they will receive the same level of protection as is listed on the policy declaration’s page

It’s hard to go from being a child to an independent adult who’s left to handle all of their business affairs on their own. If you’re finally preparing to take over everything from your savings accounts to your auto insurance, it’s important to learn how everything works. While the premise of auto insurance is quite straightforward, policy provisions can be difficult for a first-time buyer to fully understand. You know you need coverage, but you don’t know whether or not you have it if you’re driving your parents’ vehicles.

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Verifying that you’ll be covered every time you get behind the wheel is critical if you want to save your parents’ court costs and out-of-pocket expenses for damages. You don’t always have to be listed under a policy to be afforded coverage by a carrier. With this being said, there’s a very thin line between covered and uncovered in the eyes of the insurer. You need to know where this line lies before making any hasty assumptions that could damage your family’s financial future.

Understanding the Personal Auto Policy Contract

The Personal Auto Policy is a contractual agreement between the primary policyholders and the insurance company. This agreement says that you agree to all of the terms and conditions of the contract and you’ll pay your premiums when due.

As long as you agree and pay your premiums, the policy will provide coverage to covered drivers and autos.

What can get confusing is when you as who’s considered a covered driver. Under Part A of the contract, the policy defines the insured as a named insured, resident spouse or household family member. In layman’s terms, this means that liability coverage is afforded when you or any other insured by definition are driving a covered auto and have a loss that results in bodily injury or property damage. This definition applies for other coverage options like Medical Payments and Uninsured Motorist as well.

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Is automatic coverage provided to household family members with their license?

A child living in the home might meet the definition for insured, but that doesn’t mean that coverage is always afforded. Your parents have a duty to keep their policy up-to-date and to disclose all drivers in the household who have access to their vehicles.

If you’re licensed to drive and your parents fail to list you on the policy, the company may feel as if your parents are trying to hide that you should be a rated driver. It’s a major cause for concern if the driver who isn’t being listed is deemed to be a high-risk or very inexperienced driver. In this event, the company does have the right to deny a claim when you’re behind the wheel. This is especially true when there’s a claim to cover damage to the household vehicle.

What if you’re in college and you don’t live at home?

If you don’t live in the same household as your parents, this can create some new complications. Just because you aren’t physically in the same home doesn’t mean you’re out of the woods yet. Teens and young adults who’re still dependent on their parents and who’re in college are still residents of the insured’s house in the eyes of the law. So if you’re a student away at college, you still need to be a listed and rated driver. Luckily, you’ll qualify for a student away at college discount that will substantially lower the charge for you to be listed.

What if you live outside of your parent’s house and you’re not a dependent?

If you’re not a household member, you’re more likely to qualify for coverage under your parent’s policy as a permissive user. Auto insurance protects the policyholder from the financial loss that can come with owning a car.

If the named insured lets someone borrow their car and they get into an accident, the owner would suffer major financial loss if the policy didn’t offer permissive user coverage.

You should verify that you can qualify for permissive user status under your parent’s policy provisions before assuming anything. In most cases, the following will exclude you from being eligible for automatic coverage:

  • Family member living in the household
  • Regular access to any of the insured vehicles
  • High-risk driver under the age of 25
  • Suspended or revoked driver license status
  • No permission given to drive at the time

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What if you live in the home but have your own policy?

If you’re still in your parents home but you own your own car and you’ve purchased your own insurance elsewhere, you don’t need to worry about being listed on your parent’s plan. Since you have your own coverage elsewhere, you have liability insurance that’s going to be considered primary in the event of a claim. Even though your limits on your own existing insurance will be used first, your parent’s limits of liability will kick in to cover you if you don’t have enough coverage. When you’re listed but not rated on the policy, you’re called a deferred operator or a non-rated driver.

What if you only have an instructional permit?

The requirements for rating a driver are extremely different when you only have an instructional permit. Permits are issued to teens and some young adults so that they can learn how to drive under the supervision of a licensed driver. Since someone with their permit doesn’t technically hold a license, they don’t typically need to be rated. Some states allow companies to charge for teens with permits, but this isn’t the norm.

You’ll need to tell your parents to notify the company that you live in the home and ask if naming you will change the rates. If the company rates you, your parents’ policy could go up astronomically.

Auto insurance helps you pass the burden of paying for large losses on to a large insurer. Unfortunately, not all circumstances are covered. If you’re living in your parents’ home or you’re driving their vehicles, you need to be sure you’re covered. Shop around for your own plan or encourage your parents to compare pricing with an online rate tool. Once you find the right plan, you’ll be fully covered. Enter your zip code in our FREE tool below to compare car insurance rates now!