We often hear from parents who want to help their children by giving them a car after the child has moved away from home. Usually, they hope to keep the car and child on their policy to save money. Unfortunately, because the car and your child are not located at your house anymore, they cannot stay on your car insurance policy unless they’re a full-time student.
Car insurance providers require that the insured live at their residence and park their car at their address to be listed on a policy. The main driver, the address of the driver and the location where the car is garaged are rating factors that determine your risk as a policyholder.
- Many insurers allow parents to keep full-time students on their auto insurance policy, even if the student lives away from home for school.
- Expect an increase in insurance premiums when adding a young or inexperienced driver, as they are considered higher risk.
- It’s important for parents to review and update their insurance policies regularly, especially when a child’s living situation changes, to ensure all household members are covered.
Benefits of including your child on your car insurance policy
“The primary benefit is probably cost savings. Between multi-vehicle discounts, good student discounts, and family plans, you can save a lot of money. Convenience is also a factor in that you only need one policy. Finally, your kids will probably be able to get better coverage because they are on a parent’s policy,” says James Brau, Joel C. Peterson Professor of Finance at Brigham Young University.
Some of the benefits are listed below:
- Cost savings: It is 36% cheaper for teenagers to be on their parent’s car insurance policy than to purchase a separate one. Insurance companies offer multi-car policy discounts, which can significantly reduce premiums.
- Simplified management: Managing one insurance policy for the entire family is simpler than handling multiple individual policies. It helps keep track of renewal dates, payments and any changes in coverage.
- Eligibility for discounts: Many insurers offer discounts, including good student discounts and lower rates for driving a family car that might be safer and less expensive to insure.
While these benefits are significant, it’s also important to consider that adding a young driver to your policy will likely increase your premiums due to their inexperience and the higher risk associated with young drivers.
Requirements for adding family members to car insurance
Family members who live at the same address can be added to a single-car insurance policy. It includes spouses, children, siblings and sometimes extended family members, such as parents, if they live in the same household.
Anyone listed on the policy as a driver must have a valid driver’s license. Permit holders, such as teen drivers with learner’s permits, must be insured but may have specific requirements or restrictions.
Insurers generally require that all licensed family members in the household be listed on the policy, whether they drive the insured vehicles regularly or not. It is to accurately assess the risk and calculate premiums based on the driving records of all household members.
The driving history of each family member will affect the policy’s overall cost. Traffic violations, accidents, or DUI/DWI records can increase premiums. Adding young drivers or elderly family members can also impact the premium. Young drivers are typically seen as high-risk, while mature drivers might benefit from discounts if they have good driving records.
Before adding a family member to your car insurance, it’s important to contact your insurance provider to understand their specific requirements and how adding a member will impact your premiums. It’s also a good time to shop around and compare offers from different insurers to ensure you’re getting the best deal.
When can I add a child not living with me to my insurance policy?
Here are some common scenarios where you might consider adding your child who doesn’t live with you to your car insurance policy.
- College students living away from home: Many insurers allow parents to keep their college-going children on their car insurance policies if the students attend school far enough from home that they don’t take a vehicle but are close enough that they might drive when they come home for vacations.
- Children living with another parent: In cases of divorce or separation, children can often be insured by the non-custodial parent if they have regular access to the parent’s vehicle.
- Children at boarding schools: Similar to college students, children who attend boarding school might be covered under their parents’ car insurance policy when they are home during school breaks and have access to the vehicle.
“Being able to add a child not living with you varies by the insurance company and policy. For example, if you have a child who is a college student who lives away from home, many insurers will allow them to stay on your policy. The same may apply for military service. Remember, there are exceptions to everything – so ask each insurance company as you shop around,” says Dr. Brau.
How to add your child to your car insurance policy
Here’s how you can add your child to your car insurance policy:
- Contact your insurer: Reach out to your insurance company to inform them that you want to add a new driver to your policy.
- Review your coverage options: Discuss with your insurer the coverage options available for your child. It might be a good time to review and possibly adjust your coverage limits and deductibles.
- Understand the cost of adding a new driver: Adding a young driver to your policy can significantly increase your premiums. Ask about any applicable discounts, such as good student discounts.
- Update and confirm: Once you decide on the terms, update your policy to include your child. Pay your down payment to secure coverage and print your policy documents for each vehicle.
When it might be better for your child to have their own policy
If your child has their own vehicle, it’s a good idea for them to have their own insurance policy. Once your child is financially independent, having their own policy can help them build the insurance history, which may be beneficial in the long term.
Major life changes, such as getting married or having children, might necessitate adjustments in insurance coverage that are more suitably handled through a separate policy.
Frequently asked questions
How does adding my child affect my premiums?
Adding a child to your car insurance policy will increase your premiums, especially if the child is a teen or young inexperienced driver who is considered high-risk by insurers. The exact impact on premiums varies depending on factors such as the child’s age and the type of vehicle they will be driving.
What happens if my child gets into an accident while on my policy?
If your child gets into an accident while on your policy, your insurance will cover the damages according to your policy terms, but you may face higher premiums at renewal due to the increased risk associated with the accident.
Are there any discounts available for adding a student to my policy?
Many insurance companies offer discounts for students that are added to their parents’ policy. Common discounts include a good student discount, which can be applied if the child maintains a certain grade point average (usually a B average or higher).
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