Am I Covered Under My Parents’ Car Insurance? – Here’s the Answer!

Your sons and daughters are fast growing up, and they probably want to get behind the wheel. Once they have obtained drivers’ license, you have to start thinking about including them in your car insurance policy.

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While adding teens to insurance policy may seem expensive, its cost is nothing compared to what you may suffer down the line in the event of a dispute over coverage involving your uncovered children. Although this seems straightforward, it is often misunderstood.

For instance, some people think that they can save money by failing to disclose to their insurers that they have driving teens, while others assume that teens are obviously covered by their parent’s policy.

Below is the rundown of some important facts you should know about young adults’ coverage under their parents’ car insurance.

Teens Are NOT “Obviously” Covered

Generally, insurance companies are known to extend coverage to car accidents caused by teen drivers not added to their parents’ insurance policies. However, not all insurance companies are that generous. If your child obtained a drivers’ license after you renewed the policy, and you didn’t inform the insurer, this may be seen as a misrepresentation, and in such a case, the insurer will be entitled to deny you coverage.

So, can you drive parents car without insurance? The answer is no.

In other cases, the insurance company can honor claims involving unlisted children but charge parents for back premiums to cover the time that the children were licensed but not formally listed under parents’ policies. Thus, you shouldn’t leave anything to chance; if your children are driving, you should notify the insurance company sooner rather than later.

Children Can Remain on Parents’ Insurance If They Are Still at Home

Whether your children are driving cars in your name or in their names, can remain in your insurance policy for as long as they stay with you. In fact, this is good for them because it will cost them less.

While, adding children to your plan may increase insurance costs by up to 50% or more, it is still less costly compared to buying their own insurance. In any case, this cost may significantly reduce as they grow up to become more responsible drivers.

However, once your children leave home, they cannot continue staying in your insurance plan, unless they are going to college. In a nutshell, although children can have separate car insurance policies, they can enjoy a lower cost of insurance by remaining in their parents’ policies as long as they stay with parents.

Buying Child’s Own Policy

If you are wondering if teens can buy own insurance policies, the answer is “yes.” In fact, insurance companies do sell directly to teenagers. However, the laws vary from one state to the other when it comes to teenager’s ability to sign contracts, including insurance policies.

In some cases, the parent will have to cosign. Nevertheless, it is not going to be cheaper even if parent cosigns such the policy. In fact, the cost of maintaining a child’s own policy will be higher than the cost of adding a child to the parent’s policy.

Money Saving Tips

Whether you are teen or a teen’s parent, there are several ways for you to save money on teen car insurance. For instance, instead, of buying teens’ own insurance, you can just add them to your policy.

Furthermore, you can get a discount by insuring several cars with the same insurance company. This can make sense if your children have their cars. You can also enjoy cheaper car insurance premium by buying cars with higher safety ratings as opposed to considering expensive, flashy rides, which generally costs a lot to insure.

Another way to cut cost on auto insurance would be paying higher deductibles, which will allow you to pay a lower premium. However, in this arrangement, you have to ensure that you can afford the deductibles in case of an accident. Last but not the least, consider that you really need a comprehensive cover, depending on the nature of the car.

For instance, although teens are more likely to get involved in a car crash, you may not need a comprehensive policy especially if your child drives an old model.

The Takeaway

Overall, it is apparent although insurance companies generally provide coverage for children not listed in their parents’ car insurance plan, you must notify the insurer once your child receives a drivers’ license.

While including child in your policy may lead to an increase in the rate of insurance premiums, it is the most economical arrangement since getting your child an insurance policy could cost even more. However, this coverage can only continue if the child is living with you.

There are many tips you can count on to lower the cost of your car insurance policy without violating the provision of the policy. In a nutshell, children must be covered by an auto insurance policy for them to drive, no matter how expensive that could be.