Having a teenage driver listed on your policy makes a noticeable difference to your premium. However, it is even more expensive for young people to buy their own policies. Another question to be answered here is should parents remove or keep children who left home on automobile insurance? The solutions are not often straightforward because they need to be acceptable to insurers and comply with state rules as well.
Car Insurance Child Moves Out
One of the first questions to answer is if the move is considered permanent or temporary. Usually, children who left for college are still considered to be living with their parents. Therefore it may be perfectly acceptable for parents to insure a car that is driven by college student, especially if it is not taken to college. In such cases, parents should shop around for a carrier who would offer the largest vehicle insurance discount for a child away at college. Most companies accept the fact that someone who is mostly away from the address isn’t likely to drive much and the premium should reflect this fact. Follow the above link to find out more.
However, you should be careful when your child moves out completely, having own car and start living an independent life. In such cases, parents buying a policy for their kids can appear to be fronting for insurance since the young adult is now living in a different address and keeping his car there (rather than with parents) and the vehicle insured is mainly for his/her use.
Essentially, the main user of the automobile insured should be the listed main driver in any policy whichever way it is set up. And where the vehicle is kept at most nights should be the address on the policy. Also, a few states require the name on the car registration document to match with the name on insurance.
All these points make it contentious for parents to insure a vehicle used and kept by their grown up children who have left home for good, regardless of how far away they live. Premium savings may be appealing but a claim that is refused can be much more costly. That is why you should always be open and clear with your carrier about the automobile ownership, principal user and where it is kept.
Furthermore, having own policy can offer additional protection to the policyholder in several cases like not needing rental car liability coverage and having secondary liability coverage when driving someone else’s auto. Also, a policyholder can claim on Uninsured Motorist Coverage even when he/she is a pedestrian. Besides, everyone has to start having own policy at some stage.
Another point to consider is the liability. A young person isn’t likely to own a home or have valuable assets and therefore, people may not see much point in lodging big third party claims against them. However, parents would most likely be in a much better financial position and people can lodge claims against their assets if the policy is on their name even if the child caused the accident. From asset protection point of view, it may be safer to move vehicle registration and insurance to child’s name if it is mostly driven by them anyway.
In some cases, parents may still need or want to insure the vehicle. For example, they may still own it and their state doesn’t allow someone else to insure a car. Then, you need to be clear about who is the main driver and other details. It is important to be on the same page with your carrier. They calculate premiums based on main driver but you can still get good discounts, especially if you have several policies with the same provider.
When to Remove Child from Car Insurance
When a driver is no longer living at the address it may make sense to drop him/her from your policy. Particularly dropping young and high-risk drivers can save some money. You probably don’t hesitate to make the decision if the person isn’t likely to drive insured auto anymore.
However, often children settle in their new addresses that are close to parents. And they stay in regular contact and drive their parents’ cars often. In such cases, you may consider keeping them listed on your policy as long as you want. Children can stay on parents’ auto insurance as long as they want. There is nothing preventing you from insuring a driver who doesn’t live with you as well.
Someone who has a regular access to your vehicle isn’t really an occasional driver and insurance usually protects listed drivers better than occasional drivers. Therefore, you shouldn’t be too quick to remove a driver from a policy even if they are not living with you anymore. Instead, you should try to find a reasonable carrier that will understand you are keeping someone on your policy as a precaution and don’t let them influence your premium much. This would be easier if the person included has own car and policy.
In short, perhaps it is a good idea to keep a driver who has regular access to your car on your policy even though they live somewhere else. But you shouldn’t insure a car that is mostly driven by your grown up child who is keeping an independent life in a different address. He/she should buy own coverage where it is possible. Away at college may be an exception to this, depending on who owns the car and where it is kept most nights (see the link above for more explanation).