Q: ”When should my kids get their own auto insurance policy?”
A: This is a question that we get often with our clients. When children obtain their driver's license we list them as insured drivers on their parent's auto policy. Every policy requires all licensed members of the household to be listed as an operator on the auto insurance policy. We recommend letting us know when your children get their driver’s permit and when they get a school license, intermediate, or regular driver's license. As kids grow up, when do they need to get their own auto insurance policy?
If your child has moved out of your house and is no longer a dependent, they need to have their own insurance policy. Under most personal auto insurance policies, the “insured” covered by the policy includes “family members”. Family members are limited to “a person related to you by blood, marriage or adoption who is a resident of your household.” Once an adult child moves out of the household, they would no longer meet the definition of the “family member/resident relative” on your insurance policy. We know your adult children will always be your family member, but unfortunately, they won’t be defined as an insured on your auto policy once they are no longer a resident in the household. Why is this important? Here are some examples to show why:
Your daughter Amy is excited to go to her former ISU college roommate’s destination wedding in Colorado. She rents a car and doesn’t buy the insurance offered by the rental car company. If she were to be in an accident, the liability and physical damage from your insurance policy will not extend to the rental car.
Your son Brent borrows his friend’s truck to move from an apartment in Waukee and to a new apartment in Ankeny and rear-ends another vehicle, injuring the other vehicle’s driver. Since Brent is no longer a resident of your home, he has no liability coverage for the other driver’s bodily injury or the property damage to the other vehicle.
Your child is crossing the street in Des Moines and hit by a hit-and-run driver. There would be no medical payments or uninsured motorist’s coverage for his or her own injuries. Same if they are riding a bicycle and struck by a vehicle that was uninsured, underinsured, or left the scene.
Without coverage from an auto insurance policy, your child will have to pay these expenses themselves. Some of our largest claims come from the uninsured or underinsured motorists coverage. This is why we are discussing this.
Another factor of whether to keep your child on your insurance is how the vehicle is titled. With some companies, all vehicles on an insurance policy have to be titled to the named insured. If your son or daughter has their own car titled in their name (even if they still reside in your home), they might need to have their own insurance policy. Some of our companies do allow vehicles to be titled in different names - this is something that you should talk to your agent about.
Each insurance company has its own guidelines, so it is best to talk to your Absolute insurance agent about your specific details.