Ask Your Absolute Insurance Agent: When should my kids get their own auto insurance policy?

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.

You've Got Q's; We Got the A's

Q:  The color of my car affects my insurance rates, right?

A:  False.  The color of your car does not impact your car insurance rates.  What does influence your rate is your vehicle's year, make, model, body type, engine size, safety-features, and anti-theft features, along with your credit history, driving record, and geographic location.


Q:  No Fault Insurance means it's not my fault, correct?

A:  No.  It means that your company will pay for the damage to your vehicle (if physical damage is purchased) regardless of whose fault it is.  This type of policy is not available in Iowa and is a state specific type of coverage.  I, for one, am thankful that Iowa has not adopted this type of policy!


Q:  If I recently paid my insurance bill, the new car I just bought is covered?

A:  Yes, to a point.  Most insurance companies require that you notify the company of the agent within a specified number of days after the purchase.  There is a short grace period where the coverage does automatically transfer from one full coverage vehicle to a new full coverage vehicle.


Q:  If I lend my car to a friend and they get into an accident, will their company cover the damages?

A:  False.  Your car, your responsibility!  However, your friend's insurance could act as excess insurance if the damages exceed your policy limits.


Q:  I don't want uninsured/underinsured motorist because I don't want to pay for those drivers' cars!

A:  This is a common misconception.  That coverage is purely for your protection.  It pays for your lost wages and medical bills if you are struck by a driver without or not enough coverage (relative to the accident).  It does not pay for ANY vehicles, yours or theirs.

You've Got Some Q's: We've Got the A's

Q:  Why does it matter whose name is on the title?

A:  This is an important questions and the answer is because the owner (titled individual) is ultimately liable for the vehicle.  For instance, if you are driving your friend's vehicle, and you get into a horrible accident that is your fault, the owner could still be sued after all insurance has been exhausted.  As the liability of the insurance follows the vehicle, so to does the liability of the titled owner of that vehicle.  Most insurance companies will want the insurance named in the same way the cars are titled.


Q:  Flood insurance will cover my belongings in my basement, right?

A:  No.  Flood insurance has limited coverage in basements period.  In fact, Flood Coverage will only recognize food freezers, heat pumps, sump pumps, water pumps, washers, and dryers as covered property in the basement.  These are NOT covered to replacement cost either.


Q:  I was waved through while trying to get out of a parking lot and was hit by another driver.  Is this my fault since I was waved through?

A:  Yes.  This actually happens quite a bit.  To begin, never rely on another driver to be your eyes and ears on the road.  Often times, the other driver is not looking at all parts of the road to make sure you are safe to pass through.  As the first article in this newsletter explained, be wary that you might be waved through and then hit by the driver that did the waving!  Fact is, only you know when it is best to go through and you can never rely on the judgment of another driver.  Be cautious of these situations, and better to be slow or late than in an accident.

You've Got Some Q's: We've Got the A's

Q:  My wife lost her wedding ring while we were on vacation.  Is this covered under my house insurance?

A:  No.  It would have to be stolen in order to be covered UNLESS it was scheduled on the home policy as "Scheduled Personal Property"


Q:  A tree has landed on my house and has caused damage to my home.  Will insurance replace the tree?

A:  No.  Home insurance protects your home and detached structures.  Trees are not covered.


Q:  My vehicle was broken into and personal property was stolen, is this covered under my full coverage auto insurance?

A:  No.  Only items that were attached to the vehicle as stock items are covered.  Personal property losses would only be covered under a home, renters, condo/townhome, or mobile home policy.  Auto insurance never covers personal property.


Q:  Water came up through my sewer drain and destroyed my roommate's belongings.  Will my homeowners insurance cover this?

A:  No.  Your home insurance will cover only those things belonging to you or a family member.  Unless you have Water Back-up coverage, your home insurance would not even cover your belongings.  In this situation, your roommate would need to get a renters insurance policy to cover their belongings in an event of a loss, and in this situation, they would also need to have the renters insurance policy endorsed with the Water Back-up of Sewers and Drains coverage in order to be protected.