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UPDATED: Mar 13, 2020
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Young adults and teenagers pay more for car insurance than nearly any other demographic of people. In order to save money, many young people choose to add their vehicle to their parent’s policy rather than take out a separate policy on their own. While this will cause the parent’s rates to increase, it may still be more affordable than carrying your own policy. Is this a good idea? How long can you carry insurance on your parent’s policy? By knowing exactly how your policy works, you can make the best choice regarding your car insurance coverage.
Car Insurance and Young Drivers
Young drivers pay more for auto insurance because they are statistically more likely to be involved in car accidents than other people. Young drivers, especially young men, are more likely to drive under the influence of alcohol; they may also not have the driving experience necessary to react quickly to prevent damage during an accident. Because of this, rates are higher for young drivers until their own driving record proves that they will be responsible.
After the age of 25, young drivers will usually see their rates decrease, often dramatically. In the meanwhile, you may wish to consider keeping your auto insurance under your parent’s policy and paying your portion of the premiums to your parents, if possible.
Vehicle Owners and Car Insurance
You may not always be able to purchase car insurance under your parent’s name, however. Because auto insurance is designed first and foremost to protect the vehicle rather than the driver, insurance must be purchased by the registered owner of the car. This means that if unless your parents are listed on the title of your vehicle, they should not purchase your auto insurance.
For most young adults, this isn’t a problem. Usually parents will purchase a teenager’s first vehicle and probably continue to co-own that vehicle through a child’s college years. By the time the student graduates, purchasing his own vehicle and auto insurance policy may be much more affordable.
Some people try to continue using their parent’s insurance long after they have left home, however, and this may cause problems with your insurance policy. You do not need to live with your parents in order to be added to their insurance policy, but your vehicle does need to be kept at their house or primarily used by them and members of their residence.
Vehicle Location and Car Insurance Policies
One factor that determines insurance rates is the location of a vehicle. Providing an accurate address for where a vehicle is garaged at night and is predominately used helps your insurance company determine the rates for insurance. If you live with your parents, this is easy. If you don’t live with your parents, however, your auto insurance may be more difficult to carry under their names.
If the car insurance company determines that a vehicle is predominately used and garaged at a different address than the named insured on the policy, that company may decide that a separate policy is necessary and could even drop coverage on the vehicle. This could even be considered insurance fraud in some cases.
There are exceptions to the rule, of course. If a student is away at college in another state and the vehicle is kept in that state during the school year, the parents can still include the vehicle on the policy as long as the student’s permanent address is at home. In these types of situations it’s always smart to alert your insurance company as to exactly why the vehicle is located where it is and how much of the year it will spend in that location.
Contacting your agent or customer service representative is the first step to obtaining the correct insurance policy. You can ask your agent if there are any discounts you may be able to qualify as a student or if there are any concerns to carrying your policy under your parent’s name. By discussing your situation openly with your insurance company you can decide what policy decision is best for you and your family. This way you can ensure that you receive the coverage that you need without risking any policy cancellations or claim denials in the future.