When a teenager first gets their driver’s license, they almost always go on their mom and dad’s Auto insurance policy, both because they are living with and driving their parents’ vehicles and also because the premium to buy their own policy would be astronomically high in most cases. So the question becomes: how long can this young driver stay on their parents’ insurance before they need to get their own policy?
Many people wonder if there is a magic age which would force the young person to buy their own coverage, such as there is for health insurance (age 26). However, Auto insurance works differently, and there really isn’t an age restriction, at least not with most carriers. Instead, it comes down to where the young adult lives and who is on the title of their vehicle.
Most Auto carriers don’t want to insure vehicles from more than one household on a single policy. This means that once a young person moves out, typically they are going to need to get their own Auto insurance. However, this doesn’t usually apply to a student temporarily away at college. Usually when students leave to attend school, they are living there in temporary housing and have not established another permanent residence. In this situation, they are still considered to be legal residents of their parents’ household; so they can normally stay on the family Auto policy.
But once a young person fully moves out, most Auto carriers will not allow their vehicle to stay on the policy, once the company becomes aware. In addition, if a young adult does stay on their parents’ insurance after moving out, their insurance coverage becomes more limited. As a resident relative of the policyholder, they enjoyed broad coverage under the family policy – coverage when they temporarily borrow or rent a vehicle and coverage if they are hurt as a passenger or pedestrian in a car accident, for example. Once they leave home, however, typically they have no coverage under their parents’ Auto policy except when they are driving the vehicle insured on the policy.
So a young person should get their own insurance policy once they permanently move out of home, both because the insurance company probably requires it and also so that they can keep well-rounded Auto insurance protection.
The other issue that comes into play is the titling of the young driver’s vehicle. Almost always, the first car a new driver uses is one owned by Mom or Dad. However, at some point, they might buy a different vehicle and put the title in their own name. While some carriers may allow this vehicle to go on Mom or Dad’s policy if the child still lives at home, other carriers follow strict “insurable interest” rules and will require the child to buy their own policy at this point. One way to avoid such issues is to co-title the vehicle – listing both the child’s and parent’s name on the title; this allows either of them to carry the insurance on the car.*
So, here’s a quick rundown of how this normally works, told from the perspective of a fictional young person named Haylie and her mom Jennifer:
I hope this post answers your questions about when it is appropriate to remove a young driver from mom and dad’s policy. If you have any additional questions, I’d love to hear from you!
This article describes the general rules and coverage terms found with many auto insurance carriers. Some carrier’s rules or policy setup procedures may vary from what we describe in this post.
*For liability protection, it is important that all titled owners of a vehicle be either listed as a Named insured or Additional Insured or reside with a relative who is the Named Insured on the policy insuring the vehicle. In addition, we hear that titling a vehicle in a parent’s name might increase a parent’s liability exposure, especially once the adult child leaves home. However, we do not offer legal advice; so we recommend that you seek competent legal counsel regarding the wisdom of titling your child’s vehicle in your name.
Ken Cobb is owner of Pine Country Insurance and has been active in the insurance industry for over 15 years. Meet Ken.
Coverage descriptions found in this blog are summaries provided for general educational purposes and cannot fully detail the terms, conditions, limitations or exclusions of a specific insurance policy. Please read your policy carefully.