People have a lot of questions about their kids & auto insurance, and the questions go beyond the usual concern of “How much will my teenager increase my car insurance premium?”
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In Your Child & Your Car Insurance, I blogged about the important things you need to consider when having a licensed child living with you — how to add them to your policy, the issues of ownership when buying them a car to drive, and how to save money & avoid problems.
Although I think I was complete in explaining all the important issues of adding & insuring your child driver, I did not answer the important questions of how long your child can stay on your auto insurance, and when you need to remove your child from your car insurance.
If your child lives with you, and drives a car you own & insure, or if your child does not live with you, but regularly drives a car you own, insure, and keep at your residence, your child never needs to be removed from your car insurance, unless the insurance company has issues with your child’s driving record.
Your child can be 80 years old, rated as a driver on your car insurance policy, and drive you around in your car when you are 100 years old, and the auto insurance company will have no problem with it at all.
Although there is no age limit where you have to remove your child, most children grow up, leave the nest, and have their own car.
There are a few situations where the auto insurance company will require your child to get their own auto insurance:
1. Your child’s driving record becomes unacceptable for the auto insurance company.
If your child has a drug or alcohol-related driving offense, a reckless driving offense, too many at fault accidents or too many tickets, or a license suspension, your auto insurance company may require you & your child to sign a driver exclusion, where you child will not be insured as a driver by your auto insurance.
Signing this exclusion means your child cannot drive your car under any circumstances, and if your child does drive, any insurance claim resulting from your child’s operation of your car will not be covered.
Being able to exclude a driver depends on your state’s law and your auto insurance company’s guidelines.
Some states don’t allow exclusions, or some insurance companies do not offer exclusions. In these situations, your auto insurance will be canceled by the insurance company, with advance notice.
Some states require driver exclusions to insure the excluded driver for the minimum liability coverage required in the state. Do not use this as an excuse to let your excluded child drive — you will be legally responsible for injury and property damage above the state minimum coverage (which is often very little coverage), and on the hook for all the damage to your car.
If your child needs to be excluded by your auto insurance company, work with your agent to find a solution. Often, you can exclude your child under your policy, take one of your cars (preferably an old car, requiring liability & state mandatory coverage only) and insure your child on it with a separate car insurance policy. If possible, make your child the sole registered owner of this car, to limit or remove your liability for your child’s driving habits.
2. Your child buys a car.
If your child buys a car, and the child will be the registered owner, your child will need to insure the car under their name.
Some auto insurance companies will allow you to add a car co-owned with you and your child, but other auto insurance companies may still require a separate policy in both you and your child’s name.
Before your child buys a car, or before you buy a car for your child, call your auto insurance company with the information about the car (such as the vehicle identification number) you wish to purchase, and ask the company about its rules about ownership and separate policies, and get price quotes. The worst mistake you can do is for you or your child to buy a car, and not find out about the specifics of insuring it before owning it.
3. Your child lives at a permanent address, away from your home, and keeps one or more of the cars you insure at the permanent address.
As long as your child is your dependent, even if they live away from your household most of the year while they attend school, you can insure your child on your auto insurance policy.
In fact, many people call their insurance companies to remove their child, whom is away at school and not driving their family’s cars, only to find out the auto insurance company will not remove the child until they have permanently moved to a new address.
There are two reasons the car insurance company will not remove your child as a rated driver: the child may drive during summer vacation and school breaks when they are home, or, because their legal address, including their driver’s license address, is your address, making them a resident family member, even while away at school without a car, and therefore, your child may have coverage under your policy in some situations, such as a pedestrian injured by a car, as an injured passenger of a car, or as the operator of a borrowed or rented car.
There is usually a discount for students away at school, over 100 miles from home, without a car. If your child is away at school without a car, call your auto insurance company or agent to make sure you get all the discounts you deserve.
If your child is away at school with one of your cars, registered in your name to your home address, there is usually no problem with insuring the car and child on your policy. If the school is in the same state as your home address, you may want to check with your agent to see if listing the school address, as the garaging address for the car at school with your child, is a less expensive rate than your home address.
Things start to get tricky when your child is a student, but does not live in temporary housing like a dorm, and lives at a permanent address off campus.
If your child is still a full-time student, but also works, supports themselves, and has their own permanent address, your auto insurance company may have an issue insuring your car in your child’s possession.
Auto insurance companies are concerned with something called “Care, Custody, and Control” of your vehicle. If a person, not a part of your household, like an adult child living on their own in another state, has your car, someone else other than you and your resident family members has care, custody, and control of the car, and you do not, since you do not have possession of your car.
For example, I once had a customer have an adult child take one of his cars from his home in Oregon to live permanently in California. The customer called back a few weeks later, to add the car back to his policy, because his child could not afford to insure the car in California. I could not add the car to his policy, since the car was kept permanently in another state, and the customer did not have care, custody, and control of his vehicle.
Obviously, there are gray areas here. A 24 year-old full-time undergraduate student, working part-time in retail, and keeping the parent’s car at a rented house the student shares with 3 other roommates, across town from the parent’s home, is a different situation than a 28 year old part-time MBA student, working full-time, renting a condo in another state, and having possession of the parent’s car.
Always be honest with your insurance company, but don’t worry about care, custody, & control issues, unless you are notified there is a problem by your auto insurance company. However, remember to be careful removing cars driven by family members living outside your household, because you may not be allowed to insure the car again until it is in your possession.
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