UPDATED: Mar 13, 2020
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Many young drivers get car insurance under their parents’ policy to save money. But how long can children remain on their parents’ car insurance policy?
Today, we’re explaining everything you need to know about children staying on their parents’ car insurance policy, including whether or not they need a new policy after moving out, going to college, or turning 18.
Children Can Remain on Their Parents’ Car Insurance Policy When Residing at the Same Address
Residency is the most important factor for car insurance companies when bundling multiple people together under the same policy.
Generally, most car insurance companies allow parents and children to remain on the same car insurance policy as long as they’re all living at the same address together.
As long as your child lives at home, he or she should be able to remain on your car insurance policy indefinitely.
Even if your child goes away for college, your child is most likely still a permanent resident of your home address. That’s why many children can stay on their parents’ car insurance even after moving away for college.
Children Must Have Their Own Car Insurance Policy After Moving Out
With the exception of college, a child must have his or her own car insurance policy after moving out.
Once the child is no longer living at the same address as the parents, the child must have a separate car insurance policy.
There Are Some Exceptions to This Rule for Separated Parents and College Students
In most cases, you must be living at the same address as your parents to be listed on their car insurance policy.
However, there are two main exceptions to this rule.
College Students: If you’re living away from home at college, then you may continue to be listed on your parents’ car insurance policy as long as your home is considered your primary residence. Even if you live away at college for eight months of the year, your parents’ address may still be considered your primary residence.
Children of Divorced Parents: If your parents are divorced, then you may be able to be listed on one parent’s policy while partially living at the address of the other. Generally, the parent with primary custody will be allowed to get car insurance coverage for the child. In shared custody situations, the child may be listed under either parent’s car insurance policy.
Contact your car insurance company for any other questions you might have. Car insurance companies have different rules regarding children staying on their parents’ policies.
The Advantages of Staying on Your Parents’ Policy
Young drivers pay the highest rates for car insurance. Statistically, young drivers are more likely to be involved in a major accident than any other demographic. That means young drivers – especially young men – are forced to pay higher rates for car insurance.
By getting a policy under your parents’ insurance, young drivers can save thousands of dollars per year.
The average car insurance policy for a teenage driver can be as high as $6,000 per year, depending on your state. Under your parents’ policy, it may add just $1,200 per year to your parents’ premiums.
There’s also the convenience factor: having multiple drivers bundled under one policy with one company reduces the paperwork and hassle.
For both of these reasons, many young drivers decide to stay on their parents’ policy as long as possible.
The Disadvantages of Staying on Your Parents’ Policy
There are certain disadvantages to staying on your parents’ policy.
First, it reduces your independence. You’re dependent on your parents for car insurance. Your parents are in charge of your car insurance policy. They can cancel your policy if they no longer want you to drive.
Second, it makes it more difficult for you to build up an insured driving history. Insurance companies like to see multiple years of covered driving history to give you lower rates. If you have five years of safe driving history under your own insurance policy, you’re going to pay lower rates than a driver with five years of safe driving history under their parents’ insurance policy, all other things being equal.
Finally, having a car insurance policy under your parents might mean higher rates for both of you after an accident. If you have to make a claim, then your parents will pay higher insurance rates, but you will also pay higher insurance rates in the future because you have an accident on your driving record.
Of course, the main disadvantage of being on your parents’ policy is that you cannot maintain coverage after you move out. If you have moved out of your house and continue to be listed under your parents’ policy, then the insurance company might deny your claim. You are required to have accurate address information on your car insurance. Plus, you cannot share an insurance policy when living at separate addresses.
For all of these reasons, some young drivers may want to get their own car insurance policy sooner rather than later.
Generally, children can continue to be listed under their parents’ policy as long as they reside at the same address – regardless of age. Rules may vary between insurance companies, so check with your insurer to verify how long you can stay on your parents’ car insurance.