Today I spoke to a potential client with an adult daughter living away from home who has her own car and is still listed on the auto insurance policy. If given the choice, would you keep your adult child living away from home on your insurance policy? If so, what are the pros and cons?
Assuming your insurance carrier is okay with this scenario, and most will not be, the first question is 'will it cost more or less to keep everything together?' The answer is it depends and you should check it both ways. If the child has a bad driving record and there are several vehicles on the parents policy, then that bad driving record will extend to the whole policy causing higher premiums on all of the vehicles on that policy in most cases.
On the other hand, parents usually qualify for more discounts than younger drivers making the total policy premium better including for the child. Even having an additional vehicle on the policy may increase the multi-vehicle discount many carriers give to reward keeping all of your vehicles insured through them. Check with your carrier to see if they will allow you to keep everyone on the same policy first.
Is there a coverage difference if your adult child living away from home is on your policy? Depends!
If your child is listed as a named insured, then the policy should extend to them just as it would to you. On the other hand, if they are only a listed driver, you may have major coverage gaps. A listed driver can't authorize a permissive user of the vehicle. So if a listed driver lets someone else drive your vehicle they are not automatically covered. A listed driver can't insure a vehicle that is solely titled in their own name. So if your son or daughter owns a vehicle without your name on the title, you do not have insurable interest in the vehicle and coverage would not trigger on your insurance policy.
The following are a few scenarios that could turn into major issues if your child is only a listed driver and gets into an accident:
- Rents a vehicle,
- Loans the vehicle to a friend, or
- Purchases a new vehicle
A loss involving these scenarios could likely lead to a claim denial leaving your child to pay for damages and attorney fees out of pocket. The best solution to protect your assets is to keep your adult children away from home separate from your policy, remove your ownership of their vehicles, and encourage them to carry adequate coverage to protect themselves.
If you have any questions about your particular scenario, you can enter your information here for a consultation: Click here.