Teen Driver Car Insurance (Know Your Options!)
Clearsurance.com recently published a guide for teen drivers who may be wondering if they can be on their parents’ insurance even if the car is in their own name.
Teenagers can save money on insurance coverage when on their parents’ policy, but they must meet the criteria to stay on it.
According to Clearsurance.com, the following two conditions must be met to stay on a parent’s policy:
- Parents must be co-owners of the vehicle
- Teens must live with their parents unless they are attending college
Teens and young adults who live independently can’t stay on their parents’ insurance policy.
Cost Comparison Between Parent Policy and Teen Policy
Teen drivers pay the highest car insurance rates because they are in the age group with the highest risk of being involved in an accident and filing a claim.
Teenagers who have their own independent car insurance policy will pay about 50% more than they would if they were on their parents’ policy.
If a teen meets the criteria for remaining on a parent’s insurance policy, they should choose to stay on that policy to save money.
Parents and Teens Co-owning a Car
Insurance companies won’t write policies for customers who don’t have an insurable interest in the vehicle covered. People who don’t own a car don’t have an insurable interest in it. That’s why parents have to co-own a vehicle to have it on their policy.
Teens can buy a car themselves and manage maintenance and ownership costs, but agree to have parents as co-owners for the insurance savings benefit. This situation works well with parents and teens who have a good, trusting relationship.
In this situation, when a teen becomes independent and moves out, the title of the vehicle can be transferred to the teen’s or young adult’s name only.
Parents and Teens With the Same Address
One factor that goes into car insurance premiums is the policyholder’s address. Where a policyholder lives affects car, home, and even life insurance premiums.
A person’s address provides insurance companies with information regarding risk. Some areas have higher crime rates, while others have lower crime rates. Some areas are urban, while others are rural. Traffic can vary from one part of a state to another.
According to Clearsurance.com, drivers are required to give insurance providers their real address. That’s why a teen must be living with parents. The address makes a difference in the premiums.
Insurance providers make an exception for a teen in college. College students usually retain their parents’ address as their permanent address while attending college. As long as a teen spends summer and other breaks at home, their parents address is accepted as their home address.
Teens Getting Their Own Insurance Policy
Teens who can’t be on their parents’ policy or choose not to be can get their own insurance policy. Their vehicle will need to be titled in their name.
Even though it’s cheaper for a teen to be on their parents’ policy, teens can find competitive rates for car insurance by shopping around, collecting quotes, and choosing an insurance provider that meets their needs at an affordable price.
Teens can also save money on insurance by getting good grades and building a claims-free, good driving record.
Age at Which a Child Needs Their Own Policy
As long as the car in question is owned by the child and the parents, and the child and the parents live in the same home, there is no age at which a child can no longer be on a parent’s policy.
Most children eventually move out of their parents’ houses, so they will get their own insurance sometime during their adult lives.
Read Clearsurance.com’s entire report here: Can I be on my parents’ insurance for a car that’s in my name?