Auto Insurance for Children

[wolf]

Our Children, 17 and 20, will be driving soon. What is the best way to purchase auto insurance? Add them to our policy and carry large umbrella.

Or, if possible, have them own separate insurance policy. Is it
beneficial having their car in their name only.

Thanks.

[MichaelB]

If the kids live at home I don't believe you have the option of separate policies. In our case, the same with my siblings, once the kids got their driver permits they were automatically on the policy.

[pb4uski]

We carried ours on our policy while they lived here or were students.

When DS moved out he had to get a separate policy since he was not a student and his car was garaged at a location other than our home. I transferred ownership of the car to him at the same time because it made it easier compared to a situation where he uses a car I own that is at a location other than our home.

I think Michael is right and it might not be possible to have separate policies even if you wanted to.

I DS' case, his current car insurance is significantly less than it was when he was on our policy but the coverage is less as well as I had to have big coverage to satisfy my umbrella.

[Cobra9777]

I think the rules vary somewhat by state and by insurance company. But yes, any licensed driver living at your address is required to be included in your policy. Once they move out, the rules become less universal.

In my case, I have two kids in their mid 20s who do not live with me, but drive cars that I own. We keep them on our policy because it is radically cheaper than the alternative. We have 5 cars and 4 drivers, plus carry homeowners and umbrella with the same company. I think they also benefit from our good claim history and credit rating. Their premium would go up more than 2X on their own policy. Our agent assures me this arrangement is perfectly acceptable as long as the cars are titled in my name and they live in the same state.

The kids pay me their portion of the premium and we plan to keep this arrangement as long as it makes sense. At some point, I will kick them off and reduce my umbrella a bit. The umbrella premium is still pretty high because of them, and I only make them pay me for the auto portion.

[Katsmeow]

Around here, as mentioned, any child who is a dependent has to be on our policy. We have no choice. It doesn't matter for insurance policy reasons whether car title is in their name or not. If they are dependents they have to be on our policy (I'm not sure how it works if they are living at home and not dependents).

What we did with one son (and will do with others likely), was that we put the title in his name, but we made ourselves lienholders. That way, he couldn't take the car and just sell it or trade it in without our consent. We also entered into a written contract laying out responsibilities regarding the car and laying out when we could foreclose and when we would release our lien. This ended up working well and I expect we will do this with our other children as well.

[fh2000]

We have only 2 cars. DW and I work from home so we do not drive much.

My daughter is in college more than 100 miles from home. She only drives our older car during break, and summer. So she is added to our auto policy and umbrella policy as 'away from home student' with not much increase on both.

My son is 18 and will be driving soon as regular driver before college, so he will cost $500/6 month to be added in auto and umbrella. In September when he begins college more than 100 miles from home, I will convert him to be 'away from home' student. Should see premium drop somewhat.

[pb4uski]

Quote:

Originally Posted by Katsmeow ....What we did with one son (and will do with others likely), was that we put the title in his name, but we made ourselves lienholders. That way, he couldn't take the car and just sell it or trade it in without our consent. We also entered into a written contract laying out responsibilities regarding the car and laying out when we could foreclose and when we would release our lien. This ended up working well and I expect we will do this with our other children as well.

Clever. Sounds like some sort of lawyer trick to me.

[Al in Ohio]

Quote:

Originally Posted by wolf Our Children, 17 and 20, will be driving soon. What is the best way to purchase auto insurance? Add them to our policy and carry large umbrella. Or, if possible, have them own separate insurance policy. Is it beneficial having their car in their name only. Thanks.

It seems you don't quite understand the principle of auto insurance. You insure the auto, not the person. You can add an additional driver ( a child) to one of your autos unless they own their own car and are single driver on that car. It's cars you insure and drivers that get assigned to them. It's just one family policy, separated per auto.

Now I highly suggest with a new teen driver that you combine a lowest car liability payout with a million dollar umbrella policy. If your kid has friends in the car and they get in a bad accident and they all get hospitalized, your going to need one or two mil to cya. You get more protection for less annual cost that way.

[RetireAge50]

Our 18 and 20 year old (going to college) are on our policy. We have a lot of coverage plus umbrella. All 4 of us are insured for ANY car we drive (our 4 cars plus any other car we might drive).

[SteveL]

Personal auto insurance policies today are Family policies. They provide automatic coverage for any licensed relative who is a resident of the home. Because of this policy wording, insurance companies generally have rules that require the policyholder to report the name, age, and license number of any family members who live in the home. Despite these rules, the vast majority of young drivers are discovered when they are driving and have a wreck. This causes the rates for adults to be higher than if the young were reported and on the policy. And, it upsets the underwriters because they view not reporting youthful operators to the company as fraudulent. Statistically, 50% of youthful operators have a wreck within the first year of operation. (Side note: Rating fraud is rampant. In California half of cars are rated for pleasure use of 3 miles or less to work. Another large portion are classed as driving less than 15 miles to work. Given crowded freeways, this is impossible.)

Even if a young person owns their own car, and has their own insurance, the family policy will provide excess coverage to the extent that the family policy has higher liability limits. So the insurance company will demand that the limits on the youthful person's policy match the family policy. So, generally it isn't cheaper to have them on their own policy unless they move out. Once in a while, a company might permit a policyholder to signed a "Named Driver Exclusion" to keep a youthful off the policy. However, the courts repeatedly have overturned these exclusions as contrary to public policy.

If there are two cars in a four person household where the parents work, the young drivers can be rated as occasional operators. As the number of cars increases, the young drivers are required to be rated as primary operators.

A part time young male driver with a clean record might cost from 1.8 to 2.25 X the adult rate. A full time young male will be between 3 and 4 times the adult rate. Having a documented GPA of 3.0 or higher gives a 25% discount. Young female operators are somewhat less.

The type of auto the youthful operates has a large impact on rates and whether or not the young driver can get the "lowest" rates. Sports cars, muscle cars, modified cars, high value cars are not desirable. Driver training is a must.

[LoneAspen]

It's probably not relevant today, since I'm sure the rules and laws have changed, but back in the mid 80's when I turned 16, my parents made me get my own auto policy. I didn't like that at first because my rates were a lot higher, but in hindsight it was great.

I've been with the same insurance company ever since and they LOVE me. I've always had renters, homeowners, and cars with them, so they've gotten a boatload of premiums. I've had a handful of speeding tickets, and one chargeable accident, and my rates never went up.

And no matter what kind of "normal" car I get, my rates are usually no more than about $100 a month. Even when I went shopping for a 911 a few years ago, it would only cost about $100 a month to insure it with full coverage. My agent said I could buy almost anything I wanted and it wouldn't cost much more than that, unless I went crazy and got an exotic like a Ferrari.

So, I'm all for kids having their own policies, based on my own experiences. Not sure if today's laws prevent that kind of thing (sounds like nowadays kids have to be on their parents' policy if they live at home?) but if I had kids, I'd try to set them up just like I was when I first started driving.

[GoodWishes]

My kids all started driving at 17 and insured under our insurance driving our cars. I had several talks with our insurance agent about kids car insurance over the years.

My understanding is similar to what some others have pointed out:
1. If someone lives in your household and drives your car, they need to be listed as a driver in your policy which means you have to insure them.
2. As car owner you are liable as well as the driver.

S1 just got off the family payroll and got his own insurance after he graduated from college, got a job, has his own permanent address and car. Otherwise, you are probably not off the hook.

[wolf]

Thanks to all for the informative inputs. It helps to have a general idea prior to seeing our insurance agent.