Some insurance policies come with an expiration date. When someone turns 26, they need to find their own health insurance (if they haven’t already).This isn’t the case with auto insurance, as children can stay on their parent’s policy as long as they are household members and driving their parent’s cars.
While this may sound appealing to some, most people tend to get off of their parent’s auto policy when moving out, switching to their own health insurance policy, or purchasing a car in their name. Most young people get their own auto insurance policy out of necessity, but are there any reasons to take action and switch policies early?
- Parental Liability
The number one reason for a teen or young adult to get off their parent’s auto policy is the simple reduction in liability.
The more people on an auto insurance policy, the higher the chance of an accident or claim, which makes the risk much higher. As a policyholder, you want to have as little risk as possible, and when it comes to auto insurance, that means having as few drivers and vehicles on your plan as possible. That being said, this doesn’t mean its a great idea to stick your child with payments they can’t afford. But it does benefit young people to have their own policies and build up their insurance history.
- Discounts & Insurance History
When young people get their own policies, they begin to take some control over their future. This allows them to build up a history of insurance.
This is valuable in the long run, especially if the history is built with one specific insurance carrier. They’ll also be able to develop good rates the longer they stay accident-free on their own policy. Owning an auto policy can also save money when moving out, as bundling this policy with a renters or homeowners policy can lead to solid discounts. If someone already has their own auto policy when moving out for the first time, they’ll be a step ahead in terms of their insurance.
- Car Titles and Insurance
One of the little-known facts about auto insurance has to do with titles. The name on an auto insurance policy must match the name on a vehicle title.
This means that if a car is in a child’s name, the insurance policy associated with that vehicle must be in the same name. This is because vehicles, like many other possessions, have an “insurable interest.” This means that if a person owns a vehicle, it clearly benefits them to keep it protected. Things can get tricky when insuring a vehicle you don’t technically own, as you don’t have an insurable interest in the car. Outside of this, mismatched names can cause dangerous lapses in coverage when it comes time to correct them. Be sure that these names match to avoid issues.
Purchasing your own auto insurance policy as a young adult can be a lot, however the benefits don’t take long to start adding up. Building a history of insurance should start as early as possible and can lead to important discounts in the future. Contact us if you have any questions about your existing policy, or wanted to get started on a new one for your child!
Vice President | Personal Insurance