How much is car insurance under parents?

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Here's what you need to know...
  • Car insurance rates for teen drivers is usually higher than for more experienced drivers
  • Not all newly licensed drivers are eligible to be insured under their parent’s plans
  • Every state has their own laws governing teen ownership of cars

It is an exiting time for teens who are learning how to drive. Many young drivers and parents take so much time to prepare for the test that they completely overlook how important it is to make sure that you or your newly licensed driver is insured.

Car insurance for young drivers is more expensive because they are considered to be “high-risk” insureds who are not seasoned behind the wheel.

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Does your licensed child need their own policy?

Not all newly licensed drivers are eligible to be insured under their parent’s plans, and some insurers have special requirements that need to be considered.

Whether or not your child can be added to your insurance will depend on their age, your living situation, car ownership and the company that you do business with.

While all vehicles must be listed on your policy to be covered, drivers are not typically listed on insurance policies until they are licensed.

The liability coverage will automatically extend to the teen who is driving a covered vehicle as long as they are permitted to do so.

It gets a little tricky when that teen holds an official state-issued driver license because the rules of each insurer are different.

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You Are Not the Registered Owner of the Car

Every state has their own laws governing teen ownership of cars.

In most states, a person under the age of 18 is not legally allowed to sign contracts or to own their own property unless their parent gives consent.

There are exceptions to the rule, but this is true in most cases.

If your child waits until they are 18 to get licensed or they register the vehicle in only their name, it can pose a problem with some insurance companies when it comes to adding the car to an existing policy.

Most insurance companies require that at least one primary insured person is listed as a registered owner.

If this is the case, your teen may need to purchase a separate policy and have their name listed as a named insured.

If the registered owner is the parent or the company does not have this policy, the new driver may be eligible to be added to the policy as a listed driver.

Your Teen Does Not Live in the Household

If a newly licensed driver is independent and lives on their own, they cannot be added to their parent’s plan.

If they are defined as a dependent because they are attending college, they can still be listed even if they are away at school with the car.

It can get tricky if parents are divorced because part-time custody will become an issue.

This is something that you should discuss with your lawyer.

The Company Does Not Insure High-risk Drivers

Some companies have favorable rates for drivers who have blemished records and others have rates tailored to people with experience and clean records.

If a parent has been with their insurer for several years and they have a clean record, it can be a shock to hear that the company will not cover your high-risk driver.

Some companies are much more strict than others about taking on risk.

If your child has violations or even accidents, it becomes even more of a risk to cover them.

If your company does not extend coverage, you may be required to sign a driver exclusion and buy a new plan for the teen or switch insurers entirely.

Why adding a child to a parent’s policy is best?

To find out the actual costs, you will need to contact your agent and ask for a quote so that you can prepare yourself.

The actual cost to add a driver to an existing policy can be staggering, but it is often the more affordable route compared to buying a separate policy.

There is an average of an 85 percent surcharge for adding a teen driver to a policy without adding an additional car.

The surcharge for males averages in at 98 percent while that number drops to 73 percent for females.

Multi-car Discounts

Even if the teen has their own car, the rates for that car will be lower because of multi-car discounts.

When there is more than one car on the policy, every car receives reduced rates.

The savings can be as high as 30 percent. If you elect to buy a separate policy, you cannot take advantage of these savings.

Getting Prior Insurance Credits

There will come a time when your teen will need to purchase their own insurance. They might move out, want to get their independence, or buy their own car.

At that time, it will cost them more money to branch off, but they can save if they have been insured under your plan.

Being on your insurance policy will give the driver what is called a prior insurance discount.

This discount is available from most insurers because the statistics show that people with no lapses in their coverage are more responsible behind the wheel.

As you can see, there are many things that you need to consider when you are deciding how you want to insure yourself or your teen.

You should check the rates with other insurers first just to confirm you are getting affordable rates.

Use our FREE online rating tool below to compare the quotes with a quote from your insurer and choose the best option.

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