UPDATED: Oct 22, 2019
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Becoming a licensed driver is a great step toward independence, so it may seem like the next natural step is to get your own insurance policy. It turns out, however, that it’s much wiser to stay on your parent’s policy for as long as possible, regardless of whether you are an occasional driver or a primary driver of your vehicle. If you insure yourself, then you’ll face high premiums. But if you get a policy under your parent’s insurance, then your insurance rate will be much more affordable.
Why Should I Stay On My Parent’s Policy?
In addition to saving money, getting insurance under your parents will help you establish an insurance history. As with credit, having a history of coverage can help you become less of an insurance risk, and will therefore enable you to get cheaper insurance rates once you do establish your own policy.
How Long Can I Stay on My Parent’s Policy?
You should be able to stay on your parents’ insurance policy for as long as you meet a few requirements to be considered “dependent”. Keep in mind that becoming fully independent from your parents isn’t a black-and-white circumstance – it involves factors like financial independence, having your own apartment or house, owning your own car. In this context, “dependence” is not the same definition that the IRS uses for tax purposes; you can be considered financially independent for tax reasons but still stay on your parents’ insurance policy. Similarly, insurers don’t define your independence in black and white terms, and they look at each person’s situation on a case by case basis to determine whether a young driver can remain on their parents’ policy, or if they must get their own separate policy.
Unlike health insurance policies, there is no age limit that can cause your removal. That means that whether you choose to live at home or go off to college after high school, you should be able to stay on your parent’s policy. Because age is not a factor, you can therefore remain insured by your parents until you meet one of the circumstances that are listed below.
What Can Cause My Removal From My Parent’s Policy?
The situation gets a little tricky if you establish independence from your parents. Living on campus and being supported by your parents will keep you on their insurance policy without being contested, but if you move into an apartment and start supporting yourself, your insurance company may want to revisit your individual situation and may decide that you have what is called care, custody, and control of the vehicle, which essentially means that you are fully responsible for the car. That, in turn, can cause the insurance company to drop you from your parent’s policy.
Another factor that can cause your removal from your parent’s policy is marriage. If you get married, you are no longer considered a dependent, and insurance companies will expect you to get your own student car insurance policy.
Poor driving can also cause you to lose your parent’s insurance coverage. Multiple accidents can lead a company to declare you as too high of an insurance risk, and you will either need to get your own policy or pay higher insurance premiums.
A DUI Charge
Additionally, driving under the influence can affect your insurance coverage. Drinking and driving not only causes insurance companies to place you under a high risk category, but you may not need to wait for the company to take you off your parent’s policy; your parent may choose to remove you first.
If you want to stay on your parent’s policy, make good driving choices and don’t get a DUI. That way, your insurance company will continue to see you as a low risk and your parents won’t mind sharing their policy with you. You’ll save much more money in the long run if you go that route, instead of pursuing independent insurance coverage. If your current insurer notifies you that they’ll be removing you from your parents’ insurance policy and forcing you to buy your own policy, you may be able to shop around as a family and find another insurer who will keep you all on the same policy, saving money for everyone.