Can I Be on My Parents’ Car Insurance If the Car Is in My Name?
Last Updated on August 11, 2020
Purchasing auto insurance is often a big expense, and car insurance rates for young adults, (particularly those under the age of 25) can be astronomically high. Depending on where you live, your driving history, how old you are, and other contributing factors, annual auto insurance rates can reach well into the thousands of dollars.
Auto insurance premiums don’t tend to drop until you’re in your mid to late twenties, so for this reason, many young adults want to remain under their parents’ car insurance policies for as long as possible to keep their premiums lower. But many young adults no longer drive a vehicle that is owned by their parents and instead want to buy their own car. Which begs the question, can you be on your parent’s car insurance policy if you own your own vehicle?
Unfortunately, the short answer is no. If you are the registered owner of the car, you will need to purchase your own auto insurance under your own name. Should you be involved in an accident, your insurance company will write a check out to the registered owner, and if the owner’s name differs from that listed on the insurance policy, the insurance company reserves the right not to issue your payment.
Under What Circumstances Can You Remain on Your Parent’s Policy?
If you still live with your parents and can list their address as your primary residence, and if they are the registered owners of the vehicle, the good news is that you can stay insured under their policy.
And, there’s more good news for young adults; unlike health insurance, there is no age limit when it comes to auto insurance and getting your own policy. This means that, as long as you are not the sole registered owner and you can list your parent’s address as your own, you can remain under their insurance plan for as long as you need to.
Auto insurance is different from health insurance in that it limits those insured under the same policy by household. This means that anyone who resides under the same address, has access to drive the vehicle, and is listed as related to the policy owner can be insured under the same policy.
This is also important for students or those attending college who may, for example, still list their parent’s home as their primary residence but spend the college semester living in dorms or student housing. Under these circumstances, as long as your parents are the registered owners of your car, you can remain under their auto insurance policy. Even better, if you don’t bring your car to college, you could get a big discount on insurance since you don’t drive at school or during the college semester.
When Should You Purchase Your Own Insurance Policy?
If you have bought your own car and the title is under your name alone, then even if you still live with your parents you will need to purchase your own insurance. All legal documents (such as the title of the vehicle and your insurance policy) need to be listed under the same name in order for you to be insured.
If you decide to purchase your own vehicle, but one or both of your parents agree to co-sign for the vehicle, then you can also remain under their insurance policy. It is only if you are the sole registered owner that you will need to purchase your own insurance.
If you have recently purchased a vehicle of your own and need to switch off of your parent’s insurance policy, make sure to shop around before you do so! Buying auto insurance for the first time can be a bit confusing, so don’t just go with the first company you come across. The auto insurance industry can be very competitive, and different companies may offer different perks or better insurance rates, so make sure you take a look around. It’s also important to understand what type of insurance you need since different states will require different levels of coverage.
How Can I Keep My Car Insurance Premiums Low as a Young Adult?
One of the key reasons to try to remain insured under your parent’s policy is because of the extremely high rates for young adults, particularly those under the age of 25. Unfortunately, the younger you are, the more expensive your insurance is going to be. This is because younger adults or those with less experience are considered riskier to insure since they are much more likely to be involved in an auto accident.
Fortunately, the older you get the cheaper your insurance will become, particularly if you have been a safe driver and have a clean driving record. Typically speaking, once you reach age 25 you can expect your premium to drop significantly.
If you are the sole owner of a vehicle and it is listed under your name, you will need to buy your own insurance policy. While premium rates will likely remain high when you are a young adult, they will drop over time, especially if you keep a clean driving record. Make sure to shop around to get the best rates possible.