Can I Be on My Parents Car Insurance if the Car Is in My Name?
quick highlights
You can’t put a car on a policy that doesn’t list you as a named insured.
Your parents want you to grow up and get your own insurance.
If you live at home and drive your parents cars, be a listed driver on their policy to avoid uncovered claims.
If you are thinking of buying a car in your name but are still on your parents' insurance, can they insure the vehicle for you?
The only way you can stay on your parents' insurance with a car in your name is for one or both parents to have an insurable interest in the vehicle.
To have an insurable interest, you can only have insurance on something that you own or against situations where you’d lose money if they happened.
If one or both of your parents are listed on the title of the car, they will have an insurable interest and be able to insure the vehicle.
Here are some more of the most frequently asked questions about insuring a car in your name on your parents' insurance policy.
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Can I be on my parents' car insurance if the car is in their name?
If the car is titled to just one or both parents, you can be listed as a rated driver on their insurance policy.
This is most common for teen drivers or other young drivers who don’t have their own car or insurance policy.
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Can I be on my parents' car insurance if I don't live with them?
Is there an insurable interest?
If so, then yes, you can be on their car insurance even if you don’t live with them.
However, if you keep the car where you live, then the insurance company should know that the car is garaged at your location, which could affect the insurance rate.
How to lower my parents' car insurance?
Car insurance premiums can be high, especially for young or inexperienced drivers. Here are a few ways you can lower your parents’ car insurance costs:
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Can I drive my parents' car without my name on the insurance?
If you live with your parents, then no.
If you are temporarily at home because you are home from school for the summer, then, maybe.
Call your parents car insurance company and ask what their policy is for this situation.
They will probably want to add you, but it will be with a discount since you don’t live at home full time.
You should be listed as a driver on your parents' car insurance so you can drive their car. If you aren’t and you get into an accident, the insurance company could deny the claim.
It really depends on how the policy is written, but most car insurance companies require all drivers who live in the home to be listed on the policy.
Insurable Interest:
In basic terms, you can only have insurance on something that would cause you to have financial loss if it were damaged or destroyed. You can also have insurable interest in events, such as causing someone else to have financial loss. This is the concept all insurance is based upon.
A lot goes into the size of the claim.
If the claim is small, the car insurance company might be willing to cover it and then have you added to the policy.
If the claim is big, they might try to get out of covering it.
Or, they might cover a small portion of it and leave the rest to your and your parents to handle.
The car insurance company might pay out on the claim you caused, but they might choose to drop your parents at the expiration of the policy.
They also might also ask your parents to sign an exclusion form, which means you can’t drive any of the cars on their insurance policy.
All of these situations are way worse than having to pay a few extra bucks every month to be added to their policy, so its a good idea to just bite the bullet and pay the extra premium every month.
Can I add a car to my insurance that is not in my name?
Not if you don’t have an insurable interest.
If you cosigned a loan or lease and have your name on the title of the car, you have an insurable interest.
If you are just starting out in life and don’t have much credit, you may have your parents co-sign on the loan.
This is an example of when you can have your car on your parent’s insurance policy.
You are basically co-owners of the car and therefore, both have insurable interest in it.
That’s the only way you can insurance a car that is not in your name.
Named Insured:
These are the people a car insurance company will cut a check to in the event of a claim. You must be a named insured and have an insurable interest in a vehicle on the policy for the car insurance to do its job correctly after a claim.
Can I be on my parents' car insurance if I live in a different state?
Car insurance rates are going to vary a lot from state to state.
You should spend some time seeing how this would impact your premiums.
It might make the most sense to just have two policies in place.
If your parents want to help you pay your premiums, that is still an option.
I just see such different laws and rates from state to state. Having two policies might make sense in this instance.
It bears repeating here, if your parents don’t have an insurable interest in your car, then they can’t add your car to their policy.
tips for success!
Want to read your car insurance policy? This may sound boring, but it tells you exactly how the insurance company will handle claims caused by unlisted drivers who live in the household.
Does your car insurance and registration have to be under the same name?
Yes, car insurance companies require the titled owner and co-owner, if there is one, to be listed on the car insurance policy.
In other words, the named insured on the insurance and name of the registered owner or owners have to match.
So if you and your father are on the title, the insurance policy should include you and your father as the named owners and insured drivers.
If the car is registered in your name and the insurance is in your parents’ name, it won’t work.
Insurance companies have been known to cancel policies or leave claims partially uncovered if they find out the car insurance and registration don’t match, so it’s not worth the risk.
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Can I be on my parents' auto insurance if I’m away at school (college)?
Yes, you can. In fact, its recommended. Adding and removing drivers all the time is not a good idea.
Your car insurance company will probably have some kind of discount if you are going to school more than 100 miles from home.
Be sure to check on this discount as it could deduct as much as 5% from the premium.
If they do, the company will ask for proof to show which school you attend.
It’s important to note though that you can not take the car with you to school and still get the discount. It has to stay home with the parents, with you coming home during breaks to drive.
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If I finance a car can my parents insure it?
Yes, if they have an insurable interest in the financed car, they can.
This happens a lot when young drivers get their first car. Having one or both parents cosign the car can keep insurance costs down because they will also be listed on the policy instead of you being the only driver on the car.
Here is a sad story...
I was told this story by a friend at the agency where I work. I’ve fictionalized the names, but the story is true.
Sue and Tom were shopping for a new auto insurance company and they had called our agency for quotes.
They were shopping because their old car insurance company had dropped them after 20 years of being loyal customers.
Their daughter, Emily, had moved back home due to the Covid pandemic. She wanted out of her little apartment and her parent’s roomy suburban home seemed like a great place to hide out until the pandemic passed.
She had been living in the city and just using Uber or public transit for any trips that were farther than a walk away from her home.
Driving home from a walk on the beach one day, she had run a red light. She had been texting her mom, telling her she was on her way home for lunch.
She was texting and driving. And by the time she looked up it was too late. She hit another car and caused a lot of damage.
Sue’s Prius was not in good shape either.
They hadn’t thought to add Emily as a driver to their policy, so when they went to file the claim, their car insurance provider only paid a fraction of their total liability limit to cover the damages she caused.
So they were out of pocket $25,000 because there was a clause in their car insurance policy that limited coverage.
The clause said that the policy only pays state mandated minimum limits of liability coverage if an unlisted household driver causes an accident.
Since Emily fit this description, they only paid $15,000 in property damage coverage for the claim.
Since the other car that Emily hit cost $40,000 to repair, they were left to pay the rest out of pocket.
The kicker was when their policy came up on expiration, their car insurance company of 20 years sent them a non-renewal notice.
This was why they called us at the agency, very upset with insurance and having to find a new policy.
If I finance a car can my parents insure it?
Car insurance for young drivers can be expensive, and some are lucky enough to have parents help with the premiums.
It is almost always more cost effective to be listed as a named insured on their policy than getting your own, but that’s only if they have an insurable interest in the car.
If you don’t live at home, especially if you live in a different state, this is going to be hard. It’s now time to get your big boy (or girl) pants on and buy your own insurance policy.
don't be a dodo!
Watch out for this mistake!
And try to save a few bucks by not listing your son or daughter on your auto insurance policy while they are living at home. This could save you a small amount on the front end, but cost you a lot if they cause an accident and the insurance company is not willing to pay for the damages.
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