Why Your Kids Should Have Their Own Auto Policy
Do you realize that, if your child has a serious accident while driving your car, the victim’s lawyer will sue not only your child but you as well, since you owned the car involved in the accident? So how do you avoid this potential financial disaster? Easy--don’t own the car.
More times than I can remember, parents have called our office to announce that their child was coming of age and would soon be licensed. We joke and laugh and even recall when we got our own driver’s license for the first time; but, when we discuss this important matter with our insurance clients, we always suggest that the parent consider registering and titling in the child’s name the vehicle to be driven by the child. The reason is simple: we want you, the parent, to avoid the liability exposure that exists when your child, their friend or their roommate drives “your car.” “Oh,” you say, “but I love and trust my child, and I made them promise not to let anyone else ever drive that car.” That’s so sweet. I’m sure it will make for a wonderful defense when you go to court. Then again, maybe not.
But, you ask, won’t the auto insurance cost more if my child owns the car and has their own policy? Probably not. The reason is that auto insurance carriers insist that each driver be rated as a primary driver on at least one vehicle. So, if you already have two vehicles on your policy, one for Mom and one for Dad, and then add a third vehicle for your child, the insurer will insist that we rate your child as a primary driver on one of your vehicles, for the simple reason that Mom and Dad can drive only one car each, leaving the third vehicle available to the child. Since the child is going to be rated as a primary driver on one of the vehicles anyway, why not set them up with their own policy? By the way, you are more than welcome to pay for it.
Now that your child has their own auto policy you are avoiding the liability that comes with the use of that vehicle. In addition, your child will now be a covered operator while driving any of your vehicles, at little or no extra cost to you since they have an auto policy in their own name. Everybody’s happy now. Maybe you even use this as a learning experience to teach your child a little something about financial responsibility, managing your money, etc. As a parent and as an insurance agent, I did it with all three of my sons, and I recommend it to you as well.
So now you know.
Written by Dick Ostrander, owner of Ostrander Insurance (ostranderinsurance.com). Ostrander Insurance offers homeowners, automobile and life insurance The office is conveniently located across the street from the Bellingham Post Office. For more information, contact Dick at 508-966-1116.