College graduations have recently commenced and the fortunate graduates have already landed jobs, while others may be moving back home to look for work. It goes without saying that when these graduates enter the work force they are faced with some new expenses. Some parents move quickly to take their children off of their household expenses, but most others gradually shift the responsibility to their working adult children. One of those expenses is auto insurance.
Think about the following example: Your daughter has graduated from college, started a new job, has her own apartment, and is using one of your vehicles until she can afford her own car payment. The car that she is driving is insured on your policy.
Is there a potential problem with this arrangement?
Yes, this situation creates gaps in coverage. These gaps include no coverage for uninsured motorists, underinsured motorists, and medical payments coverage.
Insurance contracts define a family member as “a person related to you by blood, marriage, or adoption, who is a resident of your household.” The key phrase here is resident of your household. In most cases, while a child is in college they would still be considered a resident of the household as most students spend time at their parents’ home during breaks and continue to use their parents’ home address as their permanent address. In the example above, the daughter now has her own job and apartment, so she would no longer fit the definition of a resident relative.
The insurance solution for when a child moves out of the household is for them to obtain their own auto insurance policy. Additionally, if they are going to be driving their parents’ car, they will also need to have the car title transferred into their name.
If you have concerns about coverage gaps as your adult child transitions out of your household, call your agent. You are welcome to contact Hausmann-Johnson Insurance's personal insurance department with questions.
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