Doug Lefeber June 3, 2016 4 min read

When Should My Child Get Their Own Auto Insurance Policy?

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.

adult child on auto insurance policy

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.

avatar

Doug Lefeber

Doug has over 30 years of insurance industry experience, and has been with Hausmann-Johnson Insurance since 2014. He oversees the sales and service of about 2,000 Personal Lines accounts and welcomes the opportunity to interact with clients whenever they have an insurance need. As a manager, he believes that if you take good care of your employees, they will in turn take good care of your customers. Doug holds a Bachelor of Arts degree in Psychology from the University of Wisconsin – Eau Claire. Prior to joining Hausmann-Johnson Insurance, he gained experience as a manager and producer for AAA, Rural Mutual Insurance, and Met Life. He is a member of the Northside Business Association and the East Side Club and volunteers with them regularly. He also enjoys spending time with his family and attending summer music festivals in the area.

COMMENTS