Adding your child to your car insurance

Your teen should be added to your car insurance policy as soon as they’re licensed to protect your finances as well as your teen’s. The process of adding a teen driver to your policy is simple in most cases, but it can be expensive. Car insurance companies typically calculate the cost of car insurance premiums based on how risky a driver is to insure, and since your new driver has limited experience behind the wheel, you can expect an uptick in the cost of your car insurance. You may be able to mitigate the price increase by taking advantage of young driver discounts. Before allowing your child to drive your car under your insurance policy, here’s what you need to know about adding them to your policy, lowering costs and when to remove them.

Bankrate Insights

• A car insurance policy that includes a 16-year old driver costs, on average, $4,392 per year for full coverage and $1,470 for minimum coverage.

• Car insurance premiums tend to decrease with more years of experience, based on Bankrate’s study of average premiums.

• You may be able to insure your child on your policy until they move out, buy their own vehicle or become financially independent.

Do I have to add my child to my car insurance?

Adding a child to your car insurance is required in most cases. If your child has a driver’s license, lives in your household and drives a car that is registered to your home, they will need to be added to your car insurance policy. This is true whether or not they are over the age of 18, as anyone living in your household with access to your cars will need to be a listed driver on your car insurance. It’s worth noting as well that drivers under the age of 18 are typically not allowed to purchase their own car insurance policies.

There are some situations where you may not have to add a child to your car insurance. If your child has their driver’s license but doesn’t plan on driving for the foreseeable future, you can likely opt to formally exclude them from your car insurance policy. You may need to sign a form with your insurance company confirming that your child will not drive any of your cars. If they do get behind the wheel and get into an accident, your car insurance company will not cover the damages, and there could be other consequences, like policy cancellation.

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Benefits of adding your child to your car insurance policy

Although you will probably see a premium increase when you add your child to your policy, there are benefits as well. Some common advantages to adding your child as a driver on your auto insurance policy are:

• Lower premiums for your child: If your teen is 18 or older, they could purchase a policy in their name (assuming they own, lease or finance their own car). However, car insurance for 18-year-olds on their own is generally pretty expensive. If your teen lives with you and if your name is also on their vehicle, they’ll likely save money by staying on your policy.

• Qualifying for new discounts: There are plenty of car insurance discounts available for teen drivers. You might be able to offset some of the cost of adding your teen driver by taking advantage of good student discounts, distant student discounts and teen driving programs.

• Simplified policy management: Having your entire household on one policy could make it easier for you to make changes, pay bills and keep track of your insurance documents.

Additionally, adding your teen to your car insurance policy could present a learning opportunity. You could teach your child about car insurance, explain why it is an important purchase and teach them how to pay bills.

Costs of adding a young driver to your car insurance

Adding a teen driver to your car insurance policy will likely increase your rate. A recent Bankrate study on cheap car insurance for teens found that 16-year-old drivers faced some of the most expensive car insurance premiums of all age groups. When added to their parents’ policy, the average overall premium cost was $4,392 per year for a full coverage policy.

Part of the higher cost for insuring teen drivers is attributed to their lack of driving experience, but other factors may be in play too. In most cases, teens don’t have a credit history or credit score, which is used in some states to determine car insurance rates. They also aren’t able to get discounts like loyalty, bundling or multiple vehicle discounts. However, teens can access special car insurance discounts for students to help offset some of the premium increase.

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When do you add your teenager or young adult to your car insurance?

Generally, you should add your teen or young adult child to your policy as soon as they get their driver’s license. To be safe, though, you may want to contact your insurance provider before your child starts driving.

Some states, such as Florida, provide insurance carriers with “risk alert” reports. These reports advise them of any licensed operators that possess the insured’s address on their driver’s license. After receiving risk alert reports, carriers usually reach out to policyholders and request one of the following:

• That the unlisted operator be added to the policy.

• Proof that the unlisted operator is insured elsewhere.

• Proof that the unlisted operator resides elsewhere.

Official documents such as a utility bill, rental agreement or deed are typically the types of official documents accepted to show proof of residence. Failure to prove that the unlisted operator is insured elsewhere or they reside elsewhere requires that they be added onto the policy. In addition, failure to provide the appropriate information to allow the unlisted operator to be added onto the policy could lead to midterm cancellation or non-renewal of the auto policy.

When should your adult child get their own auto insurance policy?

There is not a required age for when your child has to get their own policy. As long as they are still living with you and you have insurable interest in the vehicle they drive, there is no certain age at which you must remove them from your car insurance policy. However, if any of the following factors below apply, it may be time for your child to be on their own policy.

• They are married or have children of their own.

• They are the sole owner of the vehicle they drive and do not live in your household.

• They are financially independent.

If none of the above factors are in play yet, many insurance experts recommend keeping your teen or young adult on your policy.

Frequently asked questions

• • Does my child need to own a car to have insurance?

    No, your child does not need to own or lease a car to have car insurance. As long as your child is driving a vehicle owned by you or someone else in your household, they should be added to your car insurance policy, as drivers under the age of 18 cannot typically purchase their own car insurance policy.

  • What information do I need to add my child to my policy?

    You’ll likely need your child’s name, date of birth and driver’s license number. You may also need their Social Security number. If your child qualifies for a good student or distant student discount, you may need proof of their grades (like a recent grade card) or proof of the school they attend without a car (like an admissions letter with the school name on it).

  • Can teenagers get their own car insurance policy?

    Before a teenager turns 18, they are typically unable to enter into their own legal contract with a car insurance agency. 16- and 17-year-old drivers will generally need to be added to an adult’s policy. Once a teenager turns 18, they can get their own policy. On average, an 18-year-old driver on their parents’ policy pays significantly less for coverage than an 18-year-old driver on their own policy.

  • How can I save money on car insurance for teens?

    Adding a teen to your policy presents a good opportunity to shop your coverage with different car insurance carriers. You might find that the company that was cheapest for you before adding your teen is no longer the cheapest option. Taking advantage of discounts is another solid strategy to save money, as is educating your child about safe driving habits so they maintain a clean driving record.