Parents often want to help their grown children by giving them a car after they have moved away from home and keeping them on their auto policy. However, once they have moved out and are living on their own, they are no longer considered “family members.” While they do have coverage to drive your vehicle as a permissive user, they need to obtain their own insurance for their own vehicle once they are living on their own.
Under most personal auto policies, the definition of an “insured” includes family members. Family members are limited to “a person related to you by blood, marriage or adoption who is a resident of your household.” Full-time college students are normally included as family members.
Claim Examples not Covered by Insurance:
Your child borrows a roommate’s truck to move and rear-ends another car, injuring a passenger in that vehicle. Your child has no liability coverage for the bodily injury or for the property damage to the other person or their vehicle under your personal auto policy.
Your child rents a vehicle and doesn’t buy the extra insurance offered by the rental car company. There’s no coverage for property damage to the rented vehicle or bodily injury to others if there’s an accident with the rental car under your personal auto policy.
As a passenger in someone else’s uninsured vehicle, your child is injured in an accident. There is no coverage for medical payments or uninsured motorists coverage for any injuries under your personal auto policy.
Your child is hit by an uninsured motorist while walking across the street. There is no coverage for medical payments or uninsured motorists coverage for his or her own injuries under your personal auto policy.
It is also recommended that you remove your name as owner or co-owner of any vehicle that you have given to them. Keep in mind if your name remains on the title as owner or co-owner, their actions can come back to you personally to pay for the damages.
Insurance policies are contracts between you and the insurance company. It’s important to take time to understand where coverage applies and where it does not. A quick call to your agent to confirm coverage can help protect you and your child from financial difficulties following an accident. Once your child is living on their own, it’s in their best interest to have their own personal auto policy in their own name. You both will have peace of mind knowing they have the proper protection they need.