Staying on your parents’ policy vs. getting your own policy
If you’re driving your parents’ vehicle, staying on your parents’ car insurance policy is a no-brainer. If you have your own car, the decision might not be so cut and dry. Each option has advantages and disadvantages, and the best choice depends on your situation.
When to stay on your parents’ policy
Sticking with your parents’ policy is the obvious choice if you drive their car. It usually means lower rates than if you had individual coverage, thanks to insurers offering multi-car and multi-driver discounts. You also benefit from establishing a coverage history. Keeping your car insurance with the same company and not letting it lapse can lead to discounted rates later on.
The downside is that your driving history affects the premiums for the entire policy. For example, your parents’ insurance rates may increase if you’re in an accident or get a speeding ticket. Plus, even though there’s no age limit for being on your parents’ policies, some companies may require you to have a policy in your name under certain circumstances, such as if you move out.
When to get your own car insurance policy
Generally, you can stay on mom or dad’s car insurance as long as you continue to live at home, even if you go away to college. At some point, you’ll need to purchase an individual policy. It gives you full control over how much coverage you have and limits the financial impact of any claims to your policy alone.
However, you’ll pay some of the highest rates, especially if you’re under 21. Insurers tend to see younger drivers as having less experience and being more prone to accidents, which can drive up costs.
A few situations can make getting your own policy necessary or highly beneficial, such as:
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Moving out: Insurers typically limit a shared insurance policy to drivers in the same household. When you move out, unless you’re going off to college, you’ll need a policy in your name.
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Marriage: Getting married or starting a family can mean getting your own coverage or combining policies with your spouse.
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Buying a car: When you buy a car, especially if you take out a loan for it, you may need an individual policy. It depends on the insurer. Some car insurance companies will let you keep your parents’ policy if you live at home and park your car there.
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Financial independence: An independent policy may be worth considering if you can afford to handle your insurance expenses.
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Driving record: Insurance companies can remove you from the family plan if you have several accidents or driving infractions.
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Different coverage needs: Getting an individual policy might be necessary if you have different coverage needs. For example, you might own a valuable or modified vehicle or have a long commute that requires specific coverage that your parents’ policy doesn’t offer.
