Q: My child is going back to college. Should I remove them from my Auto Insurance Policy to save money?
A: It is that time of year again, and college students around the country are getting ready to head back to school. You may be getting ready to remove your college student from your auto insurance policy to save premium dollars, but before you do I want you to think about a couple of things. I want your decision to be an informed one.
First, if you have a Preferred Auto Insurance Policy*, removing your child can create a problem. If he/she has a traffic accident or picks up tickets while away at school that can disqualify him/her and possibly your entire household from that program. This could force you to take a second policy out and limit your son or daughter to driving the only the car on that policy. If you want all drivers to be able to drive all cars you may be forced to place all drivers and cars into a non-standard program at a higher rate.
Right now I am sure that you are saying, “How can that be? My child is leaving the car that he/she drives at home.” College students are a highly mobile group of individuals and where there is a will there is a way. Maybe your son or daughter will barrow a friend’s car to get to a class or some event. Maybe a group of friends takes a road trip, goes to a concert or a party and your child ends up driving part of the way. There are all kinds of reasons why your child might end up driving even if they do not have a car with them at school. At any rate if he/she is driving there is the chance that he or she could get a ticket or even worse have an accident.
This brings up the second reason that you may wish to reconsider your decision to remove your son or daughter from your auto insurance policy when they head off to college, financial planning. As long as you provide financial support or claim your child as a dependent on your income tax return, you will be deep pockets for any mishap that child might have. If your son or daughter crashes a car while away at school you could be held financially responsible for the occurrence if your child is at fault.
Suppose the car your child barrows is uninsured? Your child is not going to ask for proof of insurance before they barrow a car. He/she is just happy to have a car to drive. Maybe the car your child barrows has insurance but the limits are too low and the cost of the accident exceeds those limits. The injured party will be coming after the driver as well as the owner of the vehicle. Your child, the driver, has no coverage because you have removed them from your insurance policy. This could place your assets in the direct line of sight of the injured party.
I realize that every family has to solve this dilemma individually and that what might be right for one family will not be right for another. The important thing is to make an informed decision that takes in all of the consequences of that decision. Saving a few hundred dollars could ultimately cost you thousands of dollars.
* Preferred Auto Insurance Policy: All the drivers listed on the policy are good drivers by definition (licensed three years, one point or less in the last three years).
This article(s) represents the views and opinions of Garrett Parkinson and not the Insurance Companies that he represents or illustrates in his articles.