Who should be listed on an auto policy?
Typically insurance policies list covered parties as a family member who is related to the named insured by blood, marriage, or by law. This definition is often overlooked in the most recent years. While I suggest you always have a professional licensed agent create policies for you, I am also aware that much of my client is smart and seeks to be educated on the matter. Lets go over a few scenarios.
I have heard nightmare stories of agents telling their clients to “not add their 16-year-old licensed teenager” to avoid a premium increase. I have also had many applicants attempt to write their young drivers on a separate policy due to the massive increase in premium when adding young/inexperienced drivers. Here are a few things to consider.
- False information on the application can lead to a denial.
- Simply put, an insurance provider can refund the premium after an accident if they find that you have falsified information to reduce the premium. That means you are on your own after rear-ending the other driver.
- Having the mom/dads policy separate from the children does not separate liability.
- if a young driver is dependent on the parents, be it high school or college, and their policy (let’s say it’s the state min limits of 25/50) is insufficient, the parent’s policy can be called into pay due to the definition of a named insured above.
Always name young drivers on a policy. You do not want to enter into a long and expensive lawsuit with an insurance company after they send you a denial, AND have a lawsuit with the not-at-fault party and their insurance company.
Students who are away at college
Another confusion situation arises out of away from college students/or military-bound individuals. Courts across the country are ruling that should a person be supported by the family, even if away in another state, they should remain on the policy with the parents. The great news here is that many insurance companies provide big discounts for students who are over 100 miles away from the primary residence. Be sure to discuss these plans with your insurance agent!
Another option is to remove them from all policies since they do not own or operate a vehicle while away. What you need to understand here is that if that happens, know that the cost for insurance for the first six months to two years will come at a premium. The best way to be prepared for these scenarios post-college is to ensure credit is in tact, the vehicle doesn’t need collision or has a lien holder, and to be accident/ticket free. That last part might seem odd, but we have had several applicants be in this situation and continued to operate vehicles without insurance.
What about children who have two primary residents when parents divorce? The child should be named on both policies. Yes, this would increase the cost, but both policies would then be on the hook for the liabilities of the child. In some cases, whoever has primary custody would be the primary care/residence. This is where we would add the child in those situations after speaking with the particular carrier. Depending on the loss experience of that company, each company would want to handle it differently. (Still, want to shop for insurance yourself?
Long term relationships
A common situation comes from couples who are unmarried but live together. While the definition of a named insured is clear (see above), the term household isn’t. Generally speaking, we advise our clients that should you be living under the same roof, have a close intimate or informal relationship, for a period of greater than six months- be on the same policy. Especially if there is NOT a secondary residence between the two people. The great news here is that many companies want the behavior over the title. Just like having an online safety driving course doesn’t count if you have a super speeder ticket, having the behaviors of a marrier couple can often offer married discounts with insurance companies. You are also leveraging one policy with multiple drivers, along with now having the discounts of multiple vehicles.
If you are married, then get on the same policy. I understand that sometimes the spouse, while you love them, are horrible drivers. In the event of a loss, BOTH policies will come into play, and now both policies may attempt to get out of the financial responsibility or both may end up paying.
What about a situation where the child has their parent(s) move back with them. They now fall back under the original definition of family members and all family members should be named on the same policy. Family dynamics are of the most complicated human interactions we have. Some parents only drive 5 miles a year and still want to have that freedom. Just understand that should they remain in the household, if they are involved in an accident, both their policies and likely yours will be called to indemnify the other party.
I hope this small tidbit was informative and helpful when it comes to determining who to name on your policy! If you live in Georgia, we can help! We are very proud to have helped hundreds of clients secure better insurance policies, and in doing so saved over $150,000 for our clients since opening!