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Have you ever wondered when and if you have to get off your parents’ policy and get your own car insurance? When you become a licensed driver, you are taking a step toward your own independence, but that does not mean you have to be completely independent right away. Find out what the requirements are and how you can find an affordable policy of your own.
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What are the benefits of staying on my parents’ car insurance?
There are many benefits to staying on your parents’ car insurance policy. Many teenagers find insurance coverage through a parent’s policy because it is cheaper to do so. If you decide to insure yourself at a young age through your own policy, insurance companies tend to penalize you through higher rates. This is because you are considered more of a calculated risk to the insurance company.
According to the CDC, motor vehicle accidents are the number one cause of deaths in teenagers. Some factors that put teens at higher risk for a serious accident are:
- Inexperienced Driving
- Impaired Driving
- Reckless Driving
- Distracted Driving
- Drowsy Driving
The bottom line is teenagers don’t have a wealth of driving experience and are more likely to exhibit risk-taking behavior. Practicing safe driving habits will help prevent you from being another teen statistic. If you assume responsibility and keep a clean driving record, you will most likely benefit from affordable insurance.
Aside from affordability, being on your parents’ car insurance policy at a young age can help you substantiate an insurance history. A good insurance history will also help you get cheaper rates when you go get your own insurance policy down the road.
Do I have to get my own insurance policy eventually?
As the saying goes, “All good things must come to an end.” Well, this is sort of true. Most insurance companies will let you stay on your parents’ car insurance indefinitely, as long as you remain one of their dependents. This is not quite the same thing as the IRS definition of dependent.
Further explained, this means if you move out of the house into your own apartment, you are considered to be no longer financially dependent on your parents. Therefore, the insurance company thinks it’s time for you to get your own policy. If you are going to a college in a different state and move on campus, the insurance company may still view you as living at home. It is important to note that each insurance company will have their own rules regarding separate residency.
How do I go about getting my own car insurance policy?
While being on your parents’ car insurance policy must in fact come to an end at some point, it doesn’t mean that you can’t find affordable insurance on your own. It’s actually really easy to transition from your parents’ policy to an individual one.
The hardest part of getting your own car insurance is determining what kind of car insurance coverage is right for you. Evaluating what you can afford and the coverage you need will help you determine what’s right for you. Here is what makes up a basic car insurance policy:
- Bodily Injury Liability helps protect you in the event that you kill or injure the other driver in an auto accident.
- Property Damage Liability helps protect you in the event that you cause damage to someone else’s property in an auto accident.
- Collision helps cover damage to your vehicle in an auto accident. It will pay up to what the vehicle is worth.
- Comprehensive helps cover damage to your vehicle caused by something other than an auto accident, such as damage produced by hail, flood, hurricane, etc.
- Uninsured helps protect you against those who don’t have insurance or who drive off in a hit-and-run.
- Underinsured helps protect you against those who have insurance but don’t have enough to cover the amount of your claim.
How do I get affordable rates on car insurance?
Start by obtaining multiple online insurance quotes. Then you can compare quotes and see who has the best offer for you. You also want to take into account what kind of company you are dealing with. You want a company that will pay out on their claims and has good customer service.
Many car insurance companies also have discounts for teenagers. Car insurance companies will often give a discount if you make a certain grade point average. Another incentive is enrolling in and successfully completing a driver’s ed course. Whether your state requires it or not, it shows the insurance company that you have been taught the rules and regulations of driving on the road. If you stay away from expensive cars, you may see a reduction in your premium as well.
What should I know about the terms of my policy?
Your policy is a binding legal contract. That is why it is especially important you thoroughly read through your policy before you make a decision. Be sure to pay careful attention to the important parts such as the declarations page, insuring agreement, and the conditions of the policy.
The declarations page gives you an overview of who’s covered, the type of coverage and the limit amounts, the time period of coverage, and the amount of the premium. The insuring agreement is the bulk of the policy. It goes into very specific detail of how you are covered.
Lastly, the conditions portion will give you an idea how you will handle a claim in the event of an accident. It also spells out the terms and conditions associated with canceling your policy. If everything meets your criteria, then you should feel comfortable signing for your new insurance policy.
While you may be reaping the benefits of being on your parents’ car insurance policy, it is not the end of the world if you have to get your own. As long as you are diligent in your search for car insurance, you will be sure to get the best rates out there.
Even if you’re still on your parents’ car insurance, you can start thinking ahead and compare insurance rates today! Just enter your zip code below and answer a few questions!