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Should I add my child to my auto insurance policy or buy a separate policy?

Parents are always concerned with ways to insure their children's cars affordably and sensibly. There isn't really a right or wrong way to buy car insurance for your child. This article will give you information to help you make a decision based on what you feel best suits your individual situation.

Advantages of insuring a child on a parent’s policy.

1. Cheaper rate - As a rule of thumb, insurance policies are always cheaper when the vehicle is added to the parent’s policy vs. a policy on a child alone.
2. Higher limits of liability - Adding an additional vehicle to the parent’s policy basically extends the same coverage to this additional vehicle and would tend to normally have higher limits than a child would carry on his or her own. A child’s policy would have lower limits to keep the premium down and they don’t have the assets to protect like a parent would.
3. Control - The parents maintain control by receiving the premium notices and other communication from the company. It is still the parent’s policy.
4. Discounts - Parents may also receive a multi car discount if they have only one vehicle on their policy prior to adding their child. Companies also offer good student discounts to policyholders with children who have a B average or better.
5. Principal or Occasional operator - If the number of drivers in a household equals the number of vehicles, all the drivers become principal operators. No questions asked. However, if you have fewer vehicles than drivers, then a driver would be listed as an occasional operator. For example, if a parent has a company car and only one car listed on their policy, when the second vehicle with a child as the driver is added, the child would be and occasional operator. Hence the rate would be cheaper as well as getting a multi car discount.

Disadvantages of insuring a child on a parent’s policy

1. Surcharges - if your child has an accident or ticket, the surcharge will affect your policy. Cancellation may also be a possibility depending on the severity or frequency of the incident(s).
2. Liability - If a child is on his or her parent's policy, the parent’s would be responsible for any negligence of the child. The parent’s policy would be the responding insurance policy in the event of an accident and thus their assets could potentially be exposed. The parent could be sued along with the child in the event of an accident.
3. The child isn't getting the experience or learning ability -  At some point your children need to know how to purchase insurance and experience the responsibility that comes with it. If they are on your policy, it will be prolonging this eventual situation.

The bottom line is that you need to evaluate your options.  It is usually best to discuss this with your insurance agent or company to come up with a plan that suits your particular situation. 

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