How Your Graduate Impacts Your Car Insurance

It is an exciting time of year with tassels being tossed and academic accomplishments being recognized.  Your child is on a threshold moving from one stage of life to another.  This threshold should be celebrated, but also reflected upon as there are issues that need to be considered.

An example of this is in regards to your own car insurance, and how your child's life status can impact your insurance policy, price and coverage.

Below please find the possible scenarios you may face with your recent graduate.

High school graduate going on to college:

College student without a car -

If your son or daughter is going onto college, he or she will need to stay as a rated driver on your car insurance.  The reason is because coverage can extend to them, even if not driving one of the cars on your policy.

A perfect example of this is what happened to my friend, Dave, while he was a student at U Penn.  He did not have a car with him, but was rated on his mother's car insurance in NH.  While walking down the street, he was hit by a car, which then fled the scene.  Dave's injuries were covered by the medical payments and uninsured motorist coverage on his mother's policy.

The good news is that if your son or daughter is going to a school that is greater than 100 miles away from home, the premium is significantly reduced (but unfortunately UNH is not 100 miles away from the Amherst area).

College student with a car -

If your child is going onto college, and taking a car with him or her, be prepared for an increase in your premium.  If the college is within NH, the car will be rated in the city or town of the school.  If the school is outside of New Hampshire, many companies will rate the car as if it is garaged in Manchester NH (which is the most expensive town in NH to insure a car).

The good news though is that your child can still receive the good student credit in college if they are able to maintain a B average.  Be sure to inform your agent or company if your child qualifies for this credit.

As an insurance agent for more than a decade, I do not recommend having your college student register a car in NH, bring it to a school out of state, and then try to insure it in NH on his or her own.  I have never seen an insurance company allow this arrangement.  For a single-vehicle policy, the car should be registered and insured in the state where it is garaged. 

This too can prove complicated because college students can have a difficult time proving residency, especially if living in a dorm.  As every state is different, I would suggest you do your research early with the appropriate Department of Motor Vehicles.

High school graduate moving out:

For example if your son moves out of your home, he will need to get his own car insurance.  The reason is because in an auto policy, coverage is extended to a family member who is "related to you by blood, marriage or adoption who is a resident of your household."

If your son has his own place then he is no longer considered a resident of your household.

For example, if your daughter typically drives a car that is owned by you and on your insurance, I strongly suggest that you sell the car to her and have her buy her own insurance.  It is very important that vehicle ownership and insurance match in every case; otherwise there could be a coverage issue should a claim occur.  You can not typically insure something you do not own.

High school graduate going into the military: 

It is important to let your insurance agent or company know if your son or daughter is going into the military.  The premium is typically adjusted because the company understands that your child's usage will be minimal. 

I would suggest that your child remain listed on the policy.  Like the example of Dave explained above under "College student without a car" - your child may be entitled to benefits if needed while in the US (say while on leave or off base). Please note that coverage for a car insurance policy is only applicable while in the US and Canada.

High school or college graduate living at home: 

For example, if your son does not have any immediate plans to leave home, and all cars are registered in your name, you do not need to make any changes to your policy. 

As he gets older, you may consider signing one of the cars over to him.  You may want to time this with the renewal of the vehicle's registration.  If you do this, remember that your son would need his own insurance as vehicle, as again registration/ownership and insurance must typically be the same.

Before your sign the vehicle over, get a quote.  Your child's premium will be different than what you are paying for him or her on your own policy due to perhaps a multi-car credit, homeowner credit, etc.

Those are just a few of the scenarios I have seen as a NH insurance agent.  To learn about the issues your son or daughter need to consider regarding their own insurance, please read, What Graduates Need to Know About Insurance.  If your child is graduating give your local insurance agent a call.  They are there to give you advice on how to best protect you and your family.

As all parents know, we worry about our kids no matter how old.  Make sure you and are getting the best protection at the best price possible.

Written by April McBriarty-Weismann of Holt Proctor McBriarty Insurance Agency in Milford, NH.