Does My Child Need Their Own Car Insurance?

Written by April Weismann on 03/11/2020 10:46 AM in Car Insurance,. Personal Insurance.

insuring young driversMany parents dread the day when their child drives off without them.  This dread comes from your child taking a big step towards independence, as well as what you know is inevitably coming - a hike in your car insurance premium.   One of the most fundamental questions that children and parents must first decide is whether a child should be on their own policy or their parent’s policy, both with advantages and disadvantages.

Should My Child Have Their Own Car Insurance?

Policies for Only Your Child Will Be Expensive

The biggest drawback of getting your child their own car insurance policy is the cost of the policy.  It’s expensive to insure a young driver by themselves because several rating factors are working against them. The following are just a few reasons why their premiums will be high:

  • According to the Centers for Disease Control and Prevention (CDC), teens aged 16 -19 are at the highest risk of a motor vehicle crash than any other age group and nearly three times more likely than drivers 20 years and older to be in a fatal crash.  

  • Drivers without long credit histories usually cost more to insure than drivers with established credit histories

  • Children usually insure one car, and can’t get a multi-car discount

  • Children don't own homes that provide significant package/bundle discounts

Any one of these factors can have a noticeable effect on premiums, and together they have a substantial cumulative impact that usually makes insuring a child by themselves quite costly.

Your Child Will Notice If Their Rates Go Up

In certain situations, the cost of insuring a child can have a beneficial impact since they get to understand exactly how their driving habits impact what they pay for insurance. 

Should your child get a traffic ticket or be in an accident, they’ll see firsthand how that incident impacts their car insurance premiums. These types of events usually increase any driver’s premiums, but the jump in rates is often exceptionally large for young and inexperienced drivers.

Sometimes, a significant jump in insurance rates can communicate the importance of driving carefully and within the speed limit in a way that their parent’s lecture is unable to. The message sent by a rate hike can be particularly effective if your child pays their premiums or at least the additional cost that’s brought on by their incident.

You and Your Son or Daughter May Have Separate Liability Risks

Depending on the specifics of your child’s situation, you might be able to separate your own liability risk from theirs by getting your son or daughter their own insurance policy. To do this, your child typically meets the following stipulations:

  • Be at least 18 years of age

  • Own and register the car solely in their name

Some parents might be in a position where liability is a concern. If your child is particularly reckless behind the wheel or you’re a target for opportunistic lawsuits, for example, you may want to separate your and their liability.

What if I Don't Tell My Insurance Company about My Licensed Son or Daughter?

As tempting as this may be, we would never recommend not insuring your licensed child, as now, maybe more than ever, you are more likely to use your car insurance.  For more details on this topic, check out What if I Don't Tell My NH Car Insurance Company About My Teen Driver.  

Find a Solution That’s Right for You and Your Child

In short, whether your child should have their own insurance policy is dependent upon your family situation. Most people don’t find that the benefits of doing this justify the expense, but there are select situations where it does make sense to insure your child by themselves.

For help evaluating your situation, contact the independent insurance agents at HPM Insurance. Our agents have the expertise necessary to assess your family’s situation and determine the best way to cover your child on the road. Once that determination has been made, our team can help you compare policy options from multiple New Hampshire insurers to find the best available option.

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