Your 19-year-old son is away at college, is listed as a ‘driver’ on your auto policy and is using a vehicle that you; their parent – owns and insures. You have called your insurance agent and advised them of the change of address for the vehicle, so if something were to happen, your agent and the company are aware of the location and usage of that vehicle. Everything is fine.
However, the above scenario isn’t how it always works, and this blog is to provide you with some important information on coverage gaps that occur when we don’t talk with our agents about where our vehicles and kids are going.
First – a vehicle ‘titled’ to your child should be insured on a policy in their name.
We understand it’s expensive, but unless the vehicle is co-titled to parent and child both, it needs to be insured under a policy that is owned by the ‘title holder’ who would then be listed as the ‘Named Insured’… i.e. the child.
Since I’m using quotation marks, I’ll explain here that there are drastic coverage and liability differences between being a:
- Named Insured
- Automatic Insured
I will start with the preferred definition of insured and the term that allows you the broadest protection on any insurance policy – Named Insured.
When you are the Named Insured, the policy specifically states your name and address on the top of the page. Simple enough. You have the rights to the policy, the right to change the policy, and the liability referenced in the policy is for ‘you’.
Being an ‘Automatic Insured’ is when you have that 16-year-old that has their permit, but we told you when you called that you don’t need to add them to your actual policy until they obtain their license. They ‘automatically’ have coverage while using your vehicles as long as they are ‘related by blood, marriage or adoption AND a member of your household’. This brings up a slew of questions when we have a child who spends 50% of their time with one parent in one home and 50% in another. We can educate you on how best to handle that.
A listed ‘Driver’ is simply that, someone that you have listed as a driver who ‘only’ is provided liability when driving that vehicle. We use this often for resident young drivers using parent’s insured vehicles, but also for family members who may even be in another home who take their elderly relative or neighbor (using that relative or neighbor’s car) to doctor appointments, shopping etc. Anyone who is using your vehicle more than on a very occasional basis, you should discuss with your agent to make sure there are no coverage gaps.
On this same topic, use of someone else’s vehicle and counting on ‘your’ insurance to cover you is also a mistake. Any non-owned vehicle that you have access to the keys to run errands and use occasionally, has legally been declared to meet the ‘EXCLUDED’ definition of ‘furnished or available for your regular use’. There are a number of court cases where coverage was denied due to that exclusion.
As you look at sending your kids to college, or perhaps just have a young adult no longer living with you that you are STILL insuring on your auto policy, we just caution you to give your insurance agent a call and have a discussion to ensure that none of you will have coverage issues and claims that are denied.