We most commonly look to who is paying the bills to determine when our kids are “on their own.” The transition to being on their own typically happens over time. It might begin with food costs, then clothing, then a credit card, then rent, then utilities, their own streaming services, then health insurance. This transition could occur over months or even years.
When it comes to automobile insurance costs, this transition might get overlooked because on the surface there might not be any changes. As is often the case, your child has been driving an auto you own for years and they’re still driving it. The “when you buy your own auto, you buy your own auto insurance” is a popular approach for handling this transition, but it exposes you to unpaid auto accident medical costs that could threaten your family’s financial future and quality of life.
The part of your auto policy that provides coverage for auto accident medical costs, Personal Injury Protection (or “PIP”), covers you and your resident relatives. If your child is injured in an auto you own, but they are no longer a resident of your household, they WILL NOT have PIP coverage from your auto policy. Who makes the decision about your child’s status as resident relative on your auto policy, and when is that decision made? Your auto insurance company will make this decision at the time of the auto accident. Not you.
Many factors are used by auto insurance companies to determine if your family member is a resident relative. Your child having your home address on their driver license does not guarantee their status as a resident relative by your auto insurance company. Nor does your child being listed as a driver on your auto policy.
Waiting until your child is injured in an auto accident to figure this all out is WAY too risky. Stay in touch with your auto insurance agent so they can assist you in determining when it’s time for your child to have their own auto policy. This is another great opportunity for a good conversation with your auto insurance agent so you can make good decisions!
