Our son is 18 but lives at home. Our CPA says he should have his own car insurance policy and he only needs minimum limits because he has no assets. Is this a good idea?

  1. 15645 POINTS
    Edward HarrisPRO
    Owner, Best Health And Car Insurance Rates - Instant Online Quotes, US
    If an 18 year-old son or daughter is living at home and drives a vehicle, there's a good chance that the child is currently listed on a parent's policy. This typically results in lower rates because of many available discounts, including multi-policy, multi-car, good-student, longevity, and several others.

    Also, the liability limits are likely to be above the mandatory state minimum limits. For example, if the state minimum requirement is $15,000 per person, and $30,000 per accident, the household plan may be $100,000 per person and $300,000 per accident.

    Additionally, if the young driver gets a moving violation or is involved in an at-fault accident, it is less likely a cancellation will occur if the vehicle is covered under a parent's plan.

    So...Do you really want your own policy? You can get it, although the title may have to be in your name.

    Important Note: This answer was provided by Edward Harris, one of the nation's premier car insurance experts. His top-rated website Carinsurancezoom.org provided free online quotes and the lowest auto insurance prices from top-rated companies.
    Answered on June 2, 2015
  2. 21750 POINTS
    Jim Winkler
    CEO/Owner, Winkler Financial Group, Houston, Texas
    That is a great question, and one every parent asks, I think! Here's the deal. While we want to set our kids up so that they can be independent, there are some things that might not really be best to set up for them. Savings accounts, retirement vehicles, a credit card with low credit limits, and life insurances, those are great choices. Auto insurance maybe not so much. Here's why:
    Your son's age group is the highest at risk group for an auto insurer. As such, that means they are much more likely to have an accident, get a ticket, or cause major damage to themselves or others.That risk means that the insurer will hedge their chances of having to pay out by charging much higher rates for them. If he's a safe and careful driver and the company offers safe driver discounts, he may come out ahead, but if there's an issue, his rates would increase even higher.
    By putting him on your policy, he gets the advantage of better coverage than what he could afford, and lower rates, as he's listed as a driver under your policy. If that's affordable for you, perhaps it would work out better to keep him there until he moves away, or has a couple of safe driving years under his belt. That said, maybe the responsibility of having to pay for himself might be impetus enough to be careful and safe...
    I hope that gives you something to work with as you try to decide. You know your son better than anyone, and I'm certain that you will make the best choice for him. Thanks for asking!
    Answered on June 2, 2015
  3. 617 POINTS
    Waltere Koti
    Principal Agent, First Insurance Agency Inc, United States
    You may to talk to your insurance agent and not your CPA about insurance matters. Just because your has no assets does not mean he relieved of any liabilities. As a parent you may not want to see your son or daughter under insured. If he is a good son with a clean driving record then you better off leaving him on your policy if the insurance company allows it.
    Answered on June 2, 2015
  4. 14231 POINTS
    Tom Sheehan
    Agency Owner, The Thomas G Sheehan Agency, 27 Glen Road Sandy Hook, CT 06482
    Not necessarily, all due respect to your CPA. If your son has a car that is titled to him and he wants to register the car to use on your state's public access roads and highways, then it is highly likel;y that the atete will require that he have his own insurance. The question about the amount of coverage he may need, or should have, certainly can in some fashion be based upon the extent of his assets, but I recommend to my clients that it is important to keep in mind that their child is still residing in their home and is more than likely still being claimed as a dependent. Depending upon the laws in your state, it may be that even with his own car, registered and insured in his name, should he cause a serious accident that results in a law suit, the coverage provided in his policy may not be enough to absorb the settlement. In that case, you may be included in the action. Remember a key point here, insurance only provides coverage, it does not limit liability. You may want to include your attorney and your Insurance Professional in this discussion in order to be sure you are receiving the most complete advice.
    Answered on June 9, 2015
  5. 2777 POINTS
    Terry A. McCarthy, CLU, ChFC
    President, Insurance Associates Agency Inc., West Chester, OH
    I love CPA's. They give great accounting advice and some of them even know other things. But the "minimum limits" advice defies his training in some important ways. What your son lacks in "assets" he more than makes up for in terms of "potential". What I mean here is that he may not have it now, but due to his young age, he'll have a long time to earn and pay. Even though he is only 18 does not mean that he cannot be responsible for an injury or death, or damage to property, and be subjected to an order of the court to garnishee his wage to make reimbursement to those who were injured, killed, or had property damaged.

    Now, should have have his own insurance? Assuming he owns the car, he probably needs his own insurance. Staying in the household under household coverage is also OK but some insurers concern themselves with the owner of the car being different than the insured on the policy so proceed with caution when the vehicle is not actually owned by the policyholder.

    As a practical matter, the discounts that you might enjoy are lost to the child in many cases when they have their own policy. Some companies will extend multi-policy discounts to children of the policy owner. Some discounts don't come through this connection, however. I like kids learning the responsibility of maintaining their own insurance. It gets the loss off the parents record, for one. Parents can help subsidize the cost if they want and help provide this as a reward for good outcomes on something else. All things said and done, I like responsible children on their own policies but deal with young drivers both on and off the parents policies so it comes down to personal preference and whether you are dealing with issues that poison the whole policy because of the young driver, or not, in many cases.
    Answered on July 6, 2015
  6. Did you find these answers helpful?

Add Your Answer To This Question

You must be logged in to add your answer.

<< Previous Question
Questions Home
Next Question >>