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Who Am I Required to Add to My Car Insurance Policy and Who Is Already Covered?

Written by Ryan Lowell on October 4, 2011 & Posted in Insurance

Dear Ryan,

Do I really have to add my newly licensed 17-year-old daughter to my car insurance policy? Isn't she automatically covered as a permissive driver like my neighbor who borrows my car every now and then?

Julie S., Columbia, SC

Dear Julie,

Congratulations to your daughter for the big achievement of obtaining her driver's license. It's got to be an exciting time for her, but it's also going to be a very expensive time for you as a parent. You will now need to add your daughter to your car insurance policy and pay a premium for her to be listed as a driver.

It's true when you permit others, like your neighbor, to drive your car from time to time that they are normally covered under your auto insurance policy as a permissive driver. However, allowing someone from your own household to drive your car is looked upon differently by your car insurance provider.

You may allow someone outside your household (such as a friend, neighbor, or visiting relative) to drive your car, and they aren't required to be listed on your policy to be covered. This is because these individuals don't have regular access to your vehicle and so aren't enough of a risk to your car insurance company to merit being on your policy.

However, if someone borrows your car on a regular basis, your insurer may require you to add the person to your car insurance policy as an occasional driver.

Your insurer views your newly licensed child differently than a non-household driver because she has easy access to your car and it's their belief that, on any given day, she could grab the car keys and go for a drive.

Unfortunately, because statistically teen drivers are found to be poor drivers, adding your daughter to your auto insurance policy will make your car insurance rates go up, usually by a lot. Cheap car insurance is nearly impossible to find for teenagers because insurance companies respond to the high risk an inexperienced teen driver poses by charging a high premium amount.

If you "forget" to add your daughter to your auto insurance policy now that she is licensed, it could get messy if your insurer finds out. Your car insurance provider may be able to cancel you for misrepresentation or require you to pay them the premium amount you should have paid since she became licensed. If your daughter gets into an accident without being listed on the policy, the insurer may cover it, but make you pay the premiums retroactively for her. Or, the insurer may deny coverage completely.

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