Car Insurance and Moving Back Home With Your Parents
Car insurance and moving back home with your parents can be a little tricky. Most state insurance laws require households to disclose all drivers living in the home. Your parents must let their provider know if you are rated or not rated and will have to add you to their policy if you are rated. If already carry auto insurance and move back home with your parents, you will be considered not rated and will not be added to your parents’ policy. Learn more about car insurance and moving back in with your parents below.
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UPDATED: Jan 24, 2021
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The following question came from a reader:
“I just moved back in my mother’s house and I recently got my own car insurance with GEICO. Just prior to having GEICO, I started a policy under my mothers insurance.
My mother says that her insurance company won’t deduct the prices to what she used to pay before I was on her policy because I live in the house. I think that’s wrong because I have my own insurance. Can Progressive do that?”
It sounds like there may be some confusion between the insurer and the guy who wrote in.
While Progressive can have whatever guidelines they want, i.e., once a household member is disclosed, that individual must be listed on their insurance policy, it is highly unlikely they will not, at the bare minimum, offer to exclude the son from coverage.
Even though there may be an “exclusion charge” for doing so, it would cost significantly less than having him listed and rated as a driver.
In most states, if a household member (of driving age – as young as 14) is disclosed or discovered via reporting, the named insured must address the driver as one of the following options:
– not rated: has other car insurance
– not rated: excluded from coverage
– not rated: not a licensed driver
– rated: insurer will charge you for this additional driver
Rules Protect Against Possible Fraud
As with most insurance “rules” that seem somewhat silly, the reasoning behind the decision to do it this way is to protect the insurer from fraud.
An unscrupulous individual may say, “they have their own coverage – so I don’t want them on my policy.”
But the reality is there is no way for the insurer to guarantee that this is a true statement. Unfortunately (or fortunately depending on how you look at it), unlisted household members OFTEN drive vehicles and cause accidents.
In this example, the insurer is the only “loser.” The parent didn’t have to pay extra premium for their teenage driver and the injured party is compensated. The insurer wasn’t able to collect the appropriate amount of premium for the “actual” risk they were incurring as part of the policy.
Multiply this example by thousands, if not millions, of unlisted drivers and paid claims and you can understand why an insurer simply says, “If they reside in the house, they have to be listed and pay for coverage.”
However, at the bare minimum, a named insured should be able to exclude a driver from coverage by requesting to do so and signing a document that states they understand there is no coverage for that particular individual.
The exclusion can be thought of as “putting your money where your mouth is.” If the listed, but excluded driver causes an accident, the insurer simply does not have to defend them in court or pay for damages – although the owner of the vehicle would still be liable for the damages in court.
Read more: How much is car insurance for a 16 year old?