May 25, 2010

Naming A Secondary Driver On Your Auto Insurance Policy

Parents want their kids to be safe. The economy is toughest on young drivers and their families, who often struggle with extraordinarily high premiums in exchange for occasional vehicle use. For this reason, while in the past auto insurance companies often allowed parents to keep a child on their policy up to the age of 25, now some insurance companies allow dependents up to the age of 31 to be included on a parent’s insurance policy. This looks good on paper – the parent feels good that the child is protected and is not having to pay an arm and a leg for premiums just because they are young. Furthermore, since many states require insurance coverage, keeping a dependent on an existing parental policy for an extended period of time reduces the risk that a child may shortsightedly and unknowingly illegally choose to cut costs by eliminating auto insurance coverage.

The issue arises with the definition of the word secondary.’ While in many cases the dependent is actually an occasional driver on the named vehicle, in a growing number of cases the child is actually the primary or only driver of that vehicle. When this is the case, naming a dependent as a secondary driver is illegal and can backfire when seeking reimbursement in auto claims. When gathering an auto insurance quote for adding a secondary driver to an existing policy, it is important to be clear about the difference between a primary and secondary driver. Insurance companies view adding a primary driver of a vehicle to an existing policy as a secondary driver as insurance fraud, and any money saved on monthly premiums up front is at risk when claims are filed. Both parent and child will be liable if insurance fraud is confirmed, and may find themselves dropped from coverage. A future auto insurance quote may show that both parent and child are now subject to severe premiums from being moved to the ‘high risk coverage’ category, if they can obtain coverage at all.

When done for the right reasons and under the right conditions, adding a dependent as a secondary driver on an existing auto policy just makes sense. It saves the family money, teaches the child about the value and expense of budgeting for future auto insurance expenses when it comes time to pick a primary vehicle, and allows parents much more say over how often the dependent is allowed to use the vehicle in question. When it is clear the dependent’s vehicle needs exceed what secondary coverage legally allows for, it is then time to take out an independent policy to ensure compliance with legal regulations.