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Can I be added to my parent’s car insurance policy?

Can I be added to my parent’s car insurance policy?

If you’re under 25 and you want your car, you may find that buying car insurance isn’t cheap. It might sound tempting to ask your parents to buy a policy for you to save money, but if you’re the one driving the car the most, this might not be the best option.

Car insurance policies are usually built and priced based on the car’s primary driver, or the person driving the car most often. If your parents are the policyholder but you're the primary driver of the car,  it can be considered insurance fraud. This could not only lead to your claims being denied but also legal penalties. So when you should be added to your parent’s policy and when you should have your own depends on the owner of the car and how much you’ll be driving it.

Can a 26-year-old be on a parent’s car insurance?

It’s common for families in Australia to own three or even four vehicles, and this means they all need car insurance. It may be that your parents have the insurance on all cars with other family members added as additional drivers. This situation may be one of the more suitable options for any drivers under 25 due to the increased premiums for these drivers. If you’re a driver over 25, you’ll need to consider whether you should stay as an additional driver on your parent’s policy or get your own. 

There may be reasons for you to continue as an additional driver on your parent’s car insurance. For instance, you may not do much driving, and it doesn’t make financial sense for you to have your policy. Your lack of experience may also mean you would be charged higher premiums.  If you do choose to remain as an additional driver, be careful to avoid car insurance “fronting”, or primarily driving a car insured in your parent’s name. Doing this may cause your insurer to deny any claims you file, and you also run the risk of criminal penalties in some states.  

Can I add my car to my parents’ insurance policy?

When it comes to car insurance policies, each policy only covers one car but can have multiple drivers listed. There is the option to bundle multiple policies in a multi-car policy. This type of policy would allow for car insurance in your parent’s name that also covers your car as well. In the case of single parents car insurance, some multi-car policies allow children’s cars to be covered even if they don’t live at home. 

Some lenders cap the number of cars allowed on multi-car policies, but it’s also the case that the more cars, the bigger the discount. A multi-car insurance policy might be a way to use your parents' good driving history to help you save money on premiums, especially if you’re under 25. One downside to using a multi-car insurance policy is that you don’t build your loyalty or no claim discount with the insurer.

Can I put my parents on my car insurance?

You can certainly add your parents as additional drivers on your car insurance policy, especially if they’ll regularly be driving your car. As you’re the primary driver and policyholder, the cost of the policy is based on your details, driving experience and claims history.  

Because the policy is built around your history, you may not benefit from having your parents, who’d have more driving experience, added to your policy. You may have to pay an additional premium for adding them as drivers. Also, if your parents are considered seniors, you may have to pay a senior excess when filing a claim. This will mean you pay more out of pocket for any accident your parents get into. Consider buying a joint car insurance policy if your parents want to also be the primary driver on the policy. Even if it means paying more for the policy.

Even if the car is registered in your name, you may want to buy a policy that covers other potential drivers just to be safe. Some insurers may cover anyone driving your vehicle, whether or not they are listed on the insurance policy. Others, however, may require you to nominate each driver that will be driving your car. You can check the insurer’s Product Disclosure Statement (PDS) to find out their specific conditions, or you can ask the insurer about this.

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This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.

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