Can you drive your parents’ car without insurance?

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Joel Ohman
Founder, CFP®

UPDATED: Aug 16, 2016

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Here's what you need to know...

  • Most teen drivers do not have their own separate insurance policy because of the high cost of insurance for teen drivers. As an alternative, teen drivers are added on as a driver under their parents’ auto insurance policy
  • If you are a teen driver who only has a learner’s permit, most auto insurance companies do not require parents to add you to their policy just yet
  • Auto insurance policies extend coverage to drivers who are not listed on an insurance policy if they have permission to drive a vehicle listed on the policy. This is called permissive user status
  • To be eligible for coverage under permissive use, the driver cannot live in the same household or have regular access to the listed vehicle
  • The best way to make sure that you are covered in the event of an accident is to call an insurance agent and inquire as to the insurance requirements for your state and whether you can be added to an existing insurance policy

Teen drivers typically do not have their own auto insurance policies because coverage tends to be expensive for teen drivers. Instead, their parents typically add them onto their auto insurance policy.

It is possible to have coverage for a driver not listed on your auto insurance because you gave that person permission to use the vehicle, but that person cannot live in the same house as you. It is best to contact your auto insurance company to have a new teen driver added to your policy.

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Auto Insurance for Teen Drivers


Almost every state requires that drivers carry auto liability insurance. Teen drivers are considered higher risks for auto insurance, so the auto insurance rates offered for teen drivers are typically much higher than average.

It is important for teen drivers to try to maintain as good of a driving record as possible in order to avoid paying even higher rates for insurance. On the plus side, if a teen driver is able to maintain a good driving record, they can typically enjoy lower insurance rates after a few years of driving.

If you are shopping around for a separate auto insurance policy as a teen driver, be sure to ask the insurance agent if you qualify for a good student discount to reduce your rate.

Another way to reduce your rate for an auto insurance policy is to increase your deductible.

If you agree to pay a higher amount out of pocket in the event of a claim under your policy, then your premium will be lower. Before opting for a higher deductible, make sure that you can afford to pay this amount out of pocket if you are involved in an accident.

Adding a Teen Driver to an Existing Auto Insurance Policy

To help with the cost of insurance coverage for teen drivers, many parents choose to include their teen drivers on their own policy.

Sometimes, insurance companies will offer a multi-car discount for adding another vehicle to your policy for your teen driver. The value of the car added can also affect how much your premium will increase.

When assigning a teen driver to your existing auto insurance policy, ask your insurance agent to have the teen driver assigned to the least valuable car on your policy. This could help reduce your premium because your teen driver is probably the highest risk driver on your policy.

If you agree to this arrangement, then you need to make sure that the teen driver only drives the car to designated areas at all times.

When you add a teen driver to your auto insurance policy, you should also seriously consider raising your coverages.

Given that the likelihood of a teen driver being involved in an auto accident is much higher than for a more experienced driver, you may not have sufficient coverage to cover a claim involving your additional teen driver.

The average cost of a car today is above $15,000, and the cost of medical treatment for just one person in an auto accident can easily surpass $20,000, which are close to the average coverage for state minimum liability policies.

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If your teen driver is at fault for an auto accident, you will be required to pay out-of-pocket for damages that exceed those coverage amounts if you do not have some type of supplemental coverage to make up the difference.

Ask your insurance agent to review your current coverage amounts to make sure that you are adequately protected in the event of an accident involving your teenage driver. Many times, the cost of adding additional coverage is very low in relation to your annual premium.

When you are considering options for adding your teen driver to your auto insurance policy, this is also a good opportunity to shop around and make sure that you are getting the best rate possible for adequate coverage for you and your family.

Permissible Use Coverage for Other Drivers


Liability insurance generally covers damage caused by anyone who is driving your car as long as they had your permission to drive it. Unfortunately, this does not apply to children driving their parents’ cars without being listed on their policy.

A permissive user must be someone who does not live in the same household as the insured.

The safest way to make sure that a teen driver is covered for driving another family member’s vehicle is to contact an insurance agent regarding the specific insurance requirements for your state.

Many states required drivers to be able to show physical proof of insurance when pulled over by a law enforcement officer or if they are involved in an auto accident.

You can avoid facing stiff penalties and dealing with plenty of headaches by calling an insurance agent before trying to drive a vehicle without auto insurance.

It is a good idea to notify your insurance company right away when a teen driver in your household gets a learner’s permit or driver’s license. You should explore options to have the teen driver added to an existing policy.

If the teen driver is not a named insured on the policy and he gets in an accident that is covered under permissible use under the policy, the insurance company may require the driver to be included or excluded as a driver on the policy afterward.

If excluded, any future claims you file while driving a listed vehicle will not be covered by the insurance company.

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