The transition point from your parents' car insurance policy to your own policy is a bit gray. Generally, you are supposed to get your own policy when you move out, assuming you aren't away at college. However, some insurers have greater flexibility or acceptance of young adults staying on parent plans a bit longer.
Typically, you can stay on your parents' policy as long as you live in their home. Most insurance companies won't bat an eye if your parents keep paying premiums and you list your parents' home as your residence. Even when you go to college, insurers usually consider your parents' home your permanent address. Your college residence is viewed as a temporary location while you go to school.
Insurers vary in enforcement of transitioning after you finish college or when you do move out permanently. For a variety of reasons, this time is often the best time to get off your parents' plan. However, insurers often don't question whether your parents continue to pay and you drive relatively safely. However, if it becomes clear through regular driving claims or through other types of communication that you have established your own residence, the insurer may force you to get a separate policy.
Reasons to Get Your Own Policy
Regardless of when you "need" to get a policy, you and your parents may agree it should be sooner than later. Some parents want their teen or young adult children to have an independent policy to manage their own finances. As an independent-minded young adult, you may want to establish yourself by paying your own bills. When you buy a separate policy, you also get to choose what benefits you want. If you want just state-required liability benefits, you can potentially get a relatively low premium. Premiums usually drop considerably when you turn 25, website CarsDirect says.
Drawbacks of Breaking Free
There are drawbacks to moving on besides having to pay for the policy yourself for the first time. Combination policies typically lower the collective rates for all drivers and vehicles, and parents may not loan you their cars if you aren't covered by the family policy. Going cheap on protection to save money also exposes you to greater risks of uncovered accidents.
Neil Kokemuller has been an active business, finance and education writer and content media website developer since 2007. He has been a college marketing professor since 2004. Kokemuller has additional professional experience in marketing, retail and small business. He holds a Master of Business Administration from Iowa State University.