Should our daughter buy her own insurance policy?
My daughter is 22, living at home. She is about to buy a car. What is cheaper as far as insurance, to have it titled in her name or in ours, the parents? Can she get her own insurance at that age?
Your daughter can buy her own insurance. Before she turned 18, she would have needed a signature from one of her parents, but as an adult she is able to sign contracts for herself.
But would it be cheaper for her to have her own coverage? Probably not.
Most often it is less expensive to add a driver to an existing policy, where the impact of a young driver is offset by the wisdom, guidance, multi-car discounts, accident-free record and spotless credit of you, her parents.
Let’s say Mom and Dad are in their 40s, live in Ashland, Ohio, and drive a financed 2013 Buick Lacrosse and a paid-off 2006 Acura TL. Full coverage (100/300/100 plus comprehensive and collision) would cost them about $1,048 a year, even with the daughter as an occasional driver of their cars, according to the cheapest rates we found in our car insurance comparison-shopping tool.
Adding a 2008 Honda Civic to the policy with the daughter as its primary driver, also with 100/300/100 liability limits and $500 comp and collision deductibles, brings a cheapest quote of $1,814 a year for all three cars, a difference of $766.
The daughter, buying a policy on her own, could match her parents’ full coverage policy on her own car for $960 a year.
That’s a $200 savings – but Ohio car insurance is cheap, and no one in our example has tickets or accidents. A different state, a few citations or dinged credit could change the equation quite a bit.
We’d encourage you to run the numbers yourself.
Do we need to be on the title?
For insurance purposes, your name would need to be added to the title on your daughter's car if you wished to add it to your existing policy. You have to have "an insurable interest" in any car on your policy.
If she has her own policy, only she needs to be on the title.
And if she goes that route, you as parents might save a bit on your own policy by dropping your daughter as an occasional driver on your cars.
Insurance companies ask about all drivers in a household, but premiums are calculated only on those who are listed on the policy. A separate policy for your daughter would assure your insurer that there is no unrated driver on yours.
Des Toups is a writer, editor and expert on insurance, cars and personal finance. He has written extensively about all three for national publications such as MSN and major newspapers such as the Seattle Times. He has been quoted about insurance issues in The New York Times, USA Today and Kiplinger's.
Follow him on Twitter @destoups