Switching From Your Parent's Auto Insurance: A Guide

Moving off your parents' car insurance policy can be a daunting task, but it is a necessary step towards independence and financial responsibility. While there is no age limit for staying on your parents' policy, there are several factors that signal it's time to make the switch. This includes attaining financial independence, moving out of your parents' home, owning your own vehicle, and getting married. When preparing to transition to your own policy, it's essential to gather essential information such as your driver's license, vehicle details, and driving history. You can then start shopping around for quotes from multiple insurance companies to find the best rates and coverage options. It's also worth exploring discounts you may be eligible for, such as good student discounts or safe driving discounts. Making the switch from your parents' car insurance to your own can be a confusing process, but with proper research and guidance, you can navigate it successfully and find a policy that fits your needs and budget.

Retitle the car in your name, if necessary

If you're looking to switch off your parents' car insurance, one of the first steps is to retitle the car in your name, if necessary. This is because some states and insurance companies require the title to be in your name if you're insuring a car that previously belonged to your parents.

Retitling a car involves legally transferring ownership of the vehicle from one person or entity to another. This typically requires the completion of a title transfer form, payment of any applicable fees, and the submission of necessary documentation to your local Department of Motor Vehicles (DMV) or relevant authority.

Here's a step-by-step guide to help you through the process:

• Obtain the signed title from the seller: The seller releases ownership of the car by signing the title. If the title has two names, both owners must sign unless there's an "or" separating the names. Some states require notarized signatures.
• Take the title to the appropriate state office: Bring the signed title to the state office that handles car titles, typically the DMV. Even if your state doesn't mandate notarization, consider getting it notarized to avoid any disputes over legal ownership. Check with your state for any additional paperwork required, such as a bill of sale or a transfer of ownership form.
• Submit the title and complete the transfer process: Submit the signed title and any necessary documents to the DMV. They will process the transfer and issue a new title in the new owner's name. The timeline for receiving the new title varies by state and could take up to six weeks. Some states offer electronic car titles, while others may require a fee for a paper copy.

It's important to note that transferring a car title across state lines may involve additional steps, such as obtaining a temporary registration and plate, paying applicable taxes, and complying with different emission laws. Additionally, if you're inheriting a car, you may need to follow specific probate procedures, especially if there is no will involved.

Decide how much coverage you need

Deciding how much auto insurance coverage you need is a tricky business. While you are legally obliged to get the minimum amount of car insurance required to drive legally in your state, how much you purchase beyond that depends on your own financial situation.

The minimum amount of car insurance required varies from state to state. Liability coverage is required in almost every state, but the amount you need may vary depending on where you live. Liability coverage doesn't pay you if you cause a crash, but it does pay others for injuries, deaths, and property damage, up to your policy's limits. The most common minimum limits for liability are $25,000 per person and $50,000 per accident for bodily injury, and $25,000 for property damage. However, in some states, the minimum bodily injury limit can be as low as $15,000.

It's important to note that these minimum requirements are often not enough to cover the costs of a serious accident. For example, the average cost of a crash resulting in non-disabling injuries was more than $40,000 in 2021. If you don't have enough liability coverage, you could be sued and have to pay out of pocket.

So, how do you decide how much coverage you need? A good rule of thumb is to try to purchase coverage equal to your net worth. This means that your policy should be able to cover the full cost of an accident without putting your home and other assets at risk. Calculate your net worth by adding up all your assets (including investments and retirement accounts) and subtracting any debt. Then, make sure your car insurance policy has enough bodily injury liability coverage to match.

You should also consider adding optional coverage types to make sure you're covered in any specific scenarios you might be worried about. For example, if you live in a state with a high percentage of uninsured drivers, uninsured motorist coverage could be a good idea. Collision coverage and comprehensive coverage are also worth considering, especially if you have an expensive vehicle that would be difficult to replace.

In summary, while you only need to purchase the minimum amount of car insurance required by your state, it's important to consider your own financial situation and the specific risks you want to be covered against when deciding how much coverage you need.

Shop around for quotes from multiple companies

When it comes to switching from your parents' auto insurance, shopping around for quotes from multiple companies is a crucial step. Here's a detailed guide to help you navigate this process effectively:

Understanding the Importance of Shopping Around:

Firstly, understand why this step is essential. Auto insurance rates can vary significantly from company to company, and you want to ensure you're getting the best deal. By shopping around, you can compare rates and find the most affordable option for your needs. This is especially important for young drivers, as insurance premiums are typically higher for this age group.

Gather the Necessary Information:

Before reaching out for quotes, ensure you have all the necessary information readily available. This includes your driver's license, vehicle details (make, model, Vehicle Identification Number), and your driving history. Having this information on hand will streamline the process and help you get accurate quotes.

Contact Multiple Insurance Companies:

Reach out to several insurance companies to request quotes. You can do this by calling their customer service lines, visiting their websites, or even visiting local agents in person. Be prepared to answer questions about your personal information, your vehicle, and your driving history. These details are essential for insurance providers to assess risk and provide accurate quotes.

Compare Quotes and Consider Discounts:

When comparing quotes, ensure you're looking at the same level of coverage across companies. Consider factors such as liability coverage, comprehensive and collision insurance, and deductible amounts. Additionally, ask about available discounts. For example, many companies offer discounts for good grades if you're a student, or for bundling multiple insurance types with the same provider.

Assess Your Needs and Budget:

While comparing quotes, consider your unique needs and budget. Evaluate the level of coverage you require and choose a policy that strikes a balance between adequate protection and affordability. Remember that the state's minimum insurance requirements may not be sufficient for your needs, especially if you're a young or inexperienced driver.

Finalize Your Decision:

Once you've found a quote that suits your needs and budget, it's time to lock in your rates. Confirm your start date and make the initial payment to secure your new policy. Remember that the quoted rate is an estimate, and the final rate may be adjusted after the insurance company reviews your motor vehicle records.

Purchase a policy in your own name

To switch from your parents' auto insurance, you'll need to purchase a policy in your own name. Here's a step-by-step guide to help you through the process:

Step 1: Gather Essential Information

First, gather all the necessary information. This includes your driver's license, vehicle details, and any relevant driving history. Having this information readily available will make the process smoother when contacting insurance providers.

Step 2: Decide on Coverage

Next, determine how much coverage you need. Consider your specific situation, including the age and condition of your vehicle, your driving history, and the level of protection you want. Different insurance providers may offer varying levels of coverage, so it's important to understand your requirements before seeking quotes.

Step 3: Shop Around for Quotes

Start by obtaining quotes from multiple insurance companies. Contact various reputable providers, either online or through their customer service channels. Provide them with your information and coverage requirements, and request detailed quotes outlining the costs and benefits of their policies. It's essential to compare prices and coverage options to make an informed decision.

Step 4: Choose a Policy and Purchase

After gathering and comparing quotes, it's time to make a decision. Evaluate the quotes based on price, coverage limits, additional benefits, and the reputation of the insurance company. Choose the policy that best suits your needs and budget. Once you've made your decision, proceed to purchase the policy in your name. You may need to provide additional information or complete some paperwork to finalise the process.

Step 5: Remove Yourself from Parents' Policy

After successfully purchasing your own policy, the final step is to ensure you are removed from your parents' policy. Contact your parents' insurance provider and request to have your name taken off their policy. This step is crucial to finalise the switch and ensure you are no longer financially responsible for their auto insurance.

Remember that insurance premiums for young drivers on their own are usually more expensive than premiums for a family policy. Therefore, it's essential to compare quotes and explore available discounts to find the best deal. Additionally, if you still plan to drive your parents' car occasionally, ensure that their policy covers permissive use.

Ask your parents to remove you from their policy

When you are ready to switch from your parents' auto insurance, one of the final steps is to ask your parents to remove you from their policy. This is a simple process but there are a few things to keep in mind.

First, it is important to note that you can remain on your parents' car insurance plan as long as you live in the same house. Even if you are away at college but still technically live at home, you can remain on their policy. If you are married and still live with your parents, you may also be able to remain on their policy as you are considered a member of the household.

However, once you move out of the house, insurance companies will no longer allow you to remain on your parents' policy. At this point, you will need to contact your insurance provider and notify them of your decision to switch policies. You may be asked to provide proof of your new residence or proof of other insurance. If you have purchased a vehicle, it is likely that the insurance company will require you to have the vehicle covered by your own policy.

It is worth noting that removing a child from an insurance policy can be beneficial for both the child and the parent. For the child, it is a step towards financial independence and can help improve their credit score. For the parent, removing a young driver from their policy can result in a lower premium as adult, experienced drivers are statistically less likely to cause accidents.

Frequently asked questions