26 May Do I need car insurance for my kid who doesn’t live at home?

Q. I have car insurance for me, my spouse, my 20-year-old who is in college and my 23-year-old, who graduated from college and lives away from home on his own. He only drives our cars a few times a year. Do I still need to have car insurance for him? Can he be covered under the clause for uninsured motorists?
— Dad

A. The answer isn’t easy.

The first thing you should do is look at your policy and discuss the coverages with your agent. We get that you don’t want to pay for insurance you don’t need, but you don’t want to find yourself underinsured should something happen when your son uses your car.

Most auto insurance policies have a “permissive driver clause,” said Loretta Worters of the Insurance Information Institute.

She said the clause means the car owner can occasionally lend their vehicle out to a friend or family member, and their insurance will still cover any potential damages in accordance with the auto insurance policy.

However, she said, it also depends on your insurer and your particular policy.

For example, coverage rules and regulations may be different if the driver lives in your household and could, or should, be listed as a named insured on your policy but is not; or if the driver is listed on your policy as “excluded.”

“Typically, even if the person driving your car has his or her own insurance, your insurance will be the primary payer for damages caused by your vehicle, but the person driving your car has to be found legally at fault before your insurance will pay,” Worters said. “The driver’s insurance is secondary and may cover some personal injury or medical expenses. It may also provide coverage in excess of your insurance coverage, if the cost of damages caused by your vehicle is higher than your policy limits.”

Uninsured motorist coverage is a very different thing, she said.

It is coverage you purchase in case you are in an accident with someone who does not have any auto insurance coverage, she said, noting that it’s illegal to drive without insurance.

Before you lend your car to someone — whether a child or friend — she recommends you take these steps.

First, make sure the borrower is licensed to drive? Make sure their license is up to date and ask to see it before you turn over the keys.

Next, consider whether the person has a good driving record.

“If that person has been involved in several accidents, there is a greater risk they could damage your car, too,” she said.

Then make sure your insurance is up to date and consider increasing liability coverage before you let someone borrow your car..

Finally, note why they plan to use your car.

“If it’s for commercial activity like a ridesharing program and you only have personal auto coverage, you may not have coverage,” she said.

Also note that for your college kid, your insurance company may offer discounts if the child lives a certain number of miles away from home.

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This story was originally published on May 26, 2022.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.