What you need to know about insuring someone else on your car policy

By: Robb Engen on September 6, 2016

When I got my driver’s license at 16, my parents added me as an occasional driver to their car insurance policy. I’m glad they did because it allowed me to build a driving history with the insurance company. That paid off three years later when I bought my first car and had to insure it on my own. Since I had a claim-free record under my mom and dad’s coverage, the insurance company gave me a better rate. Had I been a brand-new 19-year-old driver, my premiums would have been much higher.

While it worked out well for me, it was a little different for my parents. Unfortunately for them, adding a teenage driver to their insurance policy meant a big increase in premiums. That could be why many parents don’t inform their insurance company that their teenage son or daughter is now licensed and driving the family car.

Add your teen driver to your car insurance policy

That’s a mistake, according to John Bordigan, media relations at State Farm Canada. He says that in order to ensure a family member or friend is covered under your personal auto insurance policy you’ll need to let your insurance provider know about it. That’s especially true if they are living in the household that the vehicle is registered to and that they may be driving your car occasionally.

You are also required under the conditions of your policy to notify your insurer if there are any changes that may affect coverage. For example, if you modify your vehicle in any way, or if a person moves into the same household and has access to it.

Bordigan says it’s not only the driver but also the owner of the vehicle who is liable when their vehicle is involved in an at-fault collision.

“Therefore the onus is on the owner to inform their insurance provider and ensure that they give only legally licensed (and obviously sober) drivers permission to drive their car,” he said.

How much does insuring someone else on your car policy cost?

So we know that by adding another driver to your car policy you can expect to receive an increase in premiums. How much of an increase to expect is up to your insurance company to assess. They’ll look at three things:

  1. The age of the driver: A 16-to-24-year-old is considered a higher-risk driver and will automatically cost you a higher premium. There’s substantial savings at age 25 and up.

  2. Part-time or full-time: Is your son or daughter listed as an occasional driver on theprimary family vehicle? Or is he or she listed as a full-time driver on another vehicle? A part-time driver is obviously lower risk and therefore costs less to insure.

  3. Driving record: Every year your son or daughter drives without an accident or ticket allows them to build a clean driving record and lowers their premiums. That not only saves mom and dad money while they’re under their policy, but helps establish history and get a favourable rate once your teen buys their own vehicle and insurance policy. Conversely, if your teen has a few speeding tickets under their belt then expect this spotty record to affect your premiums.

Prepare ahead of time for the realities associated with insuring someone else on your car policy. Know what’s expected by your insurance company and follow the guidelines, and prepare your finances ahead of time.