Should You Child Have Their Own Insurance Policy? – Avoid Liability

Due to liability concerns many parents are concerned about their children having accidents and causing potential large claims to occur are placing their children on their own separate policy to avoid this exposure.

Many people get conflicting advice from attorney’s insurance agents or friends and family concerning when is the best time to take your child off your policy and place them on their own policy. Below are four simple tips to complete before you place your child on their own policy.

Several steps have to take place to exclude you from liability from your child’s actions. First your child will need to be at least 18 years of age and therefore no longer considered a minor.

Secondly, your child will need to no longer live in the household and have their own separate address with the driver’s license reflecting this separate address. If the child still has the parent’s home address on their license then they can still be considered a residing relative in the household therefore continuing the liability exposure for the parent.

The third reason is the titling of the vehicle in the child’s name. If it is still in both the parent and the child the liability exposure still remains.

Lastly, the child can’t be listed as a dependent on the parent’s tax return. Basically attorney’s will try to show that their is a connection or link with the parent’s policy as there are a new set of limits that they can go after. If you do the other 3 steps but still list your child as a dependent you can still be held responsible.

When these 4 steps have been completed then you can consider placing your child on their own policy. Keep in mind that your child will not receive the same discounts that you do and will therefore have a much higher premium. I usually recommend to keep you child on your policy until they are completely self sufficient and then usually lower their limits of coverage to mirror their assets.

These steps usually work to completely shield you of liability however if you have further concerns you should consult legal advice.

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