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When kids come home, so do high insurance rates

If your young adult child moves back in with you -- or never left -- be sure your insurer knows. Failure to disclose that information could get your claim denied and/or your policy canceled.

By MSN Money Partner Aug 13, 2013 1:00PM
This post comes from Penny Gusner at partner site logoA just-released analysis of 2012 Census data reveals that 36% of young adults age 18 to 31 were living in their parents' homes, up from 32% five years ago.

Driver on cell phone (© BananaStock/Jupiterimages)That’s 21.6 million young people, the Pew Research Center says.

Some of those young adults have never left home, of course. But many are boomerang children who left the nest and returned. Some parents may welcome them back, and others may be reluctantly giving up the bedroom they just converted to a home gym.

Either way, parents of boomerang kids may need to readjust their car insurance, too.

An adult child living in a parent’s home is more likely to be male than female, the Pew researchers found, and more likely to be under the age of 25 as well. That means the car insurance consequences could be expensive.

For example, we compared car insurance rates for a Denver couple driving a 2012 Toyota Camry and a 2008 Honda Pilot, with clean records and 100/300/50 liability limits, plus comprehensive, collision and medical payments. By themselves, the couple would pay $3,412 a year.

With a 22-year-old son moving back into the home and driving their cars occasionally, that rate rises to $4,994. The rate would be much, much higher if the child had an accident or tickets on his record.

Time to revise car insurance

Car insurance companies ask  -- demand, really -- to know who is living in your household and driving your cars.

If your children went off to college, your auto insurer may have let you take them off your policy temporarily, requiring you to add them back on when they returned for long breaks.

If your child never returned home from college or moved out into his or her own residence, then you probably had the child completely removed from your policy. 

But when a child returns to your household, your car insurance company needs to be notified and policies reviewed. 

  • If your child owns a vehicle and auto policy of his or her own, your car insurance provider will typically require a copy of the child’s policy. You then won’t have to add your boomerang child back on your policy.  Most insurers assume that if the child has a vehicle that is what he or she will drive a majority of the time and thus won’t mandate you to add the child back on your policy as a driver.
  • Your child will need to inform his or her insurance provider of the change of address. A new location may cause a rate change (higher or lower depending upon the rating system).  And as with your insurer, it’s unlikely you’ll need to be added to your child’s auto policy if you have a vehicle and policy of your own.
  • If your child does not own a vehicle, then you’ll need to add the child back on your auto insurance policy if he or she is licensed to drive.  Depending upon your child’s age and driving record, this may cause your rates to rise. 
  • If your child has a bad driving record, especially something as serious as a DUI, and won’t be driving your vehicles ever, then you can see about excluding him or her from your policy so that your rates won’t skyrocket.

Forgetting to inform your car insurance company about your child’s return and use of your vehicles could result in claims being denied in the future and even your policy being canceled or non-renewed for misrepresentation of licensed household members. 

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