Buying car insurance can be expensive, especially for younger drivers. If you’re under 25, you might be exploring options to save money on premiums, and one option you might consider is joining your parent’s car insurance policy. While this could reduce costs, it’s important to understand how car insurance works, who qualifies as the primary driver, and the potential risks of not accurately listing drivers.
Yes, you can be added to your parent’s car insurance policy. However, how you use the vehicle and your age can affect the premium you may pay significantly.
Car insurance policies are usually built and priced based on the car’s primary driver (the person driving the car most often). If your parents are the policyholder but you're the primary driver of the car, it can be considered insurance fraud. This could not only lead to your claims being denied but also legal penalties. If you are the primary driver of the vehicle, it may be worthwhile instead comparing insurance policies yourself.
Young drivers in Australia often face higher car insurance premiums, primarily due to the increased risk associated with this age group. Insurers consider drivers under 25 more likely to be involved in accidents, which leads to higher costs. This could make it tempting to join a parent’s car insurance policy to save money, but there are several things to keep in mind:
If you are under 25 and are added to your parent’s car insurance policy, this may increase the premium significantly. It’s worthwhile knowing this before you start looking for quotes to avoid any surprises.
It’s advisable to accurately disclose who drives the car most often. If you’re the primary driver but your parent is listed as such, this could be considered "fronting," a form of insurance fraud. Fronting can lead to your claims being denied, or the insurer may even declare your policy void.
Each car insurance policy typically covers one vehicle but can list multiple drivers. However, some insurers offer multi-car policies, which allow you to bundle multiple policies in a multi-car policy.
This type of policy would allow for car insurance in your parent’s name that also covers your car as well. In the case of a single parents’ car insurance policy, some multi-car policies allow children’s cars to be covered even if they don’t live at home.
Some lenders cap the number of cars allowed on multi-car policies, but it’s also the case that the more cars, the bigger the discount. A multi-car insurance policy might be a way to use your parents' good driving history to help you save money on premiums, especially if you’re under 25. One downside to using a multi-car insurance policy is that you don’t build your loyalty or no claim discount with the insurer.
It’s common for families in Australia to own three or even four vehicles, and this means they all need car insurance. It may be that your parents have the insurance on all cars with other family members added as additional drivers. This situation may be one of the more suitable options for any drivers under 25 due to the increased premiums for these drivers. However, once you turn 26, it may be worth reconsidering whether staying on your parent’s policy is still the best option.
At 26, drivers generally start to see a reduction in car insurance premiums as insurers consider them to be lower risk compared to younger drivers. By getting an individual policy, you can also start building your own no-claims bonus and loyalty discounts, which can help reduce your premiums in the future.
That said, there may be reasons for you to continue as an additional driver on your parent’s car insurance. For instance, you may not do much driving, and it doesn’t make financial sense for you to have your policy. Your lack of experience may also mean you would be charged higher premiums.
If you do choose to remain as an additional driver, be careful to avoid car insurance “fronting”, or primarily driving a car insured in your parent’s name. Doing this may cause your insurer to deny any claims you file, and you also run the risk of criminal penalties in some states.
You can certainly add your parents as additional drivers on your car insurance policy, especially if they’ll regularly be driving your car. Since you’re the primary driver and policyholder, the cost of the policy is based on your details, driving experience, and claims history.
However, because the policy is built around your history, you may not benefit from having your parents, who’d have more driving experience, added to your policy. You may have to pay an additional premium for adding them as drivers.
Also, if your parents are considered seniors, you may have to pay a senior excess when filing a claim. This will mean you pay more out of pocket for any accident your parents get into. Consider buying a joint car insurance policy if your parents want to also be the primary driver on the policy, even if it means paying more for the policy.
Even if the car is registered in your name, you may want to buy a policy that covers other potential drivers just to be safe. Some insurers may cover anyone driving your vehicle, whether or not they are listed on the insurance policy. Others, however, may require you to nominate each driver that will be driving your car. You can check the insurer’s Product Disclosure Statement (PDS) to find out their specific conditions, or you can ask the insurer about this.
Overall, adding family members to your car insurance can offer benefits, but it’s important to carefully review the details of your policy. Make sure the arrangement works for your needs, and ensure that the policy is set up correctly to avoid any potential issues down the road.
This article was reviewed by Mark Bristow before it was published as part of RateCity's Fact Check process.
