Before you buy your first car insurance policy, you may be wondering whether it’s even necessary. Specifically, you may be asking yourself, “Am I covered under my parents car insurance?” Below, we dive into this subject to help you understand whether you are covered by your parents’ policy or are required to purchase auto insurance coverage of your own.
Driving your parents’ car without insurance
If you’re a student or young driver wondering about driving your parents car without insurance, you are in the right place. Typically, you can drive your parents’ car and be covered by their insurance if you meet the following criteria: you have a valid driver’s licence, your parents have given you permission to use their vehicle, and you are not listed as an excluded driver in their policy.
However, in Ontario, the class of your driver’s licence may also come into play. For example, if you just got your G1 permit, you should be added to your parents’ policy as you learn the rules of the road. Since G1 drivers aren’t legally allowed to drive without a fully licensed driver in the vehicle, being listed on your parents’ policy won’t increase their rates but it can make filing a claim easier.
Once you earn your G2 licence and are able to drive independently, your parents’ should add you to their policy if you plan to drive their car regularly. You may still be covered by their policy even if you aren’t added as a driver. That said, you will only be covered if you abide by the restrictions of your licence classification.
For example, let’s say you borrow your parents’ car for a day to drive from Toronto to Kingston, but you only have a G2 licence, which prohibits you from driving on the highway. If you decide to drive on the highway anyway, you are in violation of your licence, and if an incident occurred on the road, your insurance company would likely reject your claim because of this. Therefore, if you meet the criteria to be covered by your parents’ car insurance policy, you will need to make sure that you are in compliance with any applicable licensing restrictions. For more information on car insurance for students, contact BrokerLink.
How auto insurance coverage works when driving your parents’ car in Ontario
Whether your parents give you permission to use their vehicle or you have officially been added as a named driver on their policy, it’s important to understand how auto insurance coverage works when you are not the primary policyholder. The main thing to remember is that in Canada, car insurance follows the car, not the driver.
This means that when you borrow your parents’ car, you will be protected by whatever coverage the owner of the car has purchased. In Ontario, all drivers must purchase policies with four types of coverage: third party liability coverage, accident benefits coverage, direct compensation - property damage coverage, and uninsured automobile coverage. On top of this, drivers can choose to purchase additional coverage like comprehensive or collision coverage. If you have permission to drive your parents’ car and opt to do so, make sure to review their policy to better understand the ways in which you are covered.
Below is a rundown of each type of compulsory auto insurance coverage in Ontario and a few of the most popular types of optional coverage to give you an idea of the ways in which you may be protected on the road:
Third party liability coverage
Third party liability coverage protects drivers from legal claims that may arise from at-fault accidents. If you are responsible for a collision, the third party liability coverage portion of your policy can help pay for associated costs, like legal fees, medical bills, or vehicle repair bills.
Accident benefits coverage
Accident benefits coverage is another type of compulsory auto insurance coverage. It deals specifically with medical expenses. If someone involved in a car accident requires medical attention afterward, the accident benefits section of your car insurance plan can help pay for these expenses, whether they be physical therapy, prescription medications, etc.
Direct compensation - property damage coverage
Direct compensation - property damage coverage can reimburse policyholders for the cost of repairs if they get into an accident that causes property damage. For instance, if you are rear ended and you need to take your car to the auto body shop, your insurer might compensate you for the cost of the repair under this portion of your policy.
Uninsured automobile coverage
Uninsured automobile coverage is the final type of compulsory car insurance in Canada, and it comes in handy if you get into an accident with someone who does not have auto insurance, or who does not have enough insurance to pay for the cost of the incident. It can also protect policyholders from unidentified drivers following a hit and run accident.
Collision coverage
Collision coverage is a type of optional car insurance coverage in Canada. It can pay for the cost of car repairs if a policyholder gets into a collision with another car or a grounded object on the road, and their car is damaged.
Comprehensive coverage
Comprehensive coverage, also known as parked car coverage, can protect vehicles against risks like fire, water damage, theft, and more. This type of coverage is popular because it is one of the only types that offers financial protection against non-collision incidents. For example, if theft is a named peril in your policy, your insurer will help pay to replace your vehicle if it is stolen. Perils commonly included in comprehensive policies include water damage, falling objects, fire, theft, vandalism, wind, and more. You can either choose the specific perils that make sense for you or select all perils coverage to be covered against each peril offered by your insurer.
Accident forgiveness coverage
One final type of optional car insurance coverage popular among drivers is accident forgiveness. Accident forgiveness is additional coverage that can be added to your car insurance policy as an endorsement, to protect your driving record and to help prevent your insurance premium from increasing if you have an at-fault accident claim. Note: coverage varies by province.
The benefits of staying on your parents’ car insurance policy
One of the main benefits of staying on your parents’ car insurance policy, if you are eligible, is that insurance for young drivers tends to be quite expensive. Since you do not have a very extensive driving history or record, purchasing a policy of your own is likely to be quite expensive. By comparison, being added to your parents’ car insurance policy may be more cost-effective.
While adding a young driver is still likely to increase your parents’ overall premium, it would still likely be far less expensive than purchasing an independent car insurance policy for yourself. Then, when you’ve gained enough driving experience to prove to an insurance company that you aren’t a major risk, you can purchase your own coverage then. For more young drivers insurance information, contact BrokerLink now.
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How long am I covered by my parents’ auto insurance policy?
The amount of time you can be covered by your parents’ auto insurance policy varies from person to person. That said, there is no specific age limit or time restriction on how long you can remain on your parents’ insurance plan. If you do not have a vehicle of your own and instead drive your parents’ vehicle, you can likely remain on their policy for as long as you want. You may not even need to live at home full-time to remain on their policy.
For instance, many insurance companies allow students who leave home for university to still be covered by their parents’ car insurance coverage when they come home and use their parents’ car. Depending on where your university is located, you could even qualify for an occasional driver discount.
Am I covered by my parents’ auto insurance policy if I move out?
It depends. If you move out of your parents’ home and buy a vehicle of your own, then you will need to purchase your own policy for that vehicle. However, if you move out of your parents’ home and do not have your own car, you might be able to remain covered by their policy. Students who leave home temporarily to attend university can usually also remain on their parents’ car insurance plans.
Please note that where you live and drive can have a significant impact on your car insurance rates. Therefore, if you move out, make sure your parents notify the insurance company as soon as possible.
If I buy my own car, can I still be covered under my parents’ policy?
No. If you buy your own car, for example if you plan on buying a car in university, you will need to purchase your own policy for that vehicle. Basically, if the vehicle’s title is in your name, it requires independent car insurance coverage. However, to simplify the process of purchasing insurance for your new car, you could choose to purchase it from the same provider as your parents’. If you were previously added as a driver to your parents’ policy, then the insurance company would likely already have your name and information on file. That said, insurance experts typically recommend shopping around when buying a new policy to ensure you’re getting the best coverage at the best rate.
Can I be removed from my parents’ car insurance policy?
Yes, an insurance company can remove a driver from a car insurance policy, depending on the circumstances. If you were to rack up several driving infractions over a short time, the insurance company could refuse to renew your parents’ policy as-is. They would be forced to cancel their policy altogether or remove you from their policy, leaving you to purchase one of your own. However, if your driving record was full of traffic tickets or at-fault accidents, purchasing a policy for yourself might be difficult. You could even be deemed a high-risk driver, which means you should be prepared to pay a much higher premium.
Further, if you violate the terms and conditions of the policy or of your licence classification restrictions, your parents’ coverage could be invalidated. An example of violating your licence classification restrictions would be driving on the highway as a G2 driver or driving without a licensed adult in the car as a G1 driver. To learn more about the rules of the road as a new driver, check out this first time driver guide.
Another way that you can be removed from your parents’ car insurance policy is if they choose to list you as an excluded driver. To do so, your parents would need to sign a form stating that you are not to drive their vehicle under any circumstances. If you are listed as an excluded driver on any car insurance policy, you will not be covered anytime you operate the vehicle. If you still chose to do so, it would be the equivalent of driving without insurance, which is illegal in Canada and can result in fines, vehicle impoundment, the suspension of your driver’s licence, and even jail time.
Lastly, your parents can choose to remove you from their car insurance policy if they can prove to the insurance company that you changed your address or have your own coverage under a different policy.
Occasional vs. secondary drivers in Canada
If you choose to be covered by your parents’ car insurance policy, they may need to name you in their policy. Remember that there is a difference between an occasional driver and a secondary driver in Canada. An occasional driver is someone who occasionally borrows the policyholder’s vehicle. If you are a young driver who lives away from home for university and only drives your parents’ vehicle a few times a year, you will likely be deemed an occasional driver, which means you may not need to be formally added to their policy.
However, if you live at home and frequently drive your parents’ car, being added as a secondary driver is likely necessary. When being added as a secondary driver, an insurance company will review your driving record and other factors, such as your age, the amount of kilometres you would use the vehicle and more before adjusting the policy premium accordingly. Assuming you are a young driver, your parents’ policy premium is probably going to increase.
How car insurance providers determine insurance premiums for drivers
Car insurance companies consider a wide range of factors when determining insurance premiums. Whether you decide to purchase a policy on your own, separate from your parents, or be covered by their policy, an insurance company will still assess your risk level using the following list of factors. From age to annual mileage, you should expect the following details to come into play when an insurance company is calculating your rates:
- Location
- Age
- Driving record
- Driving experience
- Past claims
- Annual mileage
- Prior insurance coverage
- Your deductible
- Local laws
- How you use your vehicle
- Gender
Keep in mind that if you are being added to your parents’ car insurance policy, an insurance agent will still evaluate your specific risk level, but it will then be balanced out by your parents’. This is often why adding a young driver to their parents’ policy ends up being cheaper than a young driver purchasing their own.
How to save money on any type of car insurance policy
Whether you want to be added to your parents’ car insurance plan or wish to buy separate coverage for yourself, chances are you want your plan to be as affordable as possible. BrokerLink can help with that. Keep reading for a list of broker-approved tips to save money on car insurance in Canada:
- Bundle insurance policies and save big.
- Install winter tires on your vehicle to become eligible for a winter tire discount.
- Maintain a clean driving record and qualify for a safe driver discount.
- Outfit your vehicle with a telematics device or download the app on your phone.
- Pay for your car insurance policy annually instead of monthly.
- Ask an insurance broker about other car insurance discounts you may qualify for, such as employment or education-based discounts.
- Select a higher car insurance deductible.
- Buy a hybrid or electric vehicle.
- Graduate from an approved driver’s education course in your province.
- Install a security system, such as an anti-theft device, in your car to reduce the odds of theft.
- Make all auto insurance payments on time and in full.
Why buy car insurance in Canada through a licensed insurance broker
If you or your parents are ready to purchase a car insurance policy, why not do so with help from a broker? There are so many benefits to buying insurance through a licensed auto insurance broker, such as:
Brokers operate independently of insurance companies
First, insurance brokers do not work for insurance companies, they work for the customer. This means that you are guaranteed to receive unbiased advice from an expert when consulting with one on your car insurance coverage.
Brokers do the work for you
Second, working with an insurance broker means that a professional will be by your side to do the work for you. If you need help shopping for a policy, your dedicated insurance advisor will tackle each task as it comes. They will contact insurance providers to obtain quotes, compare those quotes, research discounts, and then present you with the options that make the most sense for you.
Brokers have years of car insurance expertise
Lastly, the insurance brokers at BrokerLink have years of car insurance expertise, which they will put to use when shopping around for coverage on your behalf or helping out with other tasks. Due to their extensive experience, a BrokerLink insurance broker can help you with all kinds of car insurance-related tasks, like renewing insurance, adding a secondary driver to your policy, filing a claim, and more.
Reach out to BrokerLink for more information on being covered by your parents’ car insurance policy
Want to speak with a licensed professional about car insurance? Contact BrokerLink today. We have auto insurance experts all across the country. This means that whether you need help finding car insurance in Calgary, Toronto, Vancouver, or Moncton, we are here. One of our knowledgeable insurance brokers would be pleased to answer any questions you have, such as, “Am I covered under my parents car insurance?” A broker can explain how coverage works, under which circumstances children can be covered by their parents’ auto insurance policies, and the pros and cons of doing so. More than that, a BrokerLink representative can shop around to find you a great car insurance policy if you decide to purchase one on your own. Alternatively, if your parents wish to add you to their policy, we can walk you through the process of adding a secondary or occasional driver. Contact BrokerLink today to get started. We can be reached by phone or email, or you can stop by one of our 200+ locations across Canada.
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