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Children in Cars Getting Coffee… or Anything Else
Published Date : July 14, 2022
July 14, 2022
Young drivers and cars have always been an expensive combination, whether they’re renting vehicles or getting their own auto insurance. This is especially true for drivers under the age of 25, at which point things generally start to improve cost-wise on both fronts. It’s a common misconception though that drivers under 25 simply cannot rent a car. They can, but it’s much more expensive. The rub is that car rental companies need insurance for their fleet of vehicles, but younger drivers are typically riskier and thus much more expensive to insure. So, in the past, many rental companies just denied young drivers. But this meant forgoing potentially lucrative business, so now they charge Underage Driver or Young Renter fees, usually from age 20-24, and sometimes as young as age 18 in some states. These fees can be rather steep—especially for a young person’s budget—and hence this limits the affordability of renting. Fortunately, other means of similar travel are available, like ride-sharing services.
And yet, there might be times—such as longer trips—when young driver renting is necessary or desirable. Perhaps when sharing driving responsibilities with a parent—even though the young driver fee would still apply—it’s better to pay the fee rather than burden one older driver with all the driving and potential fatigue. By the way, on the other end of this same topic, there is no maximum age requirement for renting a car in the U.S.—if the driver has a valid driver’s license—but there are such old age limits in some foreign countries, so beware of this if travelling internationally with this intention.
Parents might also provide financial help with auto insurance coverage for young drivers, even a car used exclusively by the child. Importantly, though, any vehicle must be owned, or at least co-owned, by the parent for it to be covered by that parent’s auto insurance policy. Doing this can make sense because premiums will likely be less in this kind of arrangement, rather than if the child alone gets insurance… since age is the biggest factor in determining insurance rates for young drivers. But keep in mind, when a parent has any ownership in their child’s car, they can be held financially responsible for the child’s driving behavior. For this reason, it’s very important to make sure that the parent’s additional personal liability (or umbrella) insurance is adequate, if not ample. Indeed, that is partly the reason for insuring a young person’s vehicle in the first place, to make sure there is decent liability coverage, too; and parents can get more umbrella coverage at lower cost than their young children can. This is effectively about trying to protect overall family wealth, to the extent that this is a manageable financial objective.
Even when vehicle ownership is not a consideration, children can be listed as drivers on the family auto insurance policy if they are still living in the household or away at school. And unlike health insurance where children drop off coverage at age 26, parents can choose to keep children on their auto policy for as long as the parent allows. Children can remain on their parents’ auto insurance, even if moving out of state with the parents’ car, as long as that child’s permanent address is still their parents’ home. Ultimately, by age 25, auto insurance costs will generally decline significantly; and at this point, a child may want to establish their own auto insurance coverage, along with their own permanent address.
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