As your college students come home for the holidays or travel during their school break, you may think they are covered under your Michigan auto insurance policy. After all, they are a family member. Perhaps you haven’t given it a second thought.
However, if you have family members with access to your vehicles or others peoples’ vehicles – and they don’t have their own auto policy – there is a material insurance gap for those individuals. So, is your college student covered on your auto insurance policy?
Definition of Covered Person and Family Member
Under most Personal Automobile Insurance Policies, the definition of a Covered Person includes any Family Member. However, a Family Member is defined as a person related to you – who is a Resident of your household.
The word Resident is not specifically defined in the insurance policy. It can be subjective, with analysis based upon the totality of circumstances and facts around the person, including any applicable case law on the issue.
Factors can include but are not limited to:
- Address on driver’s license
- Voter registration
- Where the individuals’ personal property is kept.
The takeaway: a young adult may be a dependent for tax purposes and healthcare benefits, but not considered a resident for insurance definition purposes.
Common Situations Where College Students Could be at Auto Insurance Risk
There are a few typical situations that the Mason-McBride team sees every day:
- College students or recent graduates living away from home who do not own an automobile
- Current college students living out-of-state.They change their state of residency to take advantage of in-state, discounted college tuition opportunities.
- Young adults living away from home in cities with robust mass transit and accordingly, not having an insured vehicle of their own.
In these common circumstances, if they drive your vehicle or a friend’s vehicle, they do not have any liability coverage for themselves. In addition, if they rent a vehicle while traveling, the insurance provided under the rental agreement may be inconsistent and inadequate to address their exposure. These are all serious concerns.
What can you do about reducing your student’s risk?
A Named Non-Owned Auto Policy is designed to address those individuals in these circumstances. While the cost of a Named Non-Owned Policy may be difficult to rationalize for some based on how often or how infrequent they drive, it’s critical to understand that without coverage, their personal assets are completely exposed in the event of an accident resulting in litigation.
If you have this exposure in your own family, or know someone who does, please contact one of our Personal Risk Advisors that can help navigate you through a solution for your students’ unique circumstances.
Contact our office at (248) 822-7170 or fill out the form below to get started, discussing your college student being covered on your auto insurance policy: