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. But perhaps you haven’t given it a second thought.
However, there is a material insurance gap for those individuals if you have family members with access to your vehicles or other peoples’ vehicles – and they don’t have their auto policy. 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 – a household resident.
The word Resident is not explicitly defined in the insurance policy. Therefore, 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 is that a young adult may be dependent for tax purposes and healthcare benefits but not considered a resident for insurance purposes.
Everyday 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 were living out of state. They change their state of residency to take advantage of in-state, discounted college tuition opportunities.
- Young adults live away from home in cities with robust mass transit and, accordingly, do not have an insured vehicle of their own.
If they drive your vehicle or a friend’s vehicle in these ordinary circumstances, they do not have any liability coverage for themselves. In addition, if they rent a car while traveling, the insurance provided under the rental agreement may be inconsistent and inadequate to address their exposure. These are all serious concerns.
How Do College Students Find the Best Car Insurance Rates?
Your college student car insurance will protect you and your vehicle from liability risks and injuries, collisions, and other types of risks. When comparing quotes, make sure that the coverage and limits are the same for each quote. It doesn’t pay to compare apples to oranges.
A local independent insurance agent can help you find the student car insurance you need and will help you find all of the discounts you’re eligible for and save you time and money. Your wallet will thank you.
How Can you Reduce Your Student’s Risk?
A Named Non-Owned Auto Policy addresses those individuals in these circumstances. While the cost of a Named Non-Owned Policy may be challenging to rationalize for some based on how often or how infrequent they drive, it’s critical to understand that without coverage, their 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 Risk Advisors to help navigate you through a solution for your student’s unique circumstances.
Have More Questions?
We are always here to help you, your employees, and your business with all your insurance needs — from commercial insurance to group benefits to personal insurance. Thank you for allowing Mason-McBride to serve you!