Question: My 23 year-old son just moved out and bought a car. His car insurance rates are ridiculously high. Can I put him back on my auto insurance as if he still lives at my house? His car is in his name. I have excellent credit and a clean driving record, so I get better rates.
Answer: This is a bad idea. Auto insurance companies don’t act kindly to those who give untruthful information in order to obtain cheaper auto insurance rates. (See “Address insurance cheaters”)
Purchasing insurance under your name could result in lower auto insurance premiums for your son’s car; however, placing your son’s car on your policy as if you owned the car and he lived in your household would be a misrepresentation of facts.
There is even a term for insuring another person’s car in your name as if it’s your own – fronting -- and it’s illegal to do.
You’re expected to give true and complete answers to your car insurance company so that it can accurately access the risk you present to them. From the information you provide, an auto insurer decides if it wants to take on that amount of risk and if so calculates the premium that would be appropriate. (See "Yes, the insurer checks up on you")
Omitting or misrepresenting information, specifically in your situation about items like who owns the car, the primary driver and the garaging address, and simply trying to add your son and his car to your policy may help your son save costs -- but will hurt both of you if the insurance company finds out.
For instance, if he were in an accident it would likely be found out that he was the primary driver and owner of the vehicle and lived outside your home. The cancellation of your policy (possibly back to the effective date so that it’s voided) and denial of claims would then be likely.
The money your son saved by having his car on your policy would be for naught since he would now be personally on the hook for the accident expenses.
And, because your policy is voided out, due to material misrepresentation (a form of insurance fraud), it would be more difficult to find low cost car insurance. Insurers will be wary of you, believing you pose more of a risk, and thus charge you more. A lot more.
State laws vary on penalties against those that have been found to have misrepresented information in obtaining auto insurance. It’s possible that you could face charges of insurance fraud and end up with fines or jail time. Michigan’s penalties for insurance fraud include imprisonment of up to four years or a fine of up to $50,000 – but that is pretty extreme.
Your son’s car insurance premium is more than yours because he is young, doesn’t have a long driving history, and has a short credit history. There may be little he can do right now to lower his rates, besides shop around for affordable car insurance and be diligent in asking for discounts that he’s eligible for, but in time his rates should come down.
Turning 25 will lower rates with most car insurance companies. Also, keeping a clean driving record and building a good credit score should help him to receive cheaper auto insurance rates in the future.