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Is he insuring his car or his stepdaughter?


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Question: My stepdaughter resides with me but is using a car that is from her biological father. The car is in his name, and he is carrying insurance for her. My insurance company claims I cannot drop her from my insurance because she resides with me. This seems unfair because there are two insurance policies on one person.  Why do I still have to carry insurance on my stepdaughter when she already has car insurance with her father? 

Answer:  While it may seem unfair that both parents have to place insurance on a child, it’s not an unusual request from insurers when parents are divorced and the young driver spends time with both households, with access to both households’ cars.

Insurance follows a car and not driver, so that car insurance that is on your stepdaughter through her father’s policy doesn’t extend to her driving your cars.  For her to be covered to operate your cars, she needs to be on your policy. (See "A parent's guide to insuring a teen driver")

Most auto insurance companies mandate that you include all licensed household members on your policy, and that is why you must have your stepdaughter on your policy as well.  Though the car from her father may be her primary vehicle, your insurer assumes she has access to your keys and could drive your household vehicles at any time, so require that you cover her for your cars.

If your stepdaughter never uses your vehicles, then you can see if a named driver exclusion is an option for you.  In some states, exclusions for household members are not allowed.  It appears you may live in North Carolina, which is one such state that has specific laws about driver exclusions.

The North Carolina Department of Insurance told us that due to financial responsibility laws that are in place, named driver exclusions are not allowed for liability coverage on auto insurance policies. 

The insurance regulator for your state did say, however, that some car insurance companies would exclude drivers for physical damage coverages, (collision and comprehensive only), meaning if you had this exclusion and your stepdaughter crashed your car its damages wouldn’t be covered.

We also have seen some car insurance companies in North Carolina that offer an “other than rated” designation.  There are several eligibility requirements normally, including she must not operate a vehicle on your policy and be on another auto insurance policy that has liability limits comparable to your policy's limits.

If your stepdaughter is not going to drive your cars and you need to save money by not having a teenager rated on your policy, then you should shop around to find an insurer that allows this “other than rated” designation and see if your stepdaughter is eligible.

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