Question: I will add my daughter as a co-owner on the title of the car that she drives. Will that allow me to have her on my insurance to save money even though she does not live with me?

Answer: No. If your daughter doesn’t live with you, then you typically wouldn’t be allowed to put her on your car insurance policy, even if you add her name to the title of your car.

We often hear from parents who want to help their children by giving them a car after the child has moved away from home; usually, they hope to keep the car and child on the parent’s policy to save money. Unfortunately, because the car and your child are not located at your house anymore, they cannot stay on your car insurance policy.

To be listed on a policy, car insurance providers require that the insured lives at your residence and parks the car at your address.  

The main driver of a car, the address of the driver and the location where the car is garaged can be rating factors that determine your risk as a policyholder.

Since your policy is for a different location, it won’t cover your daughter at a second address. The car’s policy will need to be for the main driver of the car at the address where the car is kept, meaning your daughter needs her own policy on the car.

While adding your daughter to the car’s title as a co-owner doesn’t allow her to be on your existing policy, it is helpful for her when she goes to obtain her own auto insurance policy because now she has an insurable interest in the vehicle.

Most auto insurance companies require the policyholder to have an insurable interest in a car (such as ownership) to insure it. While your name remains as a co-owner of the car that your daughter drives, her actions can come back to you.

As a co-owner, you have vicarious liability for the driver’s actions. If your daughter is in an accident and her liability limits are exceeded, then you, as the owner, as well as your daughter, as the driver and co-owner, can be required to pay the damaged party the amount that her insurance doesn’t cover.

Since you can be held responsible along with your daughter for what happens when she drives this car, she must carry higher liability coverage if she can afford it. You’d want her to get high enough bodily injury liability and property damage liability limits so that it would be unlikely they’d be exceeded.

— Penny Gusner contributed to this story.

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Our team is made up of regular people with insurance policy needs, just like you. We just happen to know a little more about insurance than the average bear.