How long can kids stay on parent’s insurance?
Shifting the insurance responsibility to young adults is a significant milestone. Learn when a child can transition from their parent’s insurance to their own.
Exploring the world of insurance can feel like an overwhelming task, especially for young adults who are transitioning to independence. "How long can kids stay on their parents’ insurance?" can be a critical question as young adults prepare to begin adulthood. Whether auto, renters, homeowners, health, life or liability policies — each type of insurance has specific rules and guidelines.
When is insurance for young adults needed?
As a young adult, it’s crucial to know when to step from the support of your parents’ insurance policies and establish your own. While staying on a parent's policy can be convenient and sometimes more cost-effective, having your own coverage can be an essential step in becoming an independent and financially responsible adult. Generally, you may find your own insurance when you get a job that provides you with financial stability to live apart from your parents. Discover various insurance types and rules that may apply below.
Auto insurance
When it comes to auto insurance for young adults, there's no strict age limit when a child must be removed from a parent's policy. Typically, if the child resides at the same address, they can remain on the policy. However, if the car is solely in the child's name, it might be time to consider separate insurance. Regarding the question "How long can a child stay on their parent’s car insurance?”. When they become financially independent, start living permanently at a different address or buy their first car titled in their name, it can be time to get their own auto insurance policy. Insurance companies may have their specific guidelines, so check with your agent.
Some insurance providers consider moving away to college as an exception to the rule. For instance, if you attend college and reside in a campus dorm or nearby housing, you may continue to have coverage under your parents' car insurance. However, consider finding your own policy if you've taken steps to establish your financial independence after you’ve graduated or moved away for a job.
Renters and homeowners insurance
Similarly, renters and homeowners insurance follow a basic guideline. Once you no longer live at your parent's residence, consider obtaining renters insurance for the residence you are renting or homeowners insurance for the property you own. Some insurance providers may extend coverage to a student at school from the parents' homeowners policy, but this typically does not apply if you are fully relocating and living independently.
Health insurance
Under the Affordable Care Act, health insurance for children is available on a parent’s plan until the age of 26. There are typically no restrictions before this age and a child can remain on their parent’s insurance plan even if they are:
- Married
- Give birth or adopt a child
- Not living with their parents
- Leave for school or live elsewhere
- Not financially dependent on their parents
- Eligible to enroll in their employer’s plan
Depending on the state you live in and your insurance plan, you could be removed from your parents’ insurance the day you turn 26, at the end of the month or the end of the year. However, coverage to age 26 exceptions do exist. States such as Florida and New York offer solutions that extend this coverage beyond the age limit. For example, New York allows children to remain on their parent's insurance up until age 30 under specific circumstances. Young adults might want to research health insurance options before turning 26 to help ensure continuous coverage.
Life insurance
Purchasing life insurance can be helpful when you're young and healthy. One approach is to add coverage through a Children's Term Rider on a parent's policy that can later be converted to a standalone policy. Starting life insurance early can help contribute to financial security and wealth over time.
Umbrella policies and liability
Umbrella insurance provides an additional layer of liability protection above what your standard auto or homeowners policy may cover. It can help protect a young adult if they’re responsible for an accident or damage. When you start obtaining significant assets or potential income that could be at risk in a lawsuit, it's time to consider a personal umbrella policy.
As a parent, when is the right time to have your child get their own insurance?
Deciding the right time for a young adult to get their own coverage might vary. Parents can help guide their children through this process, highlighting the importance of insurance and the potential consequences of being underinsured or uninsured. As young adults take on the responsibility of their insurance policies, they’re moving towards an essential step in their financial independence and maturity.
Talk to your insurance agent if you are asking yourself, “How long can children stay on parents’ insurance?” and when deciding the most appropriate time for your child to transition to their own policies. Your agent can help based on your child's individual circumstances, such as age, financial stability and living situation.
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