car title and insurance for young adult

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fenyahyhi
Posts: 6
Joined: Sat Jul 25, 2015 10:20 am

car title and insurance for young adult

Post by fenyahyhi » Mon Mar 06, 2017 7:50 am

Our son is 19 and we are happily paying for all of his college and living expenses. When he was living at home we owned two cars, one each for mom and dad. We added him to our insurance policy when he started driving. Dad is now ready to buy a new car so his old car is being gifted to son. So now three cars and three drivers on the insurance. Eventually of course son will begin to earn money and will take over his own expenses but we are perfectly happy that this won't be for at least several more years. The car has a lot more life in it so I don't see son replacing it for many years.

Right now the car is still titled in our names and is a part of our insurance policy. Are there things we consider about when/if to transfer legal title on the car to son, and to set him up with a car insurance policy just in his name? We would pay all the costs regardless of how it is titled or insured. And although his college is a couple of hours away from our home, he still legally resides with us. (I did, by the way, remember to call the insurance company to switch him from "college student away from home" to the primary driver of that car, with the corresponding increase in cost.)

Thanks

mcraepat9
Posts: 757
Joined: Thu Jul 16, 2015 11:46 am

Re: car title and insurance for young adult

Post by mcraepat9 » Mon Mar 06, 2017 12:25 pm

The state you live in matters. I can only speak for the state I live in (New York).

In New York, for example, under section 388 of the NYS Vehicle and Traffic Law, the owner of a motor vehicle is jointly and severally liable for damages caused by the negligence of a driver who used the owner's vehicle with the owner's permission. Translation: if your son causes significant damage above your insurance policy, it can wipe you out too since you're the owner.

In terms of liability, transferring title of the vehicle to your son is a good idea (at least in NYS). Without knowing for sure, I would guess that in most other states, transferring title has little downside (and maybe some upside) for the same reasons as why it makes sense in NYS.

In terms of insurance costs, you need to ask your insurer.

Do remember that transferring title of a vehicle is a gift to your son and thus the value of the car counts against your gift tax exemption amount ($14k per recipient per spouse) for the year in which you transfer it.
Amateur investors are not cool-headed logicians.

MP123
Posts: 174
Joined: Thu Feb 16, 2017 3:32 pm

Re: car title and insurance for young adult

Post by MP123 » Mon Mar 06, 2017 1:08 pm

It's a state specific thing.

When I discussed this same issue with my insurance agent a couple years back he said that even if the car was titled in my daughters name and insured on her own policy I would NOT be immune to lawsuits unless she was completely emancipated and received no financial help from us. This is in WA.

Instead he suggested raising our umbrella coverage which we did. Good salesmanship on his part? perhaps.

So ask your agent. I titled the car in my daughter's name but provide coverage on our insurance policy so I know that it gets paid :wink:

HIinvestor
Posts: 1228
Joined: Tue Apr 08, 2014 3:23 am

Re: car title and insurance for young adult

Post by HIinvestor » Mon Mar 06, 2017 3:02 pm

We live in HI & D lives in CA. We have coverage from a small local insurance firm. We couldn't find insurance that would cover us and her in CA, so we bought her a separate policy in CA and titled the car to her, where she and the car reside. We did increase our umbrella policy anyway, since the premiums went down, the independent insurance agent suggested it might be worthwhile increasing coverage, which we did. D's policy is with USAA and ours is still with our local insurer. We pay the same amount to insure the two of us for driving 3 cars for a year that we pay for our D to insure just one car in Los Angeles. Since your child is a student, try to get the good student discount and all other discounts he may qualify for. Rules about vehicles and insurance do vary by state, so check the state where the student and car reside.

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