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Ask Dave

Setting the Kids' Car Insurance Up

Mike wants to know the best way to have his children's car insurance set up once they start driving.

QUESTION: Mike in Michigan is divorced and has a teenager that will begin driving soon. He isn't sure how to set up insurance for the child. Dave shares what he did as his children were driving.

Dave's ANSWER: I wasn't in a situation where we were split up, so that does change the dynamic a little bit. But what I did with my children was I left the car in my name and I paid the extra insurance that it created, rather than it being in their name.

It might be a little cheaper in their name, but I wanted to be in control of the car as a dad. Whatever little bit of money savings that I lost was not as important to me as me owning the car as a parent. I didn't want a minor child running around out there with a name on the car title.

In this situation, because there is a possibility of disagreement, I think I'd definitely do that, especially if you're putting money into the scenario to help with the purchase of the car. Just put it in your name.

We always called it the kids' car, but from a risk perspective, when they turned 18, I put the car in their name. That's assuming the child is behaving, of course. As long as they are on a good track, I put the car in their name because they are legally liable at age 18. The insurance probably costs more yet again by putting it in their name at that point, but I don't have any risk because they are independent individuals at age 18.

I'm not liable for their car wrecks any more than I am for yours as long as the car isn't in my name.