Having grandchildren is one of life’s greatest joys. As a grandparent, you want to spend time with your grandkids, bond with them, and help them whenever possible. One common way grandparents assist is by letting grandkids borrow their car. However, before you hand over those keys, it’s crucial to understand how this affects your auto insurance coverage.

What is Permissive Use?

Most auto insurance policies have a provision called “permissive use.” This means that if you give someone permission to drive your insured vehicle, damage and liability caused by that driver will be covered under your policy.

Permissive use provides protection for occasional, infrequent use of your car by others. For example, if your grandchild is visiting for the weekend and wants to run an errand in your car, they would likely be covered under permissive use while operating the vehicle.

However, if your grandchild drives your car regularly, such as every weekend when they visit, permissive use may no longer apply. In those cases, you would need to specifically add your grandchild as a driver on your policy.

When to Add Your Grandchild to Your Policy

Here are some common scenarios when experts recommend formally adding your grandchild as a driver on your auto insurance:

• Your grandchild lives with you full-time or part-time
• Your grandchild regularly borrows your car when visiting
• Your grandchild does not have their own car and relies on yours for transportation
• Your grandchild drives your car more than anyone else in the household

Insurance companies want to know about all licensed drivers who regularly use your insured vehicles. Having your grandchild officially added to the policy ensures proper coverage.

How Adding a Grandchild Affects Your Rates

Adding a teen driver to your policy will likely increase your insurance premiums. Auto insurance rates are heavily influenced by the driving history and experience level of those insured. Teen drivers are statistically more likely to get into accidents.

However, the impact on your rates can vary significantly depending on factors like:

• Your grandchild’s age
• Your grandchild’s driving record
• The car your grandchild drives
• Your insurance company and policy

A grandchild with a new license and no driving experience will cause rates to go up more than an older teen who has been driving for a couple years with a clean record. The make, model, and safety features of the car driven also play a role.

Shop around with different insurance companies to find the best rate. Some insurers offer much better premiums than others for teen drivers. Ask about any available discounts for students with good grades or those taking defensive driving courses.

What Happens If Your Grandchild Has an At-Fault Accident

If your insured grandchild has an at-fault accident while driving your car, the damages and injuries will be covered under your policy. This applies whether your grandchild is an officially listed driver or simply operating your vehicle under permissive use.

However, you may still experience financial consequences:

• You will be responsible for paying the deductible amount stated in your policy. This could be anywhere from $250 to $1,000 or more.

• Your insurance premiums will likely increase at renewal time, as accidents raise the risk profile for your policy. This is especially true if your grandchild is a teen driver.

• If the damages exceed your policy limits, you could be sued by the other driver(s) for any amounts not covered by insurance. This risk is higher if your grandchild causes severe injuries or property damage.

• Your insurance company may choose to drop your policy due to high risk after the accident. This would force you to seek coverage elsewhere, often at a much higher price.

To protect yourself financially, choose sufficiently high liability coverage limits when a grandchild is driving your car regularly. Also consider options like accident forgiveness, which keeps rates steady after one at-fault crash.

Does Your Grandchild’s Auto Policy Provide Coverage?

If your grandchild has their own car insurance policy, it may provide secondary coverage after your policy in the event of an accident. For example, if damages exceed your liability limits, your grandchild’s policy would pay the difference.

However, you should never rely solely on a teen’s auto policy to provide sufficient protection. As the car owner, your insurance is primary. Make sure your coverage is robust with ample liability limits and other important add-ons.

Tips for Letting Grandkids Use Your Car

If you plan to let grandkids drive your vehicle, here are some smart strategies:

• Call your insurance agent to discuss coverage specifics whenever a grandchild will use your car regularly. Ask to have the grandchild officially added to your policy.

• Consider setting rules for your grandchild’s use of the vehicle, like no driving past a certain time or no teen passengers. Enforce seat belt use.

• Check that your liability coverage meets or exceeds state minimum requirements. Increase limits if financially feasible.

• Ask about defensive driver discounts your grandchild can qualify for to help offset insurance rate hikes.

• Remind your grandchild to drive carefully, obey traffic laws, and avoid distractions like cell phones.

• Make sure your grandchild has their valid driver’s license when using your car. Also confirm the car’s registration is current.

• Conduct routine maintenance on your car and check tire pressure and fluid levels regularly for safety. Require your grandchild does the same.

• Look into accident forgiveness or vanishing deductibles if your insurer offers them. This minimizes the financial impact if your grandchild has a claim.

The Bottom Line

Letting your grandchild drive your car is generally acceptable under permissive use insurance provisions. However, for regular use you should formally add your grandchild to the policy as a driver. Be prepared for potential rate increases and financial responsibility if an at-fault accident occurs. With preparation and clear ground rules, you can feel comfortable letting your grandkids safely use your insured vehicle.

Frequently Asked Questions

Can I let my grandchild drive my car if they don’t live with me?

Yes, you can allow your grandchild to drive your car even if they don’t live in your household. For occasional use, they would likely fall under permissive use coverage. If they regularly borrow your car, add them to your policy to be safe regardless of where they live.

What if my grandchild only has a learner’s permit?

If your grandchild only has a learner’s permit and not a full driver’s license, they still need to be listed on your policy as a driver when operating your vehicle. Accompanying supervisors with a valid license are also covered under permissive use. Make sure to clearly understand any restrictions that come with your grandchild’s learner’s permit.

If I exclude my grandchild as a driver, does that affect permissive use?

Excluding a driver takes away permissive use coverage for that individual. So if you specifically excluded your grandchild as a driver on your policy, they would not be covered at all when operating your vehicle. Never exclude a driver who may ever use your car.

Can my grandchild’s car insurance cover damages if they crash my car?

If your grandchild has their own insurance, it would provide secondary coverage after your policy if they are at fault in an accident while driving your car. However, your policy is always primary for your own vehicle. Relying solely on your grandchild’s insurance when they drive your car is risky.

What if my grandchild lives with me part-time due to joint custody?

If your grandchild lives with you on any kind of regular basis because of joint or split custody, it’s best to add them to your policy. The insurance company will want to know about all licensed household members, even if they only live with you half the time. Document your exact arrangement.

Conclusion

Letting your grandchildren drive your car is a kind gesture but also comes with insurance implications. Use permissive use rules and make sure to add regular drivers to your policy. Weigh the impact on your rates and liability against the convenience and benefits of helping your grandchildren. With preparation and open communication with your insurer, you can move forward confidently while also protecting yourself financially. Your grandkids will appreciate the help while also learning safe driving skills.