October 20, 2021

Young drivers in NSW often find purchasing a policy for car insurance NSW a costly affair. As a result, some young drivers may ask their parents to buy a policy to make some savings. If you are a young driver thinking of implementing this plan, we warn you not to execute it if your parents aren’t the primary drivers of your car.

Even with the best car insurance, if you portray your parents as policyholders yet you are the vehicle’s primary driver, it can be concluded as a fraud. As a result, you may have to face legal troubles, penalties, and denial of claims by the insurance company. Depending on the vehicle owner and usage, be honest about who really owns the insurance policy and who must be added as secondary drivers.

Does it make sense to have a driver over 25 years on a parent’s vehicle insurance policy?

Some families in NSW own over one vehicle. And we know every car needs to be backed up by an insurance policy. Usually, it so happens that the parents buy a vehicle insurance policy, and the rest of the household are listed as additional drivers on it.

We may call it a sound judgment on the parent’s part if their child is aged below 25 years, as young drivers need to pay high premiums if they buy an exclusive policy. Having said that, it’s the parents who will pay the higher price of insurance, even if the total cost is divided across all drivers.

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Suppose you are over 25 years of age and reflect on staying as an additional driver on your parent’s policy or purchasing a policy of your own. In that case, we suggest you assess your vehicle usage before deciding. If you lack experience or rarely drive, being an additional driver on the policy is likely appropriate.

Avoid car insurance fronting!

If your parents (low-risk drivers) insure the vehicle in their name, but you (high-risk driver) drive the car much more often, then it is known by the term “car insurance fronting”. If the older driver fronts for a young/inexperienced driver, he or she may face claim rejection and criminal penalties.

Can a young driver add his car to a parent’s vehicle insurance policy?

One policy covers one car but may have additional drivers on it. If you have multi-car vehicle insurance, then you may bundle several policies together. Purchasing this type of policy helps you cover your vehicle along with your parent’s car. Unfortunately, not all insurance providers offer a multi-car insurance policy.

Some insurers pose a limit on the number of vehicles permitted on these policies because you may be able to accumulate a large discount if you purchase coverage for many cars. You might be able to use your parents’ good driving history to your benefit if you are a young driver through this type of policy, but always be honest about which car is yours and all the information that goes along with that.

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Note: A disadvantage with this insurance plan is you may not receive no-claim discounts – your parents may have accumulated several claims whereas you haven’t. It is not always the case that older drivers attract a lower premium than young drivers, for this and other reasons.

Young drivers need to weigh up the benefits and deficits of listing themselves as additional drivers on their parent’s best car insurance policy. Our strong advice to the young driver lot who would like to cut down on their car insurance NSW premiums is to explore other ways of reducing the insurance costs instead of relying on the fronting method.

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