Are There Changes To Coverage When We Gift A Vehicle To Our Son?

Did I screw up? We have a family policy where my husband and I are the named insured. The drivers included are my husband, myself and our son and cover three vehicles all titled in my name. Yesterday I gift transferred the car title to one of the vehicles on the policy to my son (keeping the same tag, etc – just changing registered owners from myself to my son) thinking that there would be no impact to the insurance coverage since the vehicle & drivers remained the same until my spouse questioned that assumption. Who is right? I tried to take care of the transfer of title to get it done and out of the way since my son has graduated college and will be moving soon for his new job at which time I thought that he could then apply for his own individual insurance. Question is….. did I lose coverage on that vehicle now when I transferred the title to his name. Again the vehicle is covered (or was) under our existing policy of which all three of us are included drivers. Would be so grateful for your advice!!! Potential new customer when son gets his own policy. Thanks!

 

  1. 552 POINTS
    Ruth Ladas
    CEO, RLI - Ruth Ladas Insurance, LLC, Fort Myers, Florida
    Thank you for your question. You haven't screwed up, but you are correct to be asking the question. The transition to adult responsibilities is a journey through murky waters for most people. There isn't just one correct way to do it! Since your cars are titled to drivers in the household, there is no problem. Your policy is fine just the way it is - for now. It sounds like it is time though for your son to go out on his own. Presumably he is going to be living on his own also and that change of residence is a good trigger for the change to his own insurance. Depending on your carrier, they may separate the policy out and even keep some of the accident-free credits that belong to that policy. You can also address your liability limits now. You will no longer have the risk of a young driver attached to your household. Your rates may go down considerably! If you live in Florida please contact me. I welcome your business!
    Answered on April 24, 2016
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  2. 1866 POINTS
    Paul Roth
    Senior Commercial and Annuity Specialist, Freedom Brokers, Marion, Carbondale, Harrisburg IL
    You have just two jobs as parents. Give your children roots and give them wings. The second job is the more difficult one for many parents. Did you screw up? My opinion is that you did the right thing. What you have accomplished is to give your child some baby steps toward responsibility commensurate with their move into adulthood. As long as the insureds are related and all live in the home, they can typically all be on the same policy.
    Looking down the road.
    The younger driver not living with their parents, and having title to their own car may pay more for their insurance than a policy tied to mom and dad's policy. The risk of younger drivers is known. From the insurance companies standpoint, you raised the risk, because the only person on the policy is higher risk. But, your child is a grown up. Let them get their own wings.
    Financially and legally, by severing the policies when they move, (assuming he or she will not live with you) you have likely lowered your risk of being sued, with one less high risk person on the policy.
    So, congratulations, you have treated your adult child like a grownup.
    Answered on May 8, 2016
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  3. 14231 POINTS
    Tom Sheehan
    Agency Owner, The Thomas G Sheehan Agency, 27 Glen Road Sandy Hook, CT 06482
    By taking that action, actually here in Connecticut, if not everywhere, there are two problems created. One, when you transferred the title to your son, it became his vehicle and you no longer have any insurable intrest in that car. It would be the same if you had transferred the title to a non family member. So, since you have no insureable interest in the car, it would be a very good and frankly critically good idea to get in touch with your Insurance Professional and discuss your situation. The reason is that your policy may or may not provide any coverage. The second issue is that a vehicle here in CT must be insured in the same name as the name on the title, and registered in that person's name as well. Thus you may have also created a registration issue that your state Department of Motor Vehicles might frown upon.
    Again, please talk to your Insurance Professional.
    Answered on May 26, 2016
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  4. 1185 POINTS
    Scott W Johnson
    Manager, Marindependent Insurance Services LLC, California
    Thanks for your question, it is a solid one and one that we get all the time.

    I would reach out to your insurance agent and review the situation with them, ASAP.

    As a general rule of thumb, transferring ownership requires changing insurance policies. It can get a bit clouded and confusing when you live together.
    Answered on December 13, 2016
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