How relationship status can affect your auto insurance premiums
If you are in a legally recognized relationship – whether married, in a civil union or domestic partnership – you should be aware of how this can affect your auto insurance policy.
First of all, we’ll look at married couples. Insurance companies look at married policyholders as more responsible, stable and less likely to take driving risks – and they have the data to back up those perceptions. Married couples are also less likely to file claims, which adds to the attractiveness for insurance companies. All of this means that insurance companies offer reduced rates for married couples.
For civil unions and domestic partnerships, it all depends on the law of the state you are in and whether or not an insurance company recognizes those relationships as legally binding, which more and more providers are doing. For insurance companies that recognize these formal relationships, the same perceptions/benefits that we mentioned above for married couples apply.
So are there any potential downsides to legally recognized couples and auto insurance? Absolutely. One thing to consider is that unless your significant other does not have a driver’s license (or a few other exceptions) all insurance companies will automatically assume that your significant other will drive the vehicle(s) on the policy. So if one of you has a poor driving record, that will make the policy more expensive. Also, as credit score is often used in determining your premium, it is advisable to have the member of the couple with the best credit score to be the primary applicant (though it is possible that insurance companies will also look at the secondary applicants’ credit scores as well).
What about teen drivers? Well, here is where relationships can possibly extremely impact your premium – adding a teen driver to your policy will significantly increase your premium. That said, we strongly recommend that if you are about to add a teen driver to your policy that you take that opportunity to shop around and compare different auto insurance quotes, as you might be able to lessen the impact by changing providers.
You should also be aware that no matter what your relationship is with the people that you live with (significant other, roommate, teenage child, adult sibling, etc) everyone in your household that has a driver’s license must be listed on the policy. The reason for this is that insurance companies assume that everyone in a household has access to a vehicle. If you do not want to allow someone at your residence to be covered on your policy in case they ever drive your car, in most cases you need to specifically exclude them from the policy. Just remember, if you do exclude a housemate from your policy and they drive your vehicle, that person will not by covered by your policy. Finally, understand that these rules can vary from insurance company to insurance company, and from state to state, so make sure to ask your agent or insurance company if you are unclear about their terms and conditions.
September 28, 2011