Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer

UPDATED: Jun 21, 2018

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In a nutshell...

  • Auto insurance policies are contracts. In most states, you have to be of age to enter into an indemnity contract
  • One of the requirements to get insurance is ownership
  • If you and your parent both hold a stake of ownership in the car, you’ll need a policy in both of your names
  • If you live with your parents, it makes sense financially to buy insurance under your parents’ policy
  • If you’re emancipated and you have your license, you can insure the vehicle in your name because you’re liable

It’s not common that a minor wants to buy their own insurance policy. While most teens do want their independence, they want it in ways that won’t cost them a significant amount of money.

Since auto insurance costs for teens who have just recently been licensed are high under any circumstance, they are even higher when a teen is insured on their own.

If you’re a minor or you have a minor child who wants buy insurance on their own, you could be surprised to discover that the process isn’t as easiest as the average person would think.

Many consumers assume that insurers will sell products to anyone, but in order to qualify for protection, the policyholder has to meet certain conditions.

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You Must Be An Adult to Enter Into a Contract

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There’s a whole section of the law book that’s dedicated specifically to contract law.

You might wonder how this is relevant, but since car insurance is an indemnity contract, it’s very important.

In most states, contract law says that for contracts to be valid they have to be entered into by adults. In most states, people are adults when they turn 18.

The rationale behind this requirement is that a minor doesn’t have sufficient capacity to understand their contractual rights.

Since the minor can typically void the contract at any time, any party who enters into a contract with someone who is under 18 is at risk and the terms in the contract won’t be enforceable. In most scenarios, carriers won’t sell a policy to a minor alone.

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Insurance Contracts Require the Policyholders to Have an Insurable Interest

The first hurdle is contract law and how it affects a minor’s ability to find insurance. There are a few ways to get around this hurdle that will be covered later.

The next hurdle is that the contract itself says that anyone applying for coverage must have an insurable interest in the property that they are insuring.

Insurable interest is a very broad term when you’re not familiar with insurance terminology. When the term is used in the contract, it means that you have a financial interest in the car being insured such as:

  • Owning
  • Leasing
  • Financing

You can’t buy insurance on a car that someone else owns and you’re just borrowing.

Know the Legal Age to Own Property in Your State

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To satisfy the insurable interest requirement, most carriers will only insure a vehicle for a policyholder when the car is registered in their name.

Since you have to be the registered owner of the vehicle to have a policy issued in your name, the state’s legal age to own property can get in the way.

You can’t legally sign a contract to purchase property until you’re 18. You can own property at any age, but it’s signing the contract to buy the property the becomes the issue.

Even though a minor can’t sign a contract on their own, if they are 16 or 17, their parents can sign the contract for them so that the teen can own the property.

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You Must Be the Age of Majority to Have a Vehicle Registered in Only Your Name

Another problem that minors run into when they’ve gotten past the first two hurdles is that the vehicle being insured needs to be registered in their name.

An insurance company can actually deny a claim made if the name on the registration doesn’t match the name on the policy.

One of the main reasons why cars even have tags is because the tags identify the person liable for paying for damages and other fees.

Since a minor can’t be held legally liable for either third-party damages or fees, they can’t have a vehicle registered in their name.

In some cases, the DMV will allow the minor to be registered as a co-owner as long as there’s a parent or a guardian listed on the tags as well.

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What happens when a minor is emancipated?

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The average teen won’t be able to buy auto insurance without having a parent on the contract but there are exceptions to the rules listed above.

If you decide that you want to be emancipated, then you can enter into contracts, sign a bill of sale when you buy a car, and register the car in your name.

If you’re not familiar with emancipation, it’s the legal process of separating yourself from your parents so that you can enjoy legal independence.

For some teens, being legally independent is the right decision.

To get emancipated, you must be at least 16 years old and you must meet one of these conditions:

  • The teen must be married
  • The teen must be in the armed forces
  • The teen must be living away from their parents and managing their money
  • The court must decide that the emancipation is in the best interest of the teen

Make Sure to Think Twice Before Pursuing Emancipation

Enjoying legal freedom has its benefits but it’s not all fun and games. You can enter into contracts when you’re emancipated but that also means that you can be sued if you violate the terms of a contract.

You might not be under the control of your parents after the proceedings, but that also means that you bear the burden of supporting yourself financially.

Here are some of the other responsibilities that you’ll have:

  • You must pay your own rent
  • You must pay for medical bills
  • You can sign contracts in your own name and will be held to the terms
  • You can sue people
  • You can be sued by people
  • You can legally buy and sell property
  • You can get a driver’s license on your own
  • You can enroll in school without any permission from a parent

You Still Need to Have a Driver’s License to Get Insurance

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You can be licensed as a minor when you’re under the control of your parents as long as your parents say they are okay with it.

Since having a driver’s license is a major condition for getting insurance, you have to pass your licensing exam before you can even consider applying for a policy in your name.

When you’re emancipated this requirement doesn’t go away. You can’t just go to the motor vehicle agency and show your court paperwork to get your driver’s license.

Even though you might legally be 18 you still have to go through the steps to learn how to drive and to pass written and practical tests.

You’ll have to complete behind-the-wheel driver training before you can get your permit and then you have to complete the permit period before you can test for your official license.

When you get your official license, you’ll satisfy at least the licensing requirements that are set by the auto insurance company.

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Why is it best to keep insurance under your parents’ policy?

No matter how tough times can get at your parents’ house, it’s best to bite the bullet and keep your coverage under your parents’ plan. If your parents own the car you’re driving or you live in the home and you’re a dependent, the vehicle can be insured in one or both of their names.

You’ll get some special ratings that will keep premiums lower if you are insured with your mom, your dad, or both of them. Not only will you get multi-car discounts, you’ll get the loyalty discounts that they qualify for.

Getting car insurance alone when you’re a minor isn’t easy. You have to take several steps just to pay more for your coverage. If it makes sense to get emancipated, be sure that you shop around. You will still be a high-risk driver even if you are an adult in the eyes of the law.

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