The recession has touched Americans of all ages, but it has been particularly hard on young adults and seniors. Among youth in October 2009, 15.6% of 20-to-24-year-olds were unemployed vs. 8.7% for people over 25 according to the Bureau of Labor Statistics. One consequence of this unemployment has been that many young people have not moved from home and many who have moved out are moving back. When adult children remain in the home or move back in, parents need to take the opportunity to assess their insurance situation. Medical insurance, homeowners and auto insurance may cover the adult children, but some care and understanding is necessary to make certain everyone knows what is covered.
There have been major changes on the medical insurance front in the past year. Formerly, most health insurance plans dropped children from parental insurance plans once they turned 19 or when they graduated college. Under the Affordable Health Care Act signed into law on March 23, 2010, insurers must offer parents the option of keeping their adult children covered under their medical plan until age 26. This mandate will go into effect for most medical insurance plans whose benefit year begins Jan. 1, 2011. Having a young, uninsured, person in your household is a situation that calls for a discussion with your Washington insurance agent and perhaps with the human resources or insurance representative where you work. Coverage will not be automatic and you will have to take steps to assure it is taken care of.
Auto and home insurance policies generally define insureds (the persons protected under the policy) to include the person named on the policy, their spouse living in the same residence and other relatives who live at the same residence. Generally, you only need to make sure the insurance company is aware that the person will be a driver of one of your cars, and they will be covered. Of course, there are cost implications for including young drivers on a policy and, if the young person owns their own vehicle, the parents insurance will not likely extend automatically to the child’s vehicle.
Homeowner’s insurance is generally not greatly impacted by having an adult child return home. Generally speaking, your child's possessions are covered under your policy so long as they are living under your roof. You may need to consider the implications of your child’s possessions for your current coverage. If they come home with expensive electronic equipment, musical instruments or a fancy engagement ring, you should look at the extent of your current coverage.
Finally, be careful of changing circumstances and make sure you understand their implications. If your child is in transition, sometimes living at home and sometimes elsewhere, you can slip into cracks in your coverage. For example, you may put items in storage while a child is living with you that would be covered by personal property insurance. If they move out, those items may no longer be eligible for coverage under your policy and may be better covered under their own renters policy.
If your adult child’s living situation is changing, take the opportunity for a consultation with your insurance professional at Homer Smith Insurance. They can help you sort through your options including advice about coverage, ownership of policies and assuring any discounts available for multiple vehicles. Remember as well, when your child reaches adulthood, they also need to understand their own insurance needs and if an adult child asks you for insurance advice, give them the name of the insurance professional you trust to help them get the exact protection they need.