A friend, family member, or your child wants to finance their first car. The only problem they’re having is an inability to qualify for a loan without a co-signer. Your credit score is more than sufficient to help them out with their problem, but you’re wondering whether you need to be on your son’s auto insurance policy when you co-sign for the car.

The main factor in whether or not you should be listed on insurance or not is whether you are considered a co-signer or a co-borrower. A co-signer is simply responsible for financial matters related to the loan. If your son fails to meet his payment obligations on the auto loan, then your co-singing makes you financially responsible for the loan. It affects both your credit and your son’s.

Some financing companies require you to be listed as a co-borrower and co-owner on the loan. When you are a co-owner, you are placed on the car’s title. Because you are listed on the car’s title, you may be held legally responsible in the event of an accident. The way to cover your liability in the event of an accident is to get listed as an additional driver on your son’s car insurance.

Another factor to consider when co-signing on a loan is whether you are prepared to take financial responsibility if your son can’t meet his payment obligations. If this occurs, you either have to make the payments yourself, or receive a negative mark on your credit report. This has a long term impact on your own ability to get financing.