Money Fairness Without Marginal Costs

As I mentioned earlier, Ed got his driver's license last week, and I included him in my new insurance policy with Progressive. It's great (even for me) to know that he can now borrow my car and go wherever he wants. I expect this will come in very handy in grad school, where neither of us will commute to school by car, but where we may not live in (easy) walking distance of a grocery store. So far, Ed hasn't taken much advantage of this new ability, which is partly due to a lack of opportunity, and partly because I think the idea of being able to just drive somewhere hasn't penetrated his consciousness yet.

The question that arises for me is, how much (if any) of the car insurance and other car-related costs should Ed bear? I asked him this question, and he suggested that as a starting point, I find out how much extra it costs for him to be on my insurance.

At Amica, this was going to be $400/year, but according to Progressive, it is $0. Having him on my policy does not add anything to the cost. And yet, it doesn't seem that it should be free to him. If I were to move in with Sally, even if she found this desirable and enjoyable, I should pay some rent even though my being there would not affect the rent. People who benefit from a thing that costs something should bear some of the costs.

So he shouldn't pay nothing. If we drive the car about equal amounts in grad school (as opposed to now, when I drive it to work every day), should he pay half? On the one hand, borrowing your girlfriend's car is not as nice as having your own car; I'd have first dibs on the car and thus more convenient car access. On the other hand, I paid for the car and its depreciation falls on me, not him. And, of course, it might be that what I think is fair is more than it's worth to him for me to have a car that he can borrow.

It's hard for me to figure out what seems reasonable in this type of situation.