That doesn't seem right. I am not on my brothers policy, but when I drive his car I am covered and the reverse is true.
Some insurance companies have issues with drivers under 18, or people with real bad records (ie DUI probation) on others insurance. As long as you have coverage as the driver, and they have coverage for the car, and "friends or family" then you should be ok.
It really SHOULD NOT matter whether you live there or not. Heck, I have a multi car-multi driver discount with my mom, and I don't live there anymore. But don't tell anyone.
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1997 Mustang GT "The Freak" - 13.80 @ 101.70, 2.07 60'
1995 Honda VFR750 - not much @ really fast (actual data pending.)
1964.5 Mustang 289
Rice Haters Club Member #13