Insurance lawyer answers frequently asked questions for parents with new teen drivers
As the father of two, I know the worry and restlessness that comes with being a parent can be tough - especially when your kids are old enough to get behind the wheel. And as an insurance lawyer, I often get questions from other concerned parents on the price of auto insurance and what insurance coverage is best for teen drivers.
Of course, it's never in that order. The first question is usually, "What's the best car insurance coverage to keep my teen driver safe?"
And then I wait for the second question that usually follows:, "How can I save money on my teenage driver's car insurance?"
I understand that the cost of insuring a teen driver is expensive, especially because auto insurance is one of the few areas where it's actually legal to discriminate on the basis of age. And let's face it, young people are, statistically, absolute terrible drivers who cause the highest number of car accidents.
But many parents are making huge mistakes -- that can put their teen drivers in jeopardy -- by trying to save a few bucks.
The biggest and most dangerous mistake I see as an insurance lawyer is that parents are not listing their teen drivers as a "named insured" on their auto insurance policy - even when that teenager is now the primary driver of that car. If your teen then causes a wreck or is injured in a serious auto accident when driving a car that he or she normally drives, but is not listed on the policy as a "named insured" or "named driver," there can be disastrous consequences. In Michigan, where I primarily practice law, these consequences include your teenager's medical bills not being covered by your own auto insurance company under Michigan's No Fault insurance, and your teen being completely barred from suing an at-fault driver who may cause life-altering injuries, even though your son or daughter is completely innocent and the other driver is completely at fault.
Take a look at my answers to some frequently asked questions below, for help choosing the right car insurance coverage for your teen drivers:
Q. What changes do I need to make to my auto insurance policy to make sure my teen driver is protected?
A. As a parent, you must inform your insurance company that there's a new licensed driver in the home. You're also supposed to list the primary driver of each vehicle (named-drivers). If parents purposely avoid listing their teen drivers, either as living in the house or as named-drivers, this could be considered insurance fraud, and coverage can be canceled by your insurance company and insurance coverage can be taken away after the fact if the insurance company discovers this after an accident has occurred.
Q. What's the best car insurance coverage for my teenage driver?
A. Assuming the teen has her own separate auto insurance coverage as a named insured on her vehicle, the minimum policies she should carry should be $250,000/$500,000 for bodily injury (personal injury if she causes an auto accident) and $250,000/$500,000 in Unininsured and Underinsured Motorist Coverage (UM/UIM) in case of a crash with a driver who does not have auto insurance. If the teen is on her parents' policy, her coverage would be the same.
Every person should purchase UM/UIM. Uninsured and underinsured motorist coverage provides a valuable source of legal recovery after a car accident, when someone is injured by another driver who is uninsured or does not have adequate insurance. With this coverage, an injured person turns to his or her own auto insurance company to pay what would have been recovered from the at-fault driver, had that person been properly insured with an insurance policy limit to cover their injuries.
Q. How can I as a parent minimize the costs and premiums of their auto insurance policies for my teen driver's coverage while still being fully protected?
A. Once the proper car insurance coverage has been determined for your teen, call an independent insurance agent that represents several auto insurance companies, to determine which insurer will give the best rate. Like everything else in life, shopping around pays off.
Q. How should my family's car insurance policy be structured if my teen drives my car (the parent's) versus having her own car?
A. A teenager should be listed as a named-driver or named-insured on the policy, so the auto insurance company can never say that it was not unaware there were teens in the house or that the teens drove the car. If the teenager owns the car, then she should be a named-insured or co-named-insured.
Q. If a teenager is driving her car and the passengers are injured in an accident, how are the passengers covered by the Michigan No-Fault law?
A. The order of auto insurers that would cover No Fault benefits would be the same as any car accident:
- The passenger would receive No-Fault benefits through his own insurance.
- If the passenger does not have auto insurance, then he would receive No-Fault benefits from a resident-relative.
- If that relative is not covered, then the passenger would seek benefits from owner of the car.
- If the car owner is uninsured then the passenger would receive benefits from the driver of the car.
- If all else fails, the passenger would look to the Michigan Assigned Claims Facility for No-Fault benefits.
Q. What can I do as a parent to make sure my teenage driver is protected while riding as a passenger in a friend's car?
A. As long as the teenager or resident-relative has insurance, your teen is protected by the Michigan No-Fault law and can receive all of the No-Fault benefits if she's injured in a serious crash. As long as the teenager isn't operating an uninsured vehicle that she could be considered an owner of because she frequently uses the car (this is legally called constructive ownership), she can receive No-Fault insurance benefits (see answer to previous question for the order of priority in which the teen could receive No Fault benefits).
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