| A couple of years ago I shared these tips about youthful drivers. I felt the topic was worth repeating. Before I do that, I recommend that you check out the new rules under Senate Bill 577 (SB577) at the Texas Legislature's web site (www.capitol.state.tx.us), which restrict the rights of driver under the age of 18. This new graduated license applies to drivers applying for a
permit after January 1, 2002.
All parents dread the day their children reach driving age. There is a natural concern over their child's safety, and rightly so. Sadly, teenagers have the highest fatality rate of all drivers. There is also the concern about the financial aspect of having a youthful driver. Auto insurance rates are higher for the youthful class of drivers because of the risk that these less mature and inexperienced drivers represent. Teenagers are involved in more than half of all
car crashes.
Young males have higher rates than females because of the greater statistical frequency and severity of their accidents. All this is simply a reflection of their inexperience. Reductions in premiums will occur when a young man marries, when he turns 21, and then finally at 25 when he attains the adult rating status. A young lady will receive a reduction to the adult classification if she marries below the age of 21, otherwise upon her turning age 21.
So what can a parent do to advise their teenager about when to drive, what to drive or why they cannot drive yet? What can be done to control the cost of adding youthful drivers to an auto policy? Both are good questions.
First of all, it should be pointed out that the teenager does not have to be added to a policy until he or she receives a permanent license. Usually this occurs around their 16th birthday and follows the completion of a driver's education course. They are covered without adding them to the policy until they actually get their license, but remember that the temporary permit now requires that they must have a licensed 21 year-old driver in the front seat of the
vehicle.
Student drivers are automatically covered without having to be added to the policy, but insurance companies require that they be notified when the teenager receives a permanent drivers license, in adherence to the Texas Department of Insurance rules. Parents should be up front about all drivers in the household. If withholding this information were found to be the basis of a material misrepresentation, they could be penalized. It is possible that the company would
decline to renew coverage. The company also has the right to charge back to the date the youthful operator acquired a license and could bill for any additional premium due from this exposure during the current policy period.
If a household contains only 2 vehicles with 3 drivers, including teenager, then he will go on the highest rated vehicle (most expensive vehicle with collision coverage). Some parents seek to avoid this by purchasing a third "clunker" car for the teen to drive. Without a lien-holder, a low value vehicle does not need to be covered for Collision damage, which is the most expensive part, next to Liability coverage. The teenager will be assigned to the
vehicle he primarily drives when there are an equal number of cars to drivers; thus the benefit of having equal cars to drivers.
Some people believe that if you put the car in the teenager's name, and take out his own policy, you can carry less limits of liability. The fault in this philosophy is that you can still be held partially liable for what a teenager does until he is over 18 years of age. And if people file suit, you may have to defend it without your own coverage responding, if your company finds that they are not liable.
It is better not to split out the teenager into a separate policy, unless doing so enables the parents to stay in a preferred company due to a teenager's poor driving record. But taking this action will create the need to exclude the teenager from the parent's policy. This means he is NOT covered under either policy while driving Mom or Dad's vehicles.
The other problem with splitting policies to change limits is that you are applying lower limits of coverage to the highest potential risk in your household. Does that make sense when the purpose of insurance should be to cover you for possible large unexpected financial losses?
So the strategies can include:
1. Add the teen to the policy when they receive their driver's license.
2. Buy the teenager an older car, put it in his name and assign him as the principal driver of that auto.
3. Discuss the kind of auto you plan to purchase with your teen and with your insurance agent BEFORE you buy the auto. Insurance costs vary greatly depending on vehicle type and can be unaffordable for a high performance type vehicle.
4. If the title of the car is put in the teenager's name, take out his own policy to coordinate with that of the parents, but don't exclude him from their policy if possible.
5. Parents should consider taking a Defensive Driving course to obtain a discount on the insurance premium on their own cars.
6. Seek to obtain a multi-policy discounts from your insurance carrier by placing both home and autos with them. This can lead to considerable savings.
7. Put higher deductibles on your Property Damage part of the auto policy. Especially on the collision coverage for the car assigned to the teenager. Don't consider lowering liability and un-insured motorist limits - at claim time you may regret it.
8. Ask your agent to take a few minutes to visit with your teenager and explain the auto policy to them. The agent should also explain what can happen should they get a violation, or two, or have an accident; especially the increase in premium due to points being added. In worse cases, a change in carrier to a surplus lines company may become necessary due to a cancellation caused by the teenager's driving record.
9. Put a "How's my driving?" Call my parents bumper sticker on their car, listing your home phone number. Well, why not?
10. Be responsible for your teenager's behavior. Explain and continually remind them that they take on tremendous responsibility when they begin to drive. Driving is a privilege, not a right. A license can be taken away by law enforcement. Perhaps the parent should take it away for a period, along with the right to drive, whenever bad driving is witnessed or reported to a parent. This kind of tough love could save you much heartache and expense if a teenager's abuse
on the road were to lead to a fatal accident.
Russell Janecka is a Certified Insurance Counselor. He is the owner of Janecka Insurance Agency in Victoria, and serves on the board of directors with Germania Insurance Companies. Call with your questions. (361) 573-4475 e-mail: info@jiavic.com Copyright: Russell Janecka
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