Every household with kids will go through this; it’s not fun, take it from me, a father of two. Not only don’t you get any sleep because they are out driving around, but there is also concern for affordability.
The conversation typically revolves around these three things:
- Should I add them to my policy?
- Should I have them on their own policy?
- Do I even need to tell the company that my child has their license?
Let’s start with coverage and then get into premium.
Insurance is primarily about protecting you from financial ruin. In this moment, many people simply secure the cheapest policy that’s available. This is never a prudent decision because that often comes with State Minimum Limits. If a young driver causes a serious accident, those limits may not be enough to protect against a significant lawsuit, potentially exposing future assets and income.
In many households the parents have an Umbrella Policy for added coverage. By putting the youthful operator on their policy, they get the added benefit of the Umbrella. This is beneficial because on their own a youthful driver would never be able to secure this much coverage for themselves. Doing this could increase their protection anywhere from 10x to 40x and more depending on the coverage limits that the parents have.
While it is not inexpensive there are things that you can do to mitigate the expense.
In most cases, adding your child to your existing policy is the most practical and cost-effective option. First, they benefit from the household’s insurance rating factors, including the parents’ established insurance history and, with many insurers, credit-based insurance score. Second, they’ll typically qualify for multi-vehicle and, in many cases, multi-policy discounts that wouldn’t be available on a stand-alone policy. Finally, parents are often insured with carriers that offer more competitive rates than those specializing in higher-risk youthful drivers.
Young drivers should always take driver education AND defensive driving. They both come with a discount, and you can have the discount for both at the same time. Double dipping these discounts on the company will also make you feel good because it lets you finally win!
The third question is easy, the answer is, YES. The insurance contract with the company requires that you disclose any regular operators of your vehicles, including inexperienced drivers. Not doing so can create serious coverage issues and, in some cases, may result in a denied claim or cancellation of the policy. This would very quickly become the costliest outcome.
The bottom line? From both a coverage and cost perspective, adding your newly licensed driver to your existing policy is usually the smartest choice. Every family is different, so speak with your insurance professional to review your options and make sure your coverage is keeping pace with this exciting new chapter.
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