When an insurance company detects that a 16 year old is living in a policyholder’s household, the company will typically send out a notice informing the owner that the child will be added to the auto policy on a specific date. Many people get upset when they receive this notice, especially if the child still has a learner’s permit.
Sometimes, people accuse the agent or insurance company of adding the child to their policy without permission. Unfortunately, insurance companies have no way of knowing the date a teenager will receive his permanent driver’s license, so companies proactively add all young drivers in a household to the policy after a specific age, unless the policyholder signs an exclusion, which specially excludes the child from coverage on the auto policy.
Fortunately, there are ways to reduce Insurance rates when adding a teenager to your policy:
- Most insurance companies offer a good student discount, so encourage your teen to maintain good grades and provide a copy of their report card to your agent or insurance company.
- Most teenagers qualify for a discount if they take a young driver safety course.
- Encourage your teenager to maintain a good driving record. Speeding tickets and moving violations will dramatically increase rates.
- Consider increasing deductibles, especially on the car your teenager drives.
- Consider letting your teenager drive an older car. Newer cars are not always safer and usually cost more to insure. Make sure your agent rates your teenager on the least expensive vehicle on the policy.
- Review your policy and coverages annually with your agent to make sure you are properly protected and receiving all the discounts for which you qualify.
Remember, if your teenager injures someone in an accident or accidentally damages someone’s property, you could be sued. Make sure your liability limits are adequate and if you have unprotected assets, consider purchasing a personal umbrella policy (PUP) for additional liability protection. To learn more about PUPs, see my previous blog on Personal Umbrella Policies.