Question: My son has a study permit. Do I need to get him insurance now, or should I wait until he gets his driver’s license?
Answer: There is a simple, law-based answer to who needs insurance: anyone who drives a motor vehicle.* The law states (written for ease of reading and brevity), “No person may drive a motor vehicle registered in this country unless the person has insurance. under the rules of driving, is self-insured, is covered by a certificate of deposit, or has a mortgage.” In other words, if you are driving a vehicle with registration, you need proof of financial responsibility. (*There are a few exceptions: mopeds, ATVs and other pickup trucks.)
You may already know all of this, and what you are asking is, will my insurance company just reimburse me for my new driver, or do I have to do something to make this happen? I looked at several insurance companies, and they all said that you should inform the insurance agent before driving your new driver. If you don’t, and your child crashes your car, and maybe someone else, your insurance company may argue that, even though you have car insurance, your teenage driver is uninsured.
When you first received your insurance, your insurance company asked you a bunch of personal questions about everyone included in the policy; things like your age, gender, number of traffic offenses you’ve had, and your accident history. This helps them understand how much risk they are taking to protect you, which affects your rate. Adding a minor driver changes the level of risk, and your new insurance policy will reflect that.
You expect your new driver to break into traffic more often Vince Vaughn and Owen Wilson’s marriage was ruined. Sorry about this movie, but there is cause for concern. Young drivers are four times more likely to crash than drivers 20 years or older. You can be sure that your child is the best driver out there and won’t crash, but your insurance company doesn’t know. They look at the problems, and when drivers of a certain generation have more accidents, it means more insurance payouts, so you are going to help pay for it. Progressive Insurance is a great way to create an index chart relative cost of insurance and age. It shows that young drivers pay more than double what drivers 55 and older pay.
Are there ways to reduce the cost? Depending on the insurance company, and your child, they may be eligible for a good student discount. You can also choose to drive cheap cars to insure. This means either cheap, or often old cars. There is a tradeoff with that, however. Newer cars have more safety features, and if there’s any time you need those features, it’s when your kids are learning to drive.
Earlier I mentioned the dangers of all young drivers. I’m not saying that your child is four times more likely to be in an accident than an older driver. Their risk may be high or low, and you are very sensitive to this. New drivers with parents who set clear family rules about driving, model good driving behavior, and are more active in their driver’s education are just as likely to have an accident as their peers with uninvolved parents. Yes, good insurance and good protection are important. But better than risking it in the first place.