When your teenager starts to drive one of the family cars, it is a time of mixed emotions for most parents. The good news is that your child survived to become a teenager, your role of chauffeur may be lessening and this is one of the first big milestones on the road to independence for your dependent child.
Since I am a lawyer and not a psychologist, I will leave it to others to address the emotional impact that this milestone has upon most parents, who realize their baby is growing up. I did raise two sons who both survived teenage driving, but this does not make me an expert on this emotional time. However, I am an expert on the impact the addition of a young driver can have upon the family insurance policy.
Here are some practical pointers:
Disclose the additional new driver to your insurance company
Because of the financial hit caused by a 15 year old driver, some parents are tempted to “forget” to disclose the new driver when renewing the policy. This omission could result in short term savings.
However, if anyone in the household is involved in a serious motor vehicle accident, your insurance company will investigate. If your insurance company discovers that the teenage driver was not disclosed, many if not most insurers will rescind the policy for misrepresentation. Your insurer will not ask you to pay the difference of what you should have paid if the young driver was disclosed. Instead, it will refund your entire premium and tell you that your policy is rescinded. You could be stuck with a totaled car and hundreds of thousands of unpaid medical bills.
Bite the bullet and advise of the presence of the new driver.
If your child has a dedicated car, register it and title it in his or her name
Many parents, if finances allow, buy a safe car with air bags that does not require a policy of collision coverage, for the child to drive. If you are tempted to buy a newer car for your child, call your insurance agent for a quote for collision coverage before buying a newer car and getting sticker shock.
If you settle on a gently used, inexpensive, safe car, make an appointment with the Secretary of State, before your child drives the car, and get the car registered in his or her name only. In Michigan, the driver AND the registered owner of a car can be sued for a motor vehicle accident. By allowing your child to drive a car registered to a parent, the assets of the parent are at risk for any accident that involves the car, even if you are home asleep.
Many parents like the idea of exerting some control over the coming of age child by keeping the car registered and titled in the name of the parent. Resist this thought. Transfer title of the car to the child and register the car in the name of the child. If you want to discipline your child and deny the child access to his or her car, I am pretty sure that parental prerogative will prevail over technical ownership. If all else fails, the response to “Why can’t I drive my own car” is “Because I said so!”
I give the same advice to married couples. (Not the “Because I said so” part). If you have a car and your spouse or partner has his or her own car, register the car in the name of the driver, not both people. If one spouse or partner is in a catastrophic accident, you do not want both parties being sued. If one spouse is being sued, the equity in the family home of the other spouse is not at risk, unless he or she is also a registered owner of the car involved in the accident. Joint bank accounts are also not at risk if only one account owner can be sued.
Increase your uninsured/ under insured coverage
Although collision coverage is expensive for a new driver, under insured/ uninsured coverage is not. If your child is driving, he or she is also likely to be a passenger in a car driven by teenage friends. If your child is injured in a car accident, your child’s recovery will be typically limited to the amount of insurance on the car of the negligent driver. If its $20,000, the current state minimum, this is all your child or anyone in your family injured by an under insured driver will recover.
A $1,000,000 policy of uninsured/ under insured coverage is typically less than $100 per year. One of the biggest heartaches we face in our practice is explaining to seriously injured clients or worse, the survivors of someone killed in an accident, that there is only $20,000 of liability coverage available. If a member of your family suffers a catastrophic injury, your own insurance company will pay the difference between the other driver’s liability policy and the amount of under insured coverage that you purchased.