In New Hampshire, everyone knows that it is very expensive to insure a new driver. We were all teenagers once and know that sense of confidence and infallibility can lead to an accident. That is why the rates for a teenaged driver in NH are significantly higher than the general population.
Because of the cost to add a youthful driver onto your NH car insurance policy, perhaps you are tempted to just wait a little while. You have heard that the premium can decline with each year of driving experience, so what is the real harm if you wait a couple of years? The chances of your son or daughter getting into an accident are slim... right?
This is NOT a question we hear frequently at HPM Insurance in Milford, because people don't typically ask questions they already know the answer to, but just don't like the answer. What we do hear occasionally is from the client who is upset that an insurance company pro-actively added a young driver on his or her car insurance policy without their permission, or an insurance company went back to the date the young driver got licensed and sent them a bill for the premium difference.
How can my auto insurance company find out about my teen driver without me telling them?
Insurance companies rely on C.L.U.E reports (Comprehensive Loss Underwriting Exchange). This is a claims history database generated by LexisNexis that enables insurance companies to access consumer claims information when rating a car insurance policy. If a report is run and someone is flagged as living in your household (whether a young driver or not), the insurance company may add them to your auto insurance policy.
Why should a company charge for a young driver?
The probability of an accident is significantly increased with young and inexperienced drivers. The National Safety Council statistics reveal that drivers in the 16-24 age group account for nearly 1/3 of all auto accidents and fatalities.
What would happen if my teenager, who was not listed as a driver on my NH car insurance policy but does live with me, was involved in an accident?
According to the NH Insurance Department, your insurance company would have to pay the loss. However, if you were found to have intentionally withheld driver information, it could be considered a "fraudulent statement" and the company could then only be bound by the New Hampshire Financial Responsibility minimum limits which are bodily injury of $25,000 per person/$50,000 per accident and $25,000 property damage. Given that HPM Insurance typically recommends ten times this coverage amount, you could find yourself paying a part of a claim out of your own pocket. Insuring a young driver is expensive, but it isn't typically as expensive as paying for a claim yourself.
As a member of your household, the youthful driver is an insured under your policy and entitled to coverage as the policy indicates. If a young driver is not reported to the auto insurance company, upon receipt of a claim, the insurer is entitled to all unpaid premiums. Depending on how long the young driver has been licensed, but not rated on your policy, it can be a lot of money to come up with all at once.
Do I need to keep my child who is away at school or college on my car insurance policy?
In New Hampshire, insurance rates are calculated to include young drivers residing in an insured's household and young drivers while away at school. For more information about children away at school, please read a prior HPM Insurance blog called How Your Graduate Impacts Your Car Insurance.
What you can do to save money when adding a teenager to your auto insurance policy:
The best thing you can do to save money when adding a young driver is to consult with your insurance professional before you add a young driver.
I will never forget the call I received from an Amherst client who called me after they allowed his 16 year-old son to buy a brand new car. He called me after all the paperwork was signed only to find out that the monthly premium was much more than the monthly car payment. Ouch! If we had received this call prior to the purchase, we could have advised him on how the car should be registered and insured before the paperwork was finalized.
You will also want to notify your insurance professional if your son or daughter is an honor student as this can add a significant credit to the auto policy, as would driver's education.
Why you should add your new driver onto your car insurance policy:
As the saying goes, there is no such thing as a free lunch. If your son or daughter were involved in an accident with your car, you would expect the insurance company to pay. This increased exposure is not free and can easily catch up with you, and may end up costing you more money and frustration than if you simply called your insurance representative once the new driver was licensed.
This material is for informational purposes only. All statements herein are subject to the provision, exclusions and conditions of the applicable policy. For an actual description of all coverages, terms and conditions, refer to the insurance company.