Deciding how to insure a teen driver can have both financial and legal implications, so it's important to understand what is at stake. Whether they should be insured on their own policy or yours, is situationally specific, but there are some important things to consider.
Should My Teenage Driver Have Their Own Car Insurance Policy?
Advice on When to Put Your Teen Driver on Your Insurance Policy
When there is a new driver in the household, especially if under the age of 18, it is common to add the new driver to your existing car insurance policy.
It will likely be less expensive on the family policy than on their own because the family's policy likely includes discounts that a new driver can not qualify for, such as:
- multi-car discounts
- bundle discounts (for having home and auto insurance with the same carrier.)
- good driving discounts
- credit discounts (based on the credit score of the named insured)
This option probably makes the most sense if you have a typical new teen driver without major infractions who drives a typical car with low to moderate value.
When to Get Your Teen Driver Their Own Car Insurance
A critical factor for insurance is legal ownership. You can not insure what you do not own, so if your young driver owns a vehicle in their own name (and you are not listed as a co-insured on the title), you can not likely insure the vehicle.
Please note that many agents do not require a copy of the title, so they may not be aware of a conflict between insurance and ownership. So, it is up to the vehicle's owners to ensure the information is accurate.
Other situations where your son or daughter should obtain their own insurance:
Independent: If your child is fully independent, they probably should have their own insurance policy.
Independent would likely mean they’re at least 18, have a vehicle just in their name, and are financially responsible for themselves. In other words, you likely wouldn't claim them as a dependent, and your name wouldn’t be on the vehicle’s title.
Beater Car: Comprehensive and collision coverages are two protections that safeguard against damage to insured vehicles. Your policy likely has these protections if you drive a vehicle with a loan or is in good condition. Your young driver might not need comprehensive and/or collision if their vehicle is older and not worth much.
When some vehicles need these coverages and others don’t, separating the vehicles on different policies may save on comprehensive and collision premiums.
Liability Protection: Serious car accidents can result in large liability claims, especially if they cause serious injuries or fatalities. If your child is listed on your policy, then the liability from any accident they cause could also extend to you.
Sometimes, parents try to insulate themselves from this risk by insuring their child on a separate policy, assuming the driver is 18 or older, owns the vehicle solely in their name, and purchases their own insurance policy.
Given the infinite circumstances of accidents and the laws applicable when and where an accident occurs, there is no guarantee that you would not be brought into a lawsuit caused by your child, but separating ownership and insurance may heelp.
Major Infractions: New Hampshire drivers usually see their premiums increase after a moving violation or accident, but the spike can be exceptionally high for new drivers.
In this situation, separating your teen’s coverage would likely avoid the increase impacting the whole policy. If they are responsible for paying their own premium, the cause and effect of the violation or accident will be crystal clear.
Separating policies isn't always necessary for minor infractions, especially not moving violations. However, major speeding tickets, running red lights, multiple tickets, or an accident might justify separating the insurance.
Evaluate Your Options With a New Hampshire Agent
As these scenarios show, deciding how to insure your teen driver requires evaluating your specific situation. There’s not one answer for every family.
To get help deciding how your teen should be insured, contact us at HPM Insurance. One of our New Hampshire agents will walk you through the considerations so you can make an informed decision on whether to get your teenage driver their own car insurance policy.