As a parent with a new driver in the house, you may find yourself shopping around for the best insurance rates to insure a teenage driver. It's important to know that not all insurance policies are equal, and, let's face it, whether you are buying them their own policy or adding them to your policy, insurance for teenagers is not cheap. It becomes very tempting to just let an agent shop around for the cheapest price and go with it. Don't fall into this trap. Buying the wrong coverage to insure a teenage driver can leave you in a bad spot that you will regret. So to help you make the right decisions for your teenager, let's explore some of the mistakes that parents often make when they insure a teenage driver.
Liability Only vs Collision Coverage vs Comprehensive Insurance If you ask an insurance agent to get you "only the minimum insurance coverage that is required by law," they will most likely give you a quote for a 30/60/25 liability only insurance policy. "Liability only" insurance means that you are buying insurance to pay someone else's damages when you cause an accident. The three numbers indicate (in thousands) the maximum amount your insurance company will pay to cover 1) bodily injury to a single person that you are liable for, 2) bodily injury to all people in the same accident under liability coverage that you are liable for, and; 3) damage to someone else's property that you are liable for. The danger of carrying liability only is that you are relying on others to carry insurance to cover you when they are at fault. If they have no insurance, like about half the drivers in Texas, you will likely have to pay to fix your car.
It is extremely important to note that liability only insurance coverage does not pay to fix your vehicle, nor does it pay for injuries to the driver of the covered vehicle. If you want your car to be fixed even when the accident is your (or your driver's) fault, then you need to purchase Collision Coverage. If you want the car covered bumper-to-bumper, including for not just accidents, but also for damage caused by hail, theft, or vandalism, then you need Comprehensive or "Full" Coverage.
Not Buying Enough Liability Insurance Texas law only requires that you carry the minimum limits of coverage-30/60/25. However, 25,000 is less than the cost of many new cars. If your teenager collides with someone in a new Lexus, you are likely going to have to come out of pocket to fix their car or potentially face having your child's credit ruined by a judgment. Furthermore, with the rising costs of hospital visits, 30,000 can be very low coverage to have in a serious car accident. Carrying too little insurance when you go to insure a teenager is a very common costly mistake people make. You should consider purchasing a significantly higher amount.
Not Buying (Enough) UM/UIM Uninsured and Under-Insured Motorist Coverage (UM/UIM) is not required in Texas. As a result, many people make the mistake of not purchasing UM/UIM coverage or not purchasing enough when insuring a teenager. UM/UIM is two coverages sold as a package. They both cover bodily injury to you and the occupants of your vehicle. UM provides coverage when the other driver is at fault and has no insurance. UIM provides coverage when the other driver is at fault but does not have enough insurance coverage to pay for the injuries they cause you or the occupants of your vehicle. This is the most important coverage you can buy because it protects you against irresponsible drivers who don't carry insurance or do not have enough insurance. If you do not have this and you are hit and seriously injured by an uninsured or underinsured driver, you will likely be stuck paying for expensive medical bills yourself.
Non-Standard Insurance Pitfalls Many years ago, all insurance policies in Texas were required to be "standardized." They all looked the same. Now, insurance companies are permitted to write non-standardized insurance policies. When purchasing coverage to insure a teenage driver, you need to look very carefully at any non-standard insurance policy. Unless there is a specific exclusion added, a standard policy typically covers the car owner, members of the household, and anyone they loan the car too. A non-standard policy will often only cover the actual named insured on the policy. If your teenager has non-standard insurance and loans the car out, even to you, there may be no liability insurance coverage when an accident happens. Furthermore, non-standard policies tend to be "liability only."
Whether to Put Your Teenager on a Parent's Policy One last thing to consider is whether to put your teenager on your policy or their own policy. Most people who ask this question are concerned about parental liability for an accident their teenager causes. If the car is owned in the parent's name, the parent can be held liable if they negligently entrust the vehicle to a teenager. Putting them on a separate policy will not shield this. Thus, if the car is in the parent's name, the parent can add the child to the policy but they need to be sure they have high enough limits to protect the assets of both the parents and the child. If the car is in the child's name, putting them on your policy will not make you liable for their actions while driving the car. Some insurance companies prefer the car to be in your name vs the teenager and often you can get a better rate under your name with your teen as an additional insured.
Last Thoughts There are many things you should consider when you insure a teenage driver. Not having the right coverage or not having enough coverage can leave you and your child in a bad situation when a serious accident occurs. Do not jump at the lowest price without fully understanding what you are and are not buying. Discuss the coverage that you need in detail with your insurance agent and do not be afraid to ask those "what if" questions. Lastly, always make sure the agent understands that you want your child and their car covered for all possible situations.
Paul H. Cannon is an attorney at Simmons and Fletcher, P.C. and a father of two teens (16 and 14). He has been practicing personal injury law since 1995. He is Certified in personal injury trial law by the Texas Board of Legal Specialization since 2005.