Auto Insurance And Your Teen: What California Parents Need To Know

In California, it is illegal to drive without car insurance. All licensed drivers must have a minimum of $15,000 of bodily injury insurance per person, $30,000 of bodily injury insurance per accident, and $5,000 of property damage insurance. This is known as the 15/30/5 rule.

California teens are covered by their parents' or instructor's insurance while practicing with a permit, so they don't need insurance of their own until they get their license. This can save a good chunk of money as insurance premiums tend to be highest for teens.

If your child has their driver's license and lives in your household, they won't be covered under your car insurance until they're added to your policy. Insurance companies usually require you to add every licensed driver in your house to your auto insurance; otherwise, they won't be covered while driving your car.

Adding a child to your car insurance

When to Add Your Child

You should add your child to your car insurance as soon as they obtain their driver's license. Most providers require drivers under 18 to be listed on a parent's policy, and minors typically cannot purchase their own policy. Contact your insurance provider before your child starts driving to confirm their specific requirements. Some states, like Florida, provide "risk alert" reports to insurance carriers, notifying them of any licensed operators with the same address. Failure to add your child to your policy upon them receiving their license could result in consequences such as policy cancellation or non-renewal.

Benefits of Adding Your Child

While adding your child to your policy will likely result in a premium increase, there are several advantages to doing so:

• Lower Premiums for Your Child: Keeping your teen on your policy will likely be more cost-effective than them purchasing their own policy.
• Qualifying for New Discounts: You may be able to take advantage of various discounts for teen drivers, such as good student discounts, distant student discounts, and teen driving programs.
• Simplified Policy Management: Having your entire household on one policy can make it easier to manage and keep track of insurance documents.
• Learning Opportunity: Adding your teen to your policy presents an opportunity to educate them about car insurance and its importance.

Costs of Adding a Young Driver

Adding a teen driver to your policy will likely result in higher rates due to their lack of driving experience and other factors. According to a Bankrate study, a policy with a 16-year-old driver costs, on average, $4,874 per year for full coverage and $1,488 for minimum coverage. Teen drivers are considered high-risk, and insurance for 18-year-olds on their own policy is generally expensive.

When Your Child Should Get Their Own Policy

There is no required age for your child to get their own policy. As long as they live with you and you have insurable interest in the vehicle they drive, you can keep them on your policy. However, if any of the following factors apply, it may be time for your child to have their own policy:

• They are married or have children.
• They are the sole owner of the vehicle they drive and do not live with you.
• They are financially independent.

Frequently Asked Questions

• Do I need to add my child if they don't plan on driving? If your child has a driver's license but doesn't intend to drive, you can likely exclude them from your policy by signing a form confirming they won't drive any of your vehicles.
• What information do I need to add my child? You will typically need your child's name, date of birth, driver's license number, and possibly their Social Security number. If they qualify for any discounts, you may also need proof of their grades or the school they attend.
• What happens if I don't add my teenager? If your teenager is not added to your policy and gets into an accident, your insurance company may deny coverage, leaving you personally liable for damages and injuries.
• Can I exclude my child from my policy? Yes, most insurance providers allow you to exclude your child if they won't be using your vehicle, such as when they're away at college. However, remember to reinstate them when they return home for breaks.
• How can I save money on teen car insurance? You can shop around for different carriers, take advantage of discounts, and educate your child about safe driving habits to maintain a clean driving record.

Child not living with you

If your child doesn't live with you, they will need their own car insurance policy, even if they are a co-owner of your vehicle. This is because car insurance providers require that the insured person lives at your residence and parks the car at your address. The main driver of the car, the address of the driver, and the location where the car is garaged are rating factors that determine your risk as a policyholder.

However, if your child is at college and not permanently residing elsewhere, many policies will cover them. If they establish a separate permanent residence, they may need their own policy.

It's important to check with your insurance provider to clarify their rules regarding coverage for children who don't live with the policyholder.

Learner's permit

In California, all drivers, including those with a learner's permit, must have car insurance. The state's minimum liability coverage requirements are $5,000 for property damage, $15,000 for injury or death of one person, and $30,000 for injury or death to more than one person.

If your child has a learner's permit, you have several options for ensuring they are insured. One option is to add them to your existing auto insurance policy. This is typically the easiest and cheapest way to get coverage for your child. Most insurance companies allow permit holders to be added to their parent's or guardian's policy. This option also allows the permit holder to benefit from the same coverages as the rest of the family and start building an insurance history, which can be beneficial when they get their own policy.

If your child is a minor living with you, this is usually the best option. It is important to inform your insurer about your child's driving status, as they may refuse to pay a claim if they are unaware that your child was driving your vehicle. Additionally, if your child is over 18 and still living at home, they can also be covered under your policy.

Another option is for your child to purchase their own insurance policy. This may be necessary if the permit holder's parent or guardian doesn't have insurance, or if the permit holder lives at a different address. However, getting separate coverage for a permit holder is typically more expensive.

It is worth noting that California has strict penalties for driving uninsured. For a first offence, fines range from $350 to $700, and for a second offence, fines can be as high as $1,800. Therefore, it is crucial to ensure that your child has the appropriate insurance coverage before they start driving.

Excluded drivers

An excluded driver is a household member who is specifically left off your car insurance. Their name will be listed as "excluded" on your policy. Excluding a driver means that person is not covered by the policy, typically due to a high-risk driving history or other factors that could increase premiums.

In California, it is a legal requirement to inform your insurance provider of anyone who has regular access to your car. If you lend your vehicle to an unlisted driver, your insurance company can refuse a claim. However, some companies extend coverage to unlisted drivers when they are given permission to drive.

In California, insurance companies are required to offer good driver discounts of 20% or more for drivers with no accidents in the past three years. If a household member does not qualify for this discount, the policyholder can choose to exclude them in exchange for lower rates.

If you exclude a driver from your policy, they will not be covered in any scenario, even if you give them permission to drive or there is an emergency. If an excluded driver operates your vehicle and is involved in an accident, they will not be covered under your policy.

It is important to note that not all auto insurance companies allow driver exclusions, and some states outlaw it completely. In addition, it may be difficult to get a driver exclusion in certain states due to the risk to the insurance company.

Discounts for young drivers

Young drivers are considered high-risk by insurance companies, and their insurance premiums tend to be high. However, there are several discounts that young drivers can take advantage of to reduce their insurance costs. Here are some strategies for young drivers in California to obtain discounts and save money on car insurance:

Good Student Discounts

Many insurance companies offer good student discounts for young drivers who maintain good grades, typically a B average or higher. This discount is available to drivers under 25 and can help offset the high cost of insurance for young people.

Defensive Driving Courses

Completing accredited defensive driving courses can also lead to significant discounts on car insurance. These courses are designed to improve driving skills and reduce the risk of accidents, which is beneficial for both the driver and the insurance company.

Safe Driving Discounts

Insurance companies reward safe driving. Young drivers with a clean driving record, free of accidents, speeding tickets, or other violations, can often receive discounts on their insurance premiums. These "good driver discounts" can range from 10% to 30% and are a great way to save money while also staying safe on the road.

Usage-Based Insurance

Usage-based insurance, also known as telematics insurance, is a type of program where the insurance company monitors your driving behaviour, usually through a mobile app or a device installed in your car. By participating in these programs and demonstrating safe driving habits, young drivers can earn discounts on their insurance premiums.

Vehicle Choice

The type of car a young driver chooses can also impact insurance costs. Older, less expensive cars are often cheaper to insure than newer models. Additionally, safety features like anti-lock brakes and airbags can reduce insurance premiums.

Multi-Car Discounts

If a young driver is added to their parents' insurance policy, they may be able to take advantage of multi-car discounts. This is often a more cost-effective option than purchasing a separate policy, especially if the young driver is getting their own car.

Shop Around

Young drivers should compare quotes from multiple insurance companies and explore the discounts offered by different providers. By shopping around, they can find the best rates and maximize their savings.

Frequently asked questions