Insuring a Teen Driver in Single-Parent Households

Insuring a teenage driver is an expensive proposition. If your teen is away at college, lives part of the time with an ex-spouse, or spends a significant amount of time away from home for any other reason, are you still required to buy auto insurance for the teen? You might, depending on the circumstances and the practices of your insurance company.
When parents are divorced

When teens split time between divorced parents, which parent should include the teen on his or her auto coverage? Many companies suggest the parent, who has custody of the teen the most, should add the child to his or her policy. In some cases, insurers say it's whichever parent has custody of the teen when the child is attending school.

If the same company insures both parents, the teen will be covered by both parents' policies, regardless of whether the teen is listed as a driver on either policy. That's because some insurance policies define "an insured" as "a person related to you by blood, marriage, or adoption who is a resident of your household."

Not all policies are the same. Check your policy language or contact your insurance company for details.

Honesty is the best policy

If you don't list your teen on your policy, be prepared for the potential consequences. Cancellation, non-renewal, and surcharges are among the unpleasantries you might face.

Some insurance companies will cancel your policy for misrepresentation, if you fail to list your teen driver during the application process, or when the teen gets a driver's license.

Some insurers require all drivers be named on both policies, no matter how much time they spend in a household. If your teen has access to your car and drives it even occasionally, you might be required to list the teen on your auto policy.

The absolute worst case

In a state that allows insurers to void policies for misrepresentation, not listing your teen on your auto policy can be a costly mistake. If your teen has an accident and you file a claim, your insurer could void your policy because you failed to tell them about your teen.

If you're unsure whether your child is adequately covered, contact your agent or insurance company.

Why auto insurers are so concerned about teens

The Insurance Information Institute (III) has released statistics, showing just how much of a risk teenage drivers are to themselves and to others on the road.

In 2001, 3,608 teenage drivers were killed in traffic accidents. Teens accounted for 14 percent of all the drivers involved in motor vehicles fatalities, according to the National Highway Traffic Safety Administration.

The crash rate for teens aged 16 and 17 is three times greater than for 18 and 19 year olds. The cost of auto insurance for teenagers is always higher than for other drivers because as a group, they pose a higher risk of accidents than more experienced drivers. III warns parents adding a teenager to an insurance policy usually means a 50 to100 percent increase in the parent's insurance premium.

A discount offered by most insurance companies can help reduce the cost of insuring teen drivers. "Good student discounts" are available to teens, who have a grade point average of a B or higher.