Question on Youthful Driver

[blue_wynd]

So I have a client who's daughter is of age to get her license. After asking me how much it will be to put the daughter on the policy, she got a sticker shock. She called back and ask me if this scenario can be played. Title one of the cars to the daughter, get a state min. policy for that car with the daughter as the insured. The daughter has no assets to sue and want the policy premiums as low as possible. The daughter will still be listed on the parents policy, but as a excluded driver. Anyone see a issue with that?

I believe the main issue is if the daughter is under 18, she cannot enter into a contract; so she isn't eligible for her own policy, so the question is moot.

I am interested in if this scenario can be done if the daughter turns 18. Would it be more cost effective with an 18 year old on her own policy and have the parents policy exclude her rather than the normal route of adding the daughter? If the daughter is still living with the parents at that time of course. Is the carriers willing to do it, if not same carrier; maybe split up the carriers? Would an insurance agent even want to play along?


Thought it is an interesting scenario and wants to see the gallery's thoughts on it.

 

[Josh]

A point of consideration is that if the daughter has state minimums, there is nothing to say that in the event of a loss they wouldn't go after future earnings.

Also, an 18 year old alone, even at state minimums is usually going to be much more expensive than just adding them to an existing policy with their parents.

 

[blue_wynd]

A point of consideration is that if the daughter has state minimums, there is nothing to say that in the event of a loss they wouldn't go after future earnings.

Also, an 18 year old alone, even at state minimums is usually going to be much more expensive than just adding them to an existing policy with their parents.

The price might be carrier specific for cost effectiveness. After aging the daughter as a 17 old to see the cost, the premiums went from 1800 a year for three autos to 3800 a year, even with the good student discount. Didn't bother to check what the 18 year old state min. scenario would be.

 

[Josh]

The price might be carrier specific for cost effectiveness. After aging the daughter as a 17 old to see the cost, the premiums went from 1800 a year for three autos to 3800 a year, even with the good student discount. Didn't bother to check what the 18 year old state min. scenario would be.

Are we comparing apples to apples though?

When I turned 18 my policy on my parents was like $150/month, getting my own was like $325/month for lower limits. That was just me and there are a dozen other variables that can factor into things.

I think it's reckless and irresponsible to do the state minimums just to save some money though. If you hit someone and their out of work for life because you hit black ice or ran a light, why should they only be able to go after the state minimums? Yes, they should have their own UI/UM (and I do personally), but I think if you can't afford to properly pay for damage you cause using a motor vehicle (using insurance), then you probably should stay off the road.

Roughly the same scenario, take an old beat up car with liability only and have the kid listed as the primary driver on that, any idea how that impacts rates? If the kid is listed as primarily driving a mercedes SLK it'll be different than if it's on an old honda civic.

 

[Schwetty]

In my experience it is usually cheaper to have the young driver on the parents policy. That way they can take advantage of the multi-policy discount. Many carriers require 3 years driving experience before the young driver can have a preferred policy.

I would get a quote for the young driver and show it to the parents so they can see that despite the higher cost, it is still cheaper to keep them on their policy. It also helps if there is a liability only car on the policy that you can rate the young driver on.

 

[Herkster]

So I have a client who's daughter is of age to get her license. After asking me how much it will be to put the daughter on the policy, she got a sticker shock. She called back and ask me if this scenario can be played. Title one of the cars to the daughter, get a state min. policy for that car with the daughter as the insured. The daughter has no assets to sue and want the policy premiums as low as possible. The daughter will still be listed on the parents policy, but as a excluded driver. Anyone see a issue with that?

I believe the main issue is if the daughter is under 18, she cannot enter into a contract; so she isn't eligible for her own policy, so the question is moot.

I am interested in if this scenario can be done if the daughter turns 18. Would it be more cost effective with an 18 year old on her own policy and have the parents policy exclude her rather than the normal route of adding the daughter? If the daughter is still living with the parents at that time of course. Is the carriers willing to do it, if not same carrier; maybe split up the carriers? Would an insurance agent even want to play along?


Thought it is an interesting scenario and wants to see the gallery's thoughts on it.

While the idea that she had seems logical, it really isn't in there best interest. I worked uninsured and underinsured subrogation for three years with a large insurance company. Not only are they taking a large risk by wanting state minimums, they are also putting their daughter in a bad situation.

Say that she did get in an accident and the bills rack up, what do you think the company is going to do? Write off the balance because she is young, doesn't have a job or assets? Absolutely not. They'll hold the file until the SOLs run, and in that time, they will be checking for assets frequently. They can garnish wages and put liens on property. Not to mention ruin her credit for the rest of her life if it ends up with a collection agency (which it most likely would)...

 

[rudy323]

Show the price of adding the daughter
then show the price of the daughter by herself

After THAT sticker shock, they usually add child to their policy

 

[xrac]

Are we comparing apples to apples though?

When I turned 18 my policy on my parents was like $150/month, getting my own was like $325/month for lower limits. That was just me and there are a dozen other variables that can factor into things.

I think it's reckless and irresponsible to do the state minimums just to save some money though. If you hit someone and their out of work for life because you hit black ice or ran a light, why should they only be able to go after the state minimums? Yes, they should have their own UI/UM (and I do personally), but I think if you can't afford to properly pay for damage you cause using a motor vehicle (using insurance), then you probably should stay off the road.

Roughly the same scenario, take an old beat up car with liability only and have the kid listed as the primary driver on that, any idea how that impacts rates? If the kid is listed as primarily driving a mercedes SLK it'll be different than if it's on an old honda civic.

That would be my approach. Clunker car, liability only with daughter as primary driver.