By Steven M. Ladd
The Horan Companies
How did 16 years go by so quickly? Yesterday he was riding his tricycle and today he’s licensed and wants to borrow your car. Before you toss him the keys, ask yourself an important question: “Have I called my agent and told him about my newly licensed son?” If not, you’ll want to do that before you let him drive off in your car. But why, what’s the worst that could happen?
Insurance carriers have a very simple policy. They want to know whenever a household member becomes licensed. The new driver must be added to the auto policy. Failure to do so can result in serious consequences. Many parents avoid doing it because they fear their rates will skyrocket, except it can actually work out to be much more costly down the road.
Let’s say your son gets licensed on the day he turns 16. Over the following year, you let him drive on occasion. In fact, he shows to be a responsible driver during this time. He manages to not have an accident and doesn’t get any tickets. Then one day, another driver happens to be texting while driving and rear-ends your son. The accident is clearly the other person’s fault. However, as a result of the accident, your insurance company sees that the driver of your vehicle is not listed on the policy. With some basic research, your company is able to obtain the date of licensure for your son. They see that he’s been licensed for one year, but was never added to your policy. This is referred to as premium avoidance in the insurance industry. Consequently they go back to the very date he was licensed, regardless of whether or not he drove any vehicle during that time, and charge you back premium.
It is also not looked kindly upon and could ultimately lead to your policy being non-renewed. A non-renewal in your insurance history will often leave you unable to qualify for a competitive rate elsewhere. That leaves you paying even more premium. Rather than not add him and run this risk, there are some things you can do to alleviate some of the extra price burden.
Many insurance carriers offer an assortment of discounts to young drivers. The six-hour defensive driver course is accepted by all companies. However, do not confuse that with the mandatory five-hour class required for licensing, as that does not provide a discount. The Good Student discount is another option. If the driver carries a B average (3.0) or better, some will offer a reduced price. Another helpful one is Driver Training. This is when an additional hands-on course is taken to compliment the state required course. Some companies might offer additional opportunities specific to their brand.
Discounts or not, make sure to add your young driver to your policy. If you should’ve already, but haven’t yet, do it ASAP. It’s better for you to be proactive and inform the company, rather than have them find out on their own.
Steven M. Ladd is an insurance agent with Horan Companies, Inc. He can be reached at (315) 635-2095 or [email protected].
