Before I begin, I’d just like to say what an awesome forum this is. I’ve been reading them irregularly for about two years but never registered, though every time I have come to pay a visit I have always been impressed by the intelligence and maturity of the people posting here. I’m not sure what forum exactly this thread would be most suited to, so feel free to move it or whatever.
I currently live in Southern California, and I am going to be turning seventeen years old in about two weeks. I’ve had my license for about three months. My parents (well, my father) refuses to purchase car insurance (and a car) for me until I am eighteen and no longer a minor, as he says that, in the case that I am at fault for an accident, insurance companies and individuals will demand things such as our home (which will be completely payed off in a year or two) or other financial investments. He also claims that a minor involved in an accident will often have more demanded from them than an adult would, due simply to being underage and under a parent or guardian’s consent.
I realize that I might be asking information that only a small portion of this forum’s readers may know about, but this is probably the best place I know of to ask. Is what he says correct, or is my father just misinformed and/or paranoid? I doubt a bunch of people on the internet would be able to convince him otherwise if he is in fact incorrect, but I figure it is worth a shot.
Pretty much what he says is correct. If you were in an accident and you at fault, and and a court foud you liable, then his assets could be at risk.
This is why you buy auto insurance. This is also why you buy a policy with limits high enough to protect your assests.
Currently in California the state mandated minimun is 15/30/5.
That is $15,000 is the max the insurance company will pay for any one person injured in an accident, $30,000 is the max for all persons injured in an accident, and $5,000 is the max for property damage.
Let’s look at that last one for just a minute. Let’s say you run a red light and hit and total a new car. How many new cars have you seen lately selling for less than $5,000? if you were to hit and total my current car (sticker of $55,000) your insurance company would write a check for $5,000 and say best of luck, see ya. You (or your parents if you are a minor) now have to come up with $50,000. This is why you should consider buying way more than the minimum. My 20 year old daughter’s policy is 100/300/100. The cost difference between that and the minimuns is not as bad as you might think.
The only part of your post I am not sure about is
I don’t know what you (or your father) means by more demanded. If you mean more likely to be in an accident, true. If you mean more likely to be at fault due to inexperience, probably true. If you mean more likely to be assigned blame unfairly, I don’t think so. If you mean the court is likely to award more money because you are a minor, I doubt it.
So often parents who pay for their kids’ insurance totally wig out when they see how expensive it can be compared to what they have to pay for the same coverages. The typical reaction is to buy lower limits thereby lowering the cost. This is totally the wrong thing to do. The young drivers are far more likely to have a loss (girls have higher frequency smaller claims, boys have lower frequency catastrauphic claims involving teeth, hair and eyeballs all over the concrete) and therefore need the insurance probably more than the parents!
Now. Back to Rick. Just because Dad won’t pay for your insurance doesn’t mean you won’t have an accident, kill someone and because you’re a minor Dad has to pony up. The story won’t change a bit just because you don’t have insurance. It only means that there will be no insurance to pay for the damages–it’s all on Dad.
And it doesn’t matter if Dad says, “DON’T Drive my cars you little punk!” because the courts won’t give a damn what the house rules are when you pinch the keys and go for a joyride through an old-folks home. They even won’t care if you’re 17 and unlicensed, or 13 and unlicensed–Dad’s responsible for what you do (there is a lower age limit at which his responsibility for “actions of a crazy little kid” is somewhat lessened, but this doesn’t apply to you).
Oh…and if dad won’t take your word, or the word of some whacked out message board devoted to fighting ignorance in a casual & laid back kind of way, then set an appointment for you, him and the family insurance agent to sit & have a chat.
Father will be very impressed with your initiative and might just hire a stripper to entertain at your 17th B-day party.
I think what your father means is that people’s injuries often rise to the amount of insurance/assets the at-fault driver has. “Soft Tissue Injury” is one famous catchphrase, “Whiplash” is another. I’ve heard reports that as many as 1 in 3 insurance claims are fraudulent/exaggerated (take your pick). Remember that their lawyer(s) get 1/3rd as well.
In other words: If you’re an adult and at fault in an accident the other driver is only going to potentially take what you personally own, which may very well be limited to a now-totalled car. But if you’re a minor the other car’s occupants will be suffering from all sorts of vague maladies and/or emotional distress which can only be alleviated with a generous portion of you father’s estate.
It also bears mentioning that, to keep your insurance low, you should follow the “Rule of Four” when choosing a car: Four doors, four speed, and four cylinders. Sure, you may get more status from your friends/dates with a 2Fast2Furious wannabe but that just makes your already high insurance premiums skyrocket.
Somewhat tangentially, and with reference to the above, ask your dad if he has an “umbrella policy.” For a couple hundred bucks a year, he can protect his property from liability claims, with policy limits of a million dollars or more. Sounds to me like he doesn’t know about umbrellas, and one could offer him substantial peace of mind.
Secondly, when I became a licensed driver, my parents’ insurance company demanded that I be covered under the policy (increasing the premium, of course), since I represented an exposure to the company. Perhaps Inigo or one of the others could comment on insurance companies’ internal rules on mandatory coverage? Can a licensed driver in a household, like I was at the time, and Zenigame is now, simply promise “not to drive” and satisfy the insurance co?
Thanks for the replies, everyone. I’ll definitely take the rule of four into consideration. My dad did mention an umbrella policy, but said that it was only offered to 18 and up. I don’t know whether this is a mistake or misunderstanding on his part or something particular to our insurance (I guess I should find out).
Sometimes. When I was in the sales force (4 years ago) our company would charge Liability premiums based solely on the driver and with no regard to the type of vehicle driven, only Comprehensive & Colliison took the car into consideration. The idea was that a 17 year old, testosterone-poisoned boy will still be crazy whether he’s in a 1974 Pinto or a 2003 Corvette. Put Liability only on the two cars and the premium was the same. Insanely high, but the same. The actuaries backed this up with actual crash data. A more precise suggestion would be, "Get a disposable car you feel comfortable walking away from if you put it into a lamp post, and don’t cover it for Comp & Collision. You also want to balance that disposable car attitude with the level of safety you want. But Still, it’s a very feasable proposition. You can get into a (reasonably) safe 2000 Cavalier 2dr for $4-$5,000. Take a look at what Comp & Collision are going to cost you a year and you’ll see that after a couple years you’ve saved in premium pretty close to what you spent on the car!
Insurance companies want the young drivers to be rated on the policy for the reason I stated above. Nobody cares about who promised what when the kid jumps in the car and squshes granny at the bus stop. Just as Dad won’t be off the hook because his minor son took the car without permission (unless he actually wants to press theft charges, and even then he may still be in trouble), the insurance company won’t be off the hook if a claim is presented. To make this actually work, Dad has to sign a Policy Exclusion which releases the insurance company from any obligation if there is a loss caused by the person named in the exclusion. This is a stupid thing to do voluntarily. As I said, doesn’t matter who agreed to what, the minor was driving Dad’s car, the rain is gonna fall on Dad, and Dad will have waived off any financial shielding the insurance company would have provided. So, if the kid is in the household, we want to collect the premium to cover our exposure to this maniac, and the only way to get out of us is to promise, in writing, that we don’t have to pay for his hard knocks school of driving education.
Umbrella policies typically cover all household drivers. There are exceptions, but they don’t apply to you. Pops needs to bite the bullet, pay for good coverage and buy the Umbrella. he can (and should) have you pay for your share of the insurance as a matter of good parenting, but he’s making a terrible mistake by carving you out of the insurance picture.