Auto Insurance for Teenagers and
"High Risk" Drivers
Insurance Options for High-Risk Drivers
Once you've been labeled "high risk," you'll find it hard to get car insurance, let alone inexpensive coverage. Insurance companies know you and they're a little uncomfortable about what you might hit. All insurers routinely check motor vehicle records for driving history and credit reports for payment history before the write or renew policies. If your rap sheet is as spotted as a hyena with the measles or even if you drive a car "built for speed" you may be considered high risk.
Companies use the Comprehensive Loss Underwriting Exchange (CLUE®) to find out applicants' insurance claims history. You can view your own records. LexisNexis® Personal Reports is the source. If you've been denied coverage by an insurance company, have your CLUE reference number handy so you can get right to the appropriate report. You can call them at 800-456-6004.
Several major insurer groups write coverage for high-risk drivers through one of their member companies. Greta can steer you to the right places. Every company has its own guidelines for deciding to insure people.
In Texas, the Texas Automobile Insurance Plan Association (TAIPA) makes policies available for drivers that can't find basic liability coverage anywhere else. To qualify for insurance through TAIPA, two insurance companies must first reject you. A licensed insurance agent must sign your application and send it to TAIPA. TAIPA then assigns you to an insurance company, which collects your premium and pays your claims. The company will provide coverage for as long as three years.
If you get auto insurance through TAIPA, your policy will provide the basic liability insurance required by Texas law. You can add $2,500 worth of personal injury protection (PIP) and uninsured/underinsured motorist coverage. TAIPA doesn't provide collision or comprehensive insurance. Nor does it offer more liability coverage than the law requires.
TAIPA coverage costs more than most companies charge, but could be less than you would pay a county mutual. TAIPA policyholders must pay additional premiums, called surcharges, for traffic convictions. They also pay higher surcharges for accidents than other drivers do. Texas Department of Insurance rules encourage insurance companies to take policyholders out of TAIPA and insure them at lower rates after a year without tickets or accidents. The rules also require companies to offer cheaper "voluntary" policies to their TAIPA policyholders who have gone three years without tickets or accidents.
To get coverage through TAIPA, you can apply through Greta. She'll forward your application and first payment to the Association. You should receive a proof-of-insurance card by mail within 10 days. Only agents specifically certified by TAIPA may sell TAIPA policies. For more information: http://www.taipa.org or 800-580-TAIP (512-444-4441).
Automobile Insurance for Young Drivers
As you know, teenagers have committed a heinous crime. They're young. And inexperienced, fearless and clueless. Many, many of their contemporaries have caused accidents, especially the males of the species. Insurance companies are scared to death of them.
The good news is, by state law, they can be added to their parents' policy to help spread the risk and reduce rates. Never buy a kid a separate policy if you can help it. While the financial hit is gawd awful having them on your policy, an individual with a sixteen year old driver would be cataclysmic.
A parents' policy covers children living at home or away at school. Actually they're automatically covered on their parents' policy. However, don't think you can get away with not naming them when they reach driving age. By law, insurance companies are required to charge the correct rate based on the classifications of drivers in your family. If you don't have everybody listed, and the company learns about it later (i.e, with an accident or claim) the company is entitled to bill you for the extra premium you should have paid.
Be sure the insurance company knows if you have kids away from home at school. Rates are based on the car's location. You may actually get a break in premiums if they attend school in a less populated, lower risk county. If they're in another state, you should review the policy to be sure they're legal and covered.
If you buy your kid a car, be sure to list him or her as "principal driver" of that vehicle. If you don't, the teenager will likely be assigned to the most expensive car in your "fleet" and will draw the highest possible premium.
Removing the Little Darlings from Your Policy
Chances are, you'll want to remove your children from your policy when they no longer live with you. Believe it or not, you'll have to "prove" to the insurance company your little progeny has flown the nest. You'll want to collect evidence like a driver's license, lease agreement, utility receipts or conviction document to demonstrate your child has moved. You might even get by with what's known as a "named driver exclusion" whereby you legally finger your offspring as not covered on your insurance as mutually agreed upon by you and the company.
It's probably a bad idea to remove a kid from your policy that has simply moved out to attend school. Your insurance company will likely require you to keep them on your policy even though you'd prefer the little sweeties get their own damn insurance. They can do this.
You may be able to remove a teen-aged driver from your policy by purchasing a "non-owner policy." This is a stupid idea. A non-owner policy merely provides additional liability insurance when driving a non-owned vehicle. Much to your agitation, if your teen-ager has an accident while driving your car, neither your policy nor the non-owner policy will pay for your vehicle's damage. You might also be unprotected financially if held liable for an accident caused by your minor child, a conundrum known in legal circles as having your "posterior in a crack."
Even more brainless, if the non-owner policy is rated properly, your teen-ager's liability insurance might cost as much as or more than if he or she was on your policy.
Saving Money on Insurance for Young Drivers
Unfortunately, insuring young drivers is catastrophically expensive. Some young drivers may qualify for discounts, however. If a human is under 18, he or she must complete a driver training course approved by the Department of Public Safety to obtain a Texas driver's license. Many insurance companies give a 10 percent driver training credit for teen-agers who complete this mandatory driver education. Parent-taught drivers are eligible for the discount if the parent used a DPS-approved course. Some companies offer discounts to young drivers who make good grades in school or who belong to certain youth groups. Ask Greta for help.
Auto Insurance Demystified | How to Buy Auto Insurance
Stuff that Affects Your Auto Rates | High Risk Driver Insurance
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