Adding a New Driver Can Be Expensive; Not Adding Them May Cost More

Inexperienced drivers have accidents.  Of course they do; anyone learning a new set of skills is bound to make a mistake.  In fact, new drivers between the ages of 16 and 22 are 96% more likely to have some type of auto accident.  It may just be a fender bender or something much more serious.  They’re going to have an accident; the severity is the question.

The risk of new drivers coupled with inflation, and supply chain issues are starting to cost the insurance companies a bundle (and I’m not talking about Flo’s bundled insurance package).  Parts and labor are in short supply driving prices even higher.  These factors make a fender bender that would have cost $1,500 to repair 3 years ago now cost about $3200.

The increased cost of repairs has been eating into the insurance company’s bottom lines, and we all know what happens next.  The insurance companies raise their rates.  That’s been happening across the board, but it’s been especially brutal for people with young drivers in their household.

Parents of young drivers are now facing some serious choices.  They are seeing increased spending at the grocery store (teenagers eat a lot); increased costs at the pump; and increased cost for auto insurance.  Something has to give.

One risk that parents are contemplating is to NOT add their young driver to their policy.  Here’s why that’s probably not a good idea. 

  • Some insurance companies are denying claims caused by members of the household that were never listed on the policy.  Remember the young driver’s have a 96% likelihood of an accident.
  • If the insurance company does cover an accident of an unlisted driver of the household, they will then add that driver to the policy and backdate it to the day they received their driver’s license, creating a potentially huge amount of money that is owed up front.  They would then likely cancel your policy leaving you with the task of finding another insurance company with a new accident and a young driver on your record.  That’s when the cost really increases.

Some Practical Advice 

  • Getting a driver’s license is not a right that teenagers have when they turn 16.  The financial condition of the family is more important than any one member of the family.  If the family cannot afford the increased cost of the teenager getting his driver’s license, then they should not get their driver’s license until they are able to pay for that themselves. 
  • Getting a driver’s license is a huge responsibility.  Part of that is a financial responsibility.  There is nothing at all wrong with making your teenager pay for their own car, gas, and/or insurance.  In fact, I think an argument can be made that it would be wrong to just give your child these things without any contribution from them.

I hope this is helpful to someone.  That’s my two cents.

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