Car Insurance and Which Car Teen Drivers Are Rated On

A client called me last week who was surprised at the increase of adding his youngest son with a brand-new driver’s license to the family car insurance policy. I’m reviewing his options, but thought this was a great example of how car insurance companies take different approaches concerning vehicle assignment when adding a teen driver. These differences can result in some very surprising rates, especially if the new driver will be sharing one of the family cars!

All Vehicles: The company my client is with does not assign any driver in the household to a specific vehicle on the policy as their primary vehicle. Instead, it opts to rate the policy with the teen driver, as well as all other drivers, to every car on the policy, whether they will drive them or not. The reasoning for this approach is the teen driver has access to each car in the household and is therefore rated on each vehicle. In this case, the teen with the new driver’s license is listed on his mom’s BMW and brother’s sports car resulting in a dramatic increase in the family’s rate.

Most Expensive Vehicle: Other car insurance companies will rate the teen as the primary driver on the most expensive vehicle in the household, even if they are not allowed to drive it. This too can have dramatic effects on the family premium since a newly minted driver is several times more likely to be involved in an accident the first two to three years of driving.

Vehicle Assignment: Still other car insurance companies allow each driver in the household to be assigned to a specific vehicle as their primary vehicle. In this instance, we can assign the teen, or other family members, to a specific vehicle as the primary one they’ll be driving. While all vehicles are still available for the teen to drive, rating them mostly on either dad’s, mom’s, or a sibling’s vehicle keeps the premium more realistic overall.

Own Vehicle: A variation on the vehicle assignment option, is when the new driver will have their own car and we’re able to assign them as the primary driver on that vehicle. Preferably, this will be a used vehicle with four doors, or a small pickup truck, or SUV which tend to carry more favorable car insurance rates than a two-door car or newer vehicle. The teen is still listed as a potential driver on the other vehicles, however, the car insurance company recognizes they will be the primary driver of a specific vehicle rather than dad’s or mom’s more expensive vehicle.

I’m working through my client’s options with our other carriers to determine which car insurance company will give him the very best rate! I’m grateful we have several options to work with! What’s been your experience? Share them with me, along with any questions or comments you may have on my Facebook, Google +, or LinkedIn pages. I’d love to hear from you!

Thanks!

Ed Wise

Wise Insurance Group

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