When a family is preparing to begin the “learning to drive” process with a teenager, there are some very serious considerations that must be discussed, and some very serious decisions that have to be made. Some of the most important have to do with the family’s automobile insurance coverage. Connected to that, and maybe even more important, are the potential responsibility and financial liabilities for the family.

The first thing that every family should do is to have a thorough and frank discussion with your insurance agent.  Every parent needs to understand EXACTLY how this is going to affect their family.  I know that you may think that you don’t want to talk about this with your agent until you actually have to. Like, maybe, the insurance company won’t pick it up? Not likely! But you DO need to have this discussion. It could be the most expensive decision (or indecision) you will make in your lifetime!

A parent or guardian must sign for financial responsibility when a teen is getting a permit or a license. The teen is a minor; therefore it is mandatory for the parents to sign. As a parent, you are not signing for “permission”; you are signing for financial responsibility. Any incident that your child has in a car, you, as a parent, are responsible. Therefore, everything that your family has — home, money, equities, college fund, savings, etc., is at risk. Some people might believe that they have insurance, and therefore they are protected.  You need to ask yourself two basic questions.  (1) Do you have enough liability protection? (How far will $500,000 coverage go when there is a brain injury or a spinal injury? Answer:  It won’t go ‘around the block’! And (2) If you have some assets, how can you protect your assets?

A teen should also understand that with just a couple of tickets, even the “just barely speeding” variety, the cost of the family’s insurance is going to increase substantially. Most teens seem to think this is just the price of the ticket. Actually, with two small tickets, most insurance companies are going to look at an increase of several thousands of dollars over the next three to five years. And that is assuming you can continue with the insurance company, rather than having to go to a “high risk” company. In this case, the total cost to a family could be more than $10,000. 

You also should create a contract — a real contract of agreement — between the family and the teen. It should spell out the parents’ expectations, expressed conditions for the privilege of driving, how the teen can “earn” more driving privileges, curfews, driving behaviors, expectation that the teen will not risk the family, and of course, the consequences of not abiding by the agreement. As every child begins to approach being a teen, there should be a frank discussion in regard to taking a family car without permission — and what this can mean to the FAMILY. And that it can mean that EVERYTHING a family has is at risk, if the teen has an incident and injures or kills someone. 

In states where there are specific laws of how and when the teen can drive, and with whom in the car, parents must set up these things as a part of the agreement. 

As an example, in the state of California there is a law specific to the teen driver for the first 12 months after getting a driver’s license. The teen cannot drive a car in which other teens are present, unless there is also a person in the car who is 25 years old or older. Very often, teens (and even many parents) let this slide because of the odds of getting picked up are small, and it is only a minimal cost ticket. That really is not the danger. The danger is that the teen will be involved in a crash, and if there is another teen in the car who is NOT supposed to be in the car, and was injured, the parents of the teen who is driving could be totally responsible because the other teen was not even supposed to be in the car. That is — the parents, in this case, have NO defense. The situation is not defendable. 

In the state of Colorado, a newly licensed teen driver cannot drive with a teen in the car for the first 6 months after they get driver’s license. For the next 6 months, they cannot drive with more than one teen in the car. After one year, that condition is removed from the license.

Every parent needs to know exactly what the state law is in regard to teen drivers, and what potential liability and responsibility they may have. This whole area is an unlimited, open area of financial responsibility. Every family needs to do whatever is necessary to protect themselves.

In addition, parents need to understand the coverages that their insurance policy has, and what it doesn’t have. As an example, there are specific companies whose policies have a “step down” coverage for a teen driver. That is, if the parents are driving they have (example) $300,000 of liability coverage, but if the teen is driving, the coverage may step down to the state’s limit of (example) $35,000. In addition, if a teen takes a family car (without permission) BEFORE they have their license, is the family covered??? Or does this situation invalidate the coverage???

This is a major issue for every family! You depend upon your auto insurance company and the coverage you believe they are providing. You should also have a discussion with your attorney, as to the state laws and what they mean to your family. And the teen needs to have your counsel (not your threats) as to what this means to the family. If every family would set up a “Rite of Passage” process for each of their children, and make sure that their teens gets the preparation they need to become a skillful and competent driver, our research has shown that most teens are absolutely willing to become a responsible driver. 

Using the learning to drive process as a Rite of Passage process is almost always effective. Why? Because this kid wants to drive your car! And they are willing to listen, if they believe that there are conditions attached to the privilege.  If they believe that driving is their “right”, you are going to have problems!

For information about the “Teen Driver — a Rite of Passage”, along with a Parent/Teen Contract, please contact a MasterDrive office near you.  Or send us a web site request by going to the “Contact Us” page.