My husband and I have two sons, 20 and 17 yo. Our family auto policy covers 3 drivers; all 3 cars are registered to 2 adults. While we expect our kids to be responsible drivers, things happen, and we need to mitigate the risk to our assets in the event of a serious accident. We maintain standard coverage now and have been thinking about options for a while. So far we got the following ideas:
Raise coverage limits – can only be done on all cars under the policy, and would add to our annual premium of $4K for 3 cars with the 4th car added soon. Ouch.
Split 20 yo driver’s car off the family policy to maintain higher limit for that car and keep it registered to my husband. Even with the same coverage we obtained 4 quotes with double our current premium for that car. Ouch.
Split 20 yo driver’s car off the family policy and register it to him. The premium will be more than double (see above). What about the 17 yo driver?
Get an umbrella liability policy. In order to close the gap for the underlying coverage we would have to add $800 to the auto policy plus the umbrella coverage. Ouch.
Get an umbrella liability policy and don’t close the gap.
Most of these options seem unaffordable while putting two kids through college. Already have every possible discount applied to the premium. Tried quotes thru Costco, work benefits, etc. 20 yo is away at college <100 miles, living off campus, he drives under 5K/yr. His summer earnings go towards his rent, he can’t afford insurance on top of it. DS2 is a HS senior, getting his license next month, can’t wait to drive to school. He will probably be >100 miles away for college next year, but then will need a car after the freshman year.
What is the appropriate auto coverage LEVEL for young drivers?
What is the best insurance strategy for us? We live in NY.
Our son attends college out-of-state, almost the other side of the country. He was getting an internship and needed a car to get there. We bought him an SUV in his college’s state. He was 20 at the time and since he lives in an off-campus apartment he had an in-state address (lease) so he registered the car under his name in that state, and we got him Geico auto insurance in his name. Geico was the best deal we found.
Sometimes I recognize young adults driving around the neighborhood and I know they have low paying jobs but with a pretty decent car. Based on our experience with 2 boys it boggles my mind how they can afford good insurance coverage.
Because the boys cars were under our policy and shared vehicle registration, we kept the liability at 150,000/300,000. We always felt that if something were to happen that the injured party could come after us financially and we wanted to be covered. This kept the rates up, but keeping our cars and home on one policy cut a little bit as did raising the deductible to $1000. You want your child to drive a safe car, but a “beater” would sure be cheaper to insure.
His car is a beater with 200K miles. We have same limits in place and deductible $1000, but I feel $300,000 in bodily injury each occurrence does not go far these days, at least in our area. Both kids will be in state for NY.
Thumper, do you mean the umbrella without a gap? We have a house, 401K and other assets.
No, all of these quotes were for 3 drivers/cars. The 4th driver is not licensed yet, driving with a permit. But we are getting a 4th car this month due to the beater car unreliability. The youngest driver will have to deal with it, but his HS is 2 miles away.
23yo S is on our policy (he reimburses us). He is listed as primary driver of his car. We currently have 3 cars and will soon have 4 drivers/3 cars when 16 yo gets licensed. We also looked into various ways to decrease our costs, but found the cheapest way was to keep son on our insurance. We carry full coverage on all cars because collision is really not a huge percentage of the total. We also have a 1M liability policy for various reasons, including in case one of us ever gets into a bad accident and gets sued.
I stuck with amico, even tho it is more expensive than other insurances. In his first year of driving, son had a few accidents, and they considered his car totaled after last one. Only that last one was reported. The car was inherited from his GF, so insurance preferred to total it than repair. Everything was done within 4 days. I realized why insurance rates for young drivers is so high.
It is really hard with young drivers, and unfortunately the greatest part of the cost of the insurance is liability against getting into an accident with other drivers and them suing, rather than your own car, so while owning a beater is cheaper since you likely only have liability (least I hope you do, comprehensive and collision makes no sense), the bulk of the cost is going to be liability.
It might be wise to have an umbrella policy rather than raising the limits on the individual policy. Question for you, besides the car your son drives, what other cars do you have? Unless I have been told wrong (and it is not impossible), even if your 20 year old is listed as the primary driver of the clunker, if for example your husband had an expensive car, especially something considered sporty, they will consider that a risk since your son has access to the other cars even if his primary vehicle was the clunker. Unfortunately, I suspect in the end having two young male drivers you won’t be able to save much. If you have cars that are older and still have comprehensive and collision on them (assuming you own them), you can drop that, but I suspect in the end you won’t save much. I have seen people try, for example, to take their son off the policy, with the idea that if he got into an accident, they could claim he was a guest driver, but I suspect that could end up backfiring and potentially getting charged with fraud.
Personally, while I am aware of the actuarial data that backs higher rates for young men, with insurance we already subsidize high risk policy holders because without doing that they likely couldn’t afford it. In some places driving is not an option, so how is a young man supposed to get to work?
Another vote for umbrella coverage, with or without the gap coverage. I was surprised at how affordable umbrella coverage is considering what is at stake.
I am currently reviewing alternative insurance options and am amazed at the variability in premiums between companies for ostensibly the same coverage (in CA). I filled out several online estimate forms for a ballpark idea of costs. Within a day I started getting calls from representatives offering to negotiate lower premiums. Clearly there is a large “gray area” when it comes to premiums. If you have the the time and the nerve for it, it might be worth calling around to find the best offer then ask your current carrier if they can match the quote. My daughter was in an accident that was her fault and our premium is set to skyrocket at the next renewal. I tried negotiating with our carrier (Amica) since we have been with them so long, but they won’t budge. The option is to jump ship with 3 cars and home/umbrella coverage to another carrier or “spin off” our daughter to her own coverage. We’ve been pretty happy with Amica, so I think we’re just going to cut our daughter loose. Some of the companies won’t even provide the highest level of liability coverage for someone who’s been in an accident, so it’s going to require a lot of research and phone time.
My umbrella has underlying minimum requirements for the primary home and auto policies. If I don’t insure at that level, I am responsible for the “gap”. That is what I understood the above poster to mean.
OP-I felt your pain. We had 2 sons 2 years apart. Although I have read teen girls are almost as expensive to insure as boys, that has not been our experience with a D 6 years later.
What we did when they had a few years of driving experience was to title the car to them and put them on their own policy. With our carrier at that time, they could retain our discounts. Our policy cost more than went down to cover their coverage cost. An unforeseen benefit–once they knew any accidents would affect their rates for a long time, they instantly became much more cautious, never let their friends touch the wheel, etc. These were responsible kids without accidents. I did not expect this added bonus.
There have been previous threads in which other posters reported a similar experience to ours.
Umbrella coverage is designed not to apply until the limits of the underlying auto or homeowners policy is exhausted. It normally will specify the required underlying limits. For example, if the umbrella policy says it won’t apply until the $250,000 limits of the auto policy are exhausted but your auto policy only has $100,000 limits you have a gap of $150,000 which you may have to pay before the umbrella policy applies. A gap is not a good thing, and I am surprised any insurer would knowingly write an umbrella policy with a gap in coverage. It will cause all sorts of problems for the insurer as well as the insured.
Besides having enough liability coverage to protect your assets another reason to maintain high auto limits is so you can have equally high uninsured or underinsured motorist coverage in case a vehicle with no or inadequate liability insurance causes injury to you. You can then recover under your own policy.
@LoveMyPuppies When my oldest daughter got her license at 17 our insurance went up automatically. It did not matter how many cars we had (we had three) and we were not allowed to exclude her from the policy. If our younger daughter (just turned 18) gets her license it will go up again. It isn’t dependent on how many cars we have–although we would have to pay more if we bought another car. Check with your agent and you may find that your price is going up no matter what. So far I’m glad younger daughter is license free as then our $6000 policy would be closer to $7500
Have you tried GEICO? If you have a clean driving/accident record, their rates were amazing. It was adding the first teenage driver that finally prompted me to call. The process took far more than 15 minutes (closer to two hours), but I saved 50%. Rate dropped significantly when son went away to college.
I have an umbrella policy for the full value of my assets, but that is written by my homeowner carrier as GEICO was terribly expensive for the umbrella policy.
All this talk of gap between car insurance and umbrella policy prompted me to pull out my Chubb file. The umbrella policy specifically lists the levels of coverage on my auto policy so perhaps I provided my auto policy limits to the agent when the umbrella coverage was written.
@sryrstress, you explained gap perfectly. We have auto coverage above the basic but not as high as the gap insurance provider requires for the underlying coverage. Our home coverage is good enough. As a layperson I think of it as something like the dougnut hole for Medicare. The umbrella insurance provider is through my group program work benefit (Chubb) and is not the same company as car insurance. Chubb is OK with the gap as long as we are aware.
@Tyberius, what kind of problems we may have with the gap? It would cost $800 to close it with just 3 cars.
I got 5 quotes from all major companies, and they are very close, right now we have the best rate. I have tried GEICO in the past, and their rates were expensive. We all have clean driving record. No mid life crisis cars for the husband, our cars are boring family sedans. It is what it is.
Thank you all for your helpful suggestions. I know we are on the right track.
I’m wondering if the quote you got from the 5 major companies included a current quote from GEICO? Forget what you were quoted in the past, what is the quote from GEICO with the young drivers on the policy?
The reason that I ask (and that everyone keeps mentioning GEICO), is because they are the only company (that I know of), that does NOT price up for young drivers. So if your last quote with GEICO seemed expensive, when other companies double their rates for your young drivers, all of a sudden GEICO looks very cheap.
USAA massively raised our rates when the boys started driving, and we assumed everyone would do so. When we asked them why they were so much more expensive than GEICO, they said they were their major competitor, and they could not compete when GEICO doesn’t increase the rates for young drivers.
@systress, unless you have the money tucked away to cover the gap and are willing to pay it, not just now but in five years from now, you will have a rough time settling a claim that goes into the umbrella limit. If you or your kid hits someone on a motorcycle you may be looking at a death, amputation or paralysis, with a value of say $1.2 million. If you have a gap between $250k on your primary policy and the $500k minimum on your umbrella you have to pay the gap before your umbrella kicks in. You may have that $250k available now but will you in three years after paying college tuition or for an unexpected medical crisis? It is a big risk to take, and I am surprised Chubb is willing to take it. Chubb’s risk is deciding whether to risk an excess judgment or to drop down and cover your gap. Your risk is also having to cover the gap.
@Tyberius I didn’t say someone should have a gap and I do not have a gap. I’m not a big insurance fan and have very high deductibles. I have a business, farm, and rentals. I definitely have a good umbrella policy, high policy limits and do not gap myself.