One of the options that parents consider in order to save money on their auto insurance, is placing the young driver on a separate policy. They think if they buy a separate policy for their teen driver, the rates for their other cars won’t go up.
Actually, that part may be true. But the flipside is that on a separate policy, the rate for the teen driver’s car goes way up for two reasons:
First, there won’t be a multi-policy discount for the single car on the teen’s policy
Second, you will have to buy a policy from a “high-risk” insurer. “High-risk” insurance companies charge rates that are more than double of a standard company.
Not only that. Placing your teen on a separate policy can cost you much more than higher rates. The most dangerous problem when insuring your teen with a high-risk insurance company is that you can’t buy high enough limits for a teen driver. The liability limits offered by these companies are usually no higher than 100/300/50, that means $100,000 per person, $300,000 per accident and $50,000 for property damage.
Some parents think that’s fine - that in case of a big claim, the other party will only sue their child’s insurance company if there’s a big claim. That's wrong! Any good attorney will go after the parents too, as long as the child is living in the parent’s home or is a dependent. The smartest way to insure your young driver is to keep them on your own auto insurance policy, with the highest liability limits you can get.
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