Teen Car Accidents: What Happens to Parents' Car Insurance?

If your teen gets into a car accident that is his or her fault, you can expect your car insurance to soar.

Let's face it; teenagers can be bad drivers. When your child turns sixteen and gets a driver's license, you can expect your car insurance to soar. And if your teen gets into a car accident that is his or her fault, things will get even worse. But what exactly will happen?

The most important thing to remember is that every state's law is different, and every car insurance company does things a little differently. Keeping these things in mind, let's look at the possible insurance repercussions if your teen driver gets into an accident:

  • your teen's car insurance premium increases
  • your car insurance premium increases
  • your teen's car insurance is cancelled
  • your car insurance is cancelled

Raising the Insurance Premium

While everyone's car insurance will increase if they cause an accident, for teens, it is usually a much greater increase. Since automobile insurance companies begin with the premise that teenagers are going to cause accidents, even one accident will make your teen's car insurance premium skyrocket. Some insurance companies might even increase your teen's insurance premium if your teen gets into an accident that was not his or her fault!

An insurance company may even raise your car insurance premium, if your teen is on your insurance policy and is listed as a secondary driver for your car. The insurer assumes that, if your teen has caused an accident in his/her own car, the teen could just as easily cause an accident in the parents' car. So, one step that you can take in order to keep your insurance costs down is to delete your teen as a listed driver on your and your spouse's cars, and then make sure that your teen understands that he/she is not to drive the adults' cars under any circumstances. If your teen drives a car in your household for which he/she is not a listed driver, your insurer will not provide any insurance for you or your teen if he/she gets into an accident in that car. (Learn more: Who is Covered Under Your Car Insurance Policy?

In thinking about automobile insurance premiums, it is important to keep in mind that car insurance in many states is heavily regulated. Some states have very specific regulations governing exactly when and by how much car insurance premiums can be increased after an accident. These regulations can often be found on the website for your state's Department of Motor Vehicles. If you have further questions or concerns about automobile insurance premiums for teens, you should speak with your automobile insurance agent. If your teen gets into an accident, and you have questions about what this will do to your and your teen's premium, you should also feel free to contact a qualified car accident lawyer to learn your legal rights.

Cancelling the Car Insurance

A car insurance company may cancel your teen's car insurance after an accident. Some insurers may even cancel your own insurance unless you ensure that your teen is not a listed driver on any of your household's cars.

But can an insurer really do this? This seems unfair. Aren't these companies in the business of providing insurance to people who want insurance? Again, this goes back to what state you live in. In a less regulated state, insurance is a free market. Insurers are free to choose whoever they want to insure. Naturally, insurers would prefer only to insure people who will rarely if ever cost them any money in terms of claims. In those states, insurers may very well cancel your policy if your teen causes an accident. In other, more regulated states, insurers may not be allowed to cancel someone's policy just because that person causes an accident. But you can be assured that the insurer will certainly raise your premium -- or your teen's premium -- significantly.

What are your options if your teen's or your car insurance is cancelled? Obviously, your teen could elect to not drive for a while (or you could tell your teen that he/she will not drive). But if not driving is not an option for your teen, once again, your options depend on your state's regulations. Almost every state requires that drivers registered in that state have car insurance. (Check the Car Insurance Laws in your state.) So, if no insurer in that state will insure a driver, the state will have a high-risk insurance pool that insures otherwise uninsurable drivers, but at a very high premium.

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