Insuring Teenage Drivers

[jasoncran]

michigan's no fault law is whacky. here we call it no fault but really means that if you are a passenger in my car and i wreak it.insurance must cover it. but like michigan if i get in a wreck and its not my fault my insurance goes up.

cause of some likelyhood of another accident.hmm. well its been a while since the last one and it took seven years for that rate to drop on that. it wasnt my fault

 

[Mike]

Mike,

Call it what you will... but we simply didn't tell our insurance company about our teens and all the cars stayed in our name until they moved out and could afford their own insurance...

I can see both sides of this moral issue you're referring to, but I tend to agree with you, especially the way Michigan's laws are set up.

My son is at that point where he will be getting his driver's license soon. I can only imagine what it will do to our insurance. Insurance companies have a way of socking it to us one way or another.

Well, if you don't live in Michigan, you're not quite as bad off as some of us, but it's still no fun getting that extra semi-annual bill. :gah

I don't get my auto insurance through the government. Why are we blaming the state for auto insurance costs? What am I missing?

We insure a 2009 Ford F150 Lariat, 2007 Ford expedition, 1997 Pontiac Bonneville, and a 1992 2500 GMC. Five drivers: 72-year old female, 53-year old male, 52-year old female, 18-year old female, and a 16-year old female.

The 2009 and 2007 are the only ones carrying full coverage with $500 ded. on collision and $250 ded. on comprehensive.

We have a totally clean driving record with no accidents or injuries.

Total annual cost = $1,838.00 after applied discounts.

Jeff answers your first question below, but I'll add on. I don't pretend to have a total grasp on this industry, but I did stay at a Holiday Inn Express last night, soooo... The laws we have in Michigan regarding auto insurance were driven by insurance companies as a mean of reducing owner cost for premiums :toofunny by shifting the financial burden from the insurance company to the driver. WHAT A JOKE, AS YOU CAN SEE IN OUR CURRENT RATE COMPARISON!!

Today, Michigan is the only state with lifetime uncapped medical expenses. Since it is a No-Fault state, drivers and passengers who get in serious wrecks have an uncapped amount of medical paid for the rest of their lives EVEN... EVEN IF THEY WERE THE CAUSE OF THE ACCIDENT! If I'm texting, even if I'm drinking & driving, I'll have to pay the price in the legal system, but if I'm hurt, my medical is taken care of for the rest of my life without question.

I worked in the Workers Compensation industry for a few years, and the joke was - If you're in an accident just over the Michigan border, drag your car and your body into Michigan, and then call 911. You'll be set for life! As I understand it, this is the real driver of our very high rates.

"Don't ask, don't tell" may seem to work until there is an accident. If any accident happened (even if the teen was not driving) and there were non-disclosed teen drivers you would find out that you were not in fact insured, having voided the terms of your policy.

And this is why I chose to be straight up with our insurance company. Being in a no-fault state, I wouldn't see a moral dilemma in not notifying them, but I wouldn't have wanted to take the chance he wouldn't be covered.

Folks, all I can say is if you don't live in Michigan, complain about your auto insurance rates all you want, but be happy you don't live in Michigan. It's a nice place to live otherwise, but it's killing me now!

 

[stovebolts]

With all due respect and there's a lot, I would question the morality of doing what you're doing or have done. I mean this in the most loving and modest way but isn't this lying? Please don't answer me but give it some thought.

I actually don't mind answering. As I stated earlier, some may not agree. Oh well. Is it lying? I suppose you'll have to answer that one yourself. I don't feel bad about it at all. I didn't feel bad doing 78mph in the 70 mph zone this morning either. On the same token, had I gotten pulled over and recieved a ticket, I would have payed it willingly. I understand the risk.

Just to back pedal a bit, when our oldest first got his car, we had it in both of our names and we got slammed like Mike got slammed. When our next child passed drivers ed and started driving, our insurance company already knew we had a teen driver in the household. I don't know how they knew, but they knew. We simply didn't add her to any of our cars, nor did we purchase any cars which kept our rate the same. When she got in her accident, her name was on the ticket and when our insurance company was sued for the gal's deductible, her name was on the report. Again, we paid the deductible and we didn't get any flack from our insurance company about her being the driver. Again, we did not pull a claim on our car. Call it what you will. When she was 18 we helped her buy a car and that car went into both of our names. At that time she was added to her car, but she paid her own insurance. At 19 we took her off our insurance and she had to provide her own which she maintains to this day.

I don't have a moral problem with that.

 

[Sparkey]

I actually don't mind answering. As I stated earlier, some may not agree. Oh well. Is it lying? I suppose you'll have to answer that one yourself. I don't feel bad about it at all. I didn't feel bad doing 78mph in the 70 mph zone this morning either. On the same token, had I gotten pulled over and recieved a ticket, I would have payed it willingly. I understand the risk.

Just to back pedal a bit, when our oldest first got his car, we had it in both of our names and we got slammed like Mike got slammed. When our next child passed drivers ed and started driving, our insurance company already knew we had a teen driver in the household. I don't know how they knew, but they knew. We simply didn't add her to any of our cars, nor did we purchase any cars which kept our rate the same. When she got in her accident, her name was on the ticket and when our insurance company was sued for the gal's deductible, her name was on the report. Again, we paid the deductible and we didn't get any flack from our insurance company about her being the driver. Again, we did not pull a claim on our car. Call it what you will. When she was 18 we helped her buy a car and that car went into both of our names. At that time she was added to her car, but she paid her own insurance. At 19 we took her off our insurance and she had to provide her own which she maintains to this day.

I don't have a moral problem with that.

I said it wrong. Imagine this scenario -- what if you (not your daughter) got in an accident after the insurance company was aware of your daughter driving. You were paying premiums for nothing.

 

[stovebolts]

I said it wrong. Imagine this scenario -- what if you (not your daughter) got in an accident after the insurance company was aware of your daughter driving. You were paying premiums for nothing.

Is that even realistic scenario for Michigan? I can loan my car to my next door neighbor or somebody off the street and if he gets in a wreck, so what; I can still pull a claim. The car is insured, not the driver.

 

[Sparkey]

Is that even realistic scenario for Michigan? I can loan my car to my next door neighbor or somebody off the street and if he gets in a wreck, so what; I can still pull a claim. The car is insured, not the driver.

Read your policy. Your premise is that the insurance company has no recourse to non-disclosed (fraudulent) policies. As I understand you've rectified the situation but I would caution you that your bad advice should be kept to yourself. I'm glad that nothing happened to prove my point in your case.

Non-disclosure in Insurance Cases

‘Non-disclosure’ refers to the situation where a customer fails to reveal a relevant fact when applying for – or renewing – an insurance contract. It is widely recognised that in some situations involving non-disclosure, applying the strict legal position can result in an unduly harsh outcome for the customer. For this reason, when we deal with insurance cases involving non-disclosure or 'misrepresentation' – an incorrect statement made by a customer – we take account of both the law and good industry practice.

The Legal Position

An insurance contract is a ‘contract of utmost good faith’, which means that all parties to the contract are under a strict duty to deal fully and frankly with each other. Customers must disclose all facts that are ‘material’ (or relevant) to the risk for which they are seeking coverage.

A ‘material’ fact is one which would influence an underwriter when they were deciding whether to accept the risk, and the terms and conditions that should apply. If a customer fails to disclose (or misrepresents) a material fact and this induces the insurer to accept the proposed risk, the legal remedy is to ‘avoid’ the policy. This means the insurer is entitled to treat the policy as though it never existed. Unless fraud is involved, the insurer will normally return the premium and will not pay out on any claim made under the policy.

In the scenario that you suggest to your readers they should willfully withhold material facts in order to get a reduced rate. Given that, the Claims department of the insurance company would be well within their rights to allege fraud, but in any case, the claim would not be paid without a court order. We are talking about contract law here, and although I am not a lawyer, I don't know of any way to convince a judge that they should pay, do you?

It just seems to me that the better advice would be to deal honestly with all and work to change the laws in your state.
High rates aren't the only problem - check this out: http://www.michiganautolaw.com/auto-lawyers-blog/2012/02/07/dangerous-nofault-law-loophole/

PS - I'm not taking the moral high ground here, and I do understand that there are tough choices these days but there is a difference between making a personal choice (there are times in my life when I've driven uninsured) and advocating that choice for others. I'm also pretty sure you agree with what I'm trying to say.

 

[Mike]

There is a bill being promoted in our State House capping medical costs for injured drivers which would get us more in line with other states. Of course, the insurance companies are campaigning hard against this. It's only these companies that see how we're such an outlier and don't see a problem. Well, I'm sure some lawyers don't see a problem either. :gah

 

[stovebolts]

Sparrowhawk,

Not saying that either you or Wip are taking the moral high ground. Not trying to repeat myself, but like I said, "Oh well". I don't mean that in a snobbish way or anything else.

When my daughter got in her accident, we didn't have any issue with our insurance company whatsoever. But then again, it was a minor fender bender and again, we didn't pull a claim on our insurance for the damage that was done to our car. We happily paid the gal's 500 dollar deductible and never looked back.

I"m not saying anyone else should do this. I'm just saying it's what we did and I don't feel bad about it. We pay cash for all of our cars and I work on them until it's just not economically feasible to keep them going. We've had this one for about 10 years now and it's not the prettiest car in the parking lot. Most people can't stand to drive a car with a dent in it... It doesn't bother me a bit. Personally, I don't like insurance companies and when you pull a claim, they just up your rate until they get 3x back from what you pulled, so it's not worth it to pull a claim in most cases. Heck, if you want your car fixed, fix it yourself and you'll be money ahead. In my opinion, Insurance is nothing other than a big scam.. Unless you hit a deer which in Michigans case, they cant raise your rates I don't see an advantage to auto insurance. But hey, that's just me... and I don't have a car payment and if mine got totaled, I'd just go buy another one.

 

[WIP]

I don't get my auto insurance through the government. Why are we blaming the state for auto insurance costs? What am I missing?

We insure a 2009 Ford F150 Lariat, 2007 Ford expedition, 1997 Pontiac Bonneville, and a 1992 2500 GMC. Five drivers: 72-year old female, 53-year old male, 52-year old female, 18-year old female, and a 16-year old female.

The 2009 and 2007 are the only ones carrying full coverage with $500 ded. on collision and $250 ded. on comprehensive.

We have a totally clean driving record with no accidents or injuries.

Total annual cost = $1,838.00 after applied discounts.

Thought I'd share an update.

Since posting the above we have now added a 1998 Oldsmobile Cutlass to the vehicle list. We also enrolled our 2007 and 2009 vehicles in Progressive's Snapshot program and today we got our renewal notice. We saved an additional 30% as a result of the Snapshot program bringing our total premium for all five vehicles and drivers to $946.00.

When we switched to Progressive sometime around 2003 or so, our semi-annual premium was over $1,200.00 for just three vehicles. The switch cut our premiums in half. Today we insure five vehicles and five drivers including two teenage drivers for $600.00 less per year than what we were paying for insurance when we made the switch. That is savings worth noting.