Having children is one of life’s many joys. When they are young and play with their little cars on road rugs, they are so cute! Then they grow up, the little cars get bigger, the rug becomes your neighbourhood, and they must now protect themselves with auto insurance for young drivers.
GETTING A DRIVER’S LICENCE
Teenagers wait impatiently until they turn 16 to finally be able to start their driving course and gain some freedom. Once teens obtain their learner’s licence, a number of parents decide to add them to their insurance policy as occasional drivers. This practice is common because it involves little cost and allows young drivers to practise with peace of mind. Eventually, your teens will become self-sufficient young adults, and the time will come for them to have their own car. Freedom at last!
BUYING A FIRST CAR
When you call your insurer, you’ll find out that the insurance premium for your child is two to three times higher than yours, which can be surprising. A number of parents seem to forget, however, that their child is not immune to situations that may occur due to lack of experience on the road, excessive driving, or a sense of adventure. Due to young age and lack of experience driving alone, your child is seen as a higher risk for the insurance company. You know your child better than anyone in the world, but your insurer has no guarantee as to whether your child will be a safe driver or a future street racer.
An idea crosses your mind—you can register the vehicle in your name, as a parent, and put your child as the principal driver. That way, you think, you will be able to save on the additional premium for your child. It’s settled! Unfortunately, however, the insurance rate for a vehicle is calculated based on the principal driver’s record and not that of the person to whom the vehicle is registered.
You think of another idea to reduce the insurance premium—putting your teenager as an occasional driver and yourself as the principal driver. The impact of the additional premium will be offset, but a far more serious problem could eventually occur. For example, what happens if your child has an accident in the vehicle in question, and your insurer asks questions about usage in the event of a claim? What about if the accident occurred when your child was on the way to CEGEP, and your insurer learns the vehicle is being used for that purpose on a daily basis? A misrepresentation can lead to serious repercussions, such as an insurance premium increase, partial payment of the insurance claim (article 2411 of the Civil Code), or simply cancellation ab initio. Such a cancellation means that your policy would be deemed void as of its start date, because the information upon which the policy was based is untrue. This would mean that your nice new car, which is in your name, is now a total loss, and the insurance company won’t give you a penny.
What do you think the moral of the story is?
Yes, auto insurance for young adults is expensive, but the price to be paid if you don’t have the proper insurance coverage doesn’t even compare. For the best insurance solution, call your Lareau broker today. Until then, drive safely!