Learnings and thoughts on cars and insurance for DS20

[RegGuheert]

DS20 finally needs to get his driver's license for an upcoming summer job, so I called our insurance agent to discuss some options. I must say I learned a few things that surprised me:

 

- Insurance for DS20 will be $230/year CHEAPER if he has his own policy than if we add him to our policy. This was a big surprise to both me and our agent! With separate coverage, he will not get the multi-policy benefit and will have a smaller multi-car discount than if he were put on our policy, but those are swamped out by the benefits. If he drove our car to work, he will be driving a more expensive car with full coverage versus a cheaper car with liability only. In addition, we carry high liability coverage on our policy, which would also apply to him. If he has his own policy, he can use the state-mandated minimums for liability. Finally, I suspect the coverage on ALL of our cars goes up if he is on our policy, not just on the one for which he would be primary driver.

 

- DS20 must have a car to have his own policy. This should have been obvious to me, since auto policies are tied to cars. More on this below.

 

- If we add DS20 to our insurance, we do not have the option to drop him off our policy during the school year. If we did that without him getting his own policy with our carrier, they would force us to sign an exclusion form preventing him from driving any of our cars for a period of three years! Can you say heavy-handed?

 

- If we add DS20 to our policy, he MUST be the primary driver for one of our cars, even if he were to go back to school without a car. They require this if we have at least as many cars as drivers.

 

- There is no good student discount available.

 

- DS20 must have his insurance policy in place before he can have a car deeded in his name to avoid the steep uninsured motorist fees the state imposes. This is a little different than if we purchase a car, since we already have insurance in place with a grace period of a day or so for purchases.

 

So MomsintheGarden says "It doesn't make sense to buy a car for DS20 to save $230." On the surface, that sounds like a given, but I actually think we may SAVE money overall by purchasing the car. Here are some thoughts on that:

 

- The insurance savings is yearly, while the car purchase is one-time. OTOH, there will be costs associated with maintaining the car that could be equal to or higher than the insurance difference.

 

- If DS20 has his own car, he can drive HIMSELF to and from college. To me, this is the biggie. I've used a LOT of vacation time and money transporting him to and from college. The first two years, we took the entire crew (9 people) down when we dropped him off. That was fun, but it was not cheap. Beginning this fall, we will have two in college, so that may not even be feasible, especially if they both need to move in at the same time.

 

- The equation changes drastically if DS20 has an accident while commuting. The repairs for even a minor collision will cost much more for our car than the entire cost of a cheap commuter. The other side of this coin is that a cheaper car likely will not be as safe as our car, which is newer. This is a tough call, but I think it comes down to selecting a relatively safe, cheap car for commuting.

 

- Now that he has a job, I like the idea of our son literally owning all of the costs and responsibilities for the vehicle: license fees, taxes, insurance, repair costs, accidents, everything. This will help him understand how expensive cars really are and hopefully he will make good decisions while driving.

 

- I also like the idea of our son learning about car repairs. He can do this during the summer while I am available to help and advise him. We save well over $1000/year by repairing our cars instead of taking them to a shop for repairs and maintenance.

 

Any other thoughts on cars and insurance for our adult children? What works best in your family?

[In The Great White North]

- If we add DS20 to our insurance, we do not have the option to drop him off our policy during the school year. If we did that without him getting his own policy with our carrier, they would force us to sign an exclusion form preventing him from driving any of our cars for a period of three years! Can you say heavy-handed?

 

- If we add DS20 to our policy, he MUST be the primary driver for one of our cars, even if he were to go back to school without a car. They require this if we have at least as many cars as drivers.

 

- There is no good student discount available

 

What insurance company is this?

[RegGuheert]

What insurance company is this?

Erie Insurance. And after being their customer for 20 years I have nothing but good things to say about them. While I'm not a big fan of these policies, I suspect they are quite standard in the industry.

 

FWIW, they are quoting $600/year for my son with his own policy and $829/year if he is on our policy.

[ZooRho]

USAA told us the same thing about ds getting his own ins. The other thing too is if the child is in an accident and they are on your policy the people could come and sue you the parent also. and usually parent pockets are deeper.

[TravelingChris]

I am already contemplating giving dd1 my car next year when she goes to college depending on two things- where she goes and where are we stationed. If she is going to a school on the same coast or within regular driving distance from us, then yes. THere is the added complication that dd needs to see doctors every few months and needs transportation for that. So if we live near enough or we go overseas, dd gets car. Otherwise, she won't.

 

My insurance doesn't make any of our children principle drivers but we only have two cars. It does give us good student discount, driver's training discount, and if she goes away with no car, a student away discount.

[RegGuheert]

 

It does give us good student discount, driver's training discount, and if she goes away with no car, a student away discount.

Erie does offer the driver's training discount and there is also a student away discount. But according to our agent, with a child as the primary driver for one of the cars, the child's sex and age basically override any considerations related to how much they are driving the car. She specifically said that she could put in 10 miles/day or 100 miles/day for his commute and the rate would be identical. (Though the number of miles the car is driven in the year DOES matter.)

[home4school]

The other thing too is if the child is in an accident and they are on your policy the people could come and sue you the parent also. and usually parent pockets are deeper.

 

My sil and bil are being sued now. Their 18 yo dd bumped a car in the backend 2 yrs ago. The man and his son said they were fine at the accident, told the police they didn't need to go to the ER. The damage to the cars was minimal, only scratches. They were actually in a parking lot. Apparently they found out the driver was on her parents insurance and are quite well-off. It took them 2 yrs to do all the digging. Just a few weeks ago bil, sil, and niece were served with papers. Now the people in the other car are "suffering severe mental and physical damage" and seeking lifetime support.

 

My niece said, "If they could only sue me, they'd only get a Blackberry and some really nice clothes and jewelry."

 

I see now, maybe she has a point.

 

Just something for all of us parents to think about.

 

Kim

[Leanna Tomlinson]

We buy "grandma" cars for our kids. They're old, low miles, cheap, and big. We actually bought both of them from my parents for $2000 each. (two years apart). It was much cheaper to buy these cars and insure our girls on those, than to add them to our policies. We still have a group/family policy, but the cost goes way down when the teen has a car designated to him/her.

 

Dd's policy will go down on her 20th birthday if she remains accident free. That will be the same week ds is due to be a licensed driver. We make all teens pay for their own insurance and gas. Any complaints about "grandma" cars results in said complainer being assigned to the 12 passenger van. ;)

[Lisa R.]

We have three cars, and I didn't think this was too unreasonable. Since he has a job, he can easily contribute towards this.

 

I'm curious as to why your son didn't get his license until the age of 20. Having a teen driver has been great.

[cathmom]

Our oldest was going to get his license before he left for college, until we found out that our insurance co. did not take into account that he would be away at college! So our insurance would have tripled, even though at college he had no access to our cars and would not be driving them! Needless to say, he did not get his license.

 

Lisa R, I'll answer your question even though I'm not the OP. My son did not get his permit until he was 18, and at 20, does not yet have a license. I'm sure having a teen driver is a great convenience, however, their accident rates are very high and they do not yet have the best judgment. I like to protect them from themselves for just a bit longer. Also, we live in a rural area and the majority of our driving is rural 2-lane roads, the most dangerous kind of road.

[Dobela]

Every car insurance company has their own rules. The ones above have really been around for a long time - at least here. I know that when my dad started selling insurance 40 years ago the rules were very similar - the child was always rated on the most expensive car. Seems the child would always seem to have an accident on that special date night when borrowing mom's car (most likely showing off for friends/date) and the insurance company always wants to make sure they make enough to cover the worst case scenario, and make the most money,of course.

 

Girls policies typically go down around age 20, and for boys around age 25.

 

If you are car shopping, you can buy the insurance the same day you buy the car. If you are considering 2 or 3 different vehicles, it is usually helpful to call the company and get some rate quotes and do some comparisons. Some vehicles have suprisingly high rates that you wouldn't expect due to replacement parts costs.

[RegGuheert]

 

I'm curious as to why your son didn't get his license until the age of 20. Having a teen driver has been great.

I agree having a teen driver would be a great convenience and MomsintheGarden and I were looking forward to having another driver in the house when he was approaching 16 years old. But he did.not.want.to.get.his.license. Just the idea that he would not want a license never crossed my mind. When I turned 16, I was DYING to get mine. I think between the gory pictures he was required to look at in driver's ed. and the fact that when he was 15 two seventeen-year-old cousins (not his cousins) died one morning on a paper route when they crashed into our neighbor's stone pillar really gave him a healthy fear of driving. Still I cannot relate, since I recall feeling somewhat immortal at that age.

Our oldest was going to get his license before he left for college, until we found out that our insurance co. did not take into account that he would be away at college! So our insurance would have tripled, even though at college he had no access to our cars and would not be driving them! Needless to say, he did not get his license.

Yes, once it was time for DS20 to go off to college, we were glad he did not have his license. He has had almost zero need of a license there. DD17 also will not have a license as she goes off to college.

[AngieW in Texas]

My dh didn't understand why our oldest wasn't chomping at the bit to get her license. He was dumbfounded that I didn't take her to get it on her 16th birthday. She wasn't even close to having the 50 hours of driving time that Driver Ed in a Box requires. I guaranteed that I would make myself available to do driving practice with her at least 1 hour/week (and often made myself available for more than that), but she turned me down a lot. She got her license two months before her 17th birthday.

 

My middle will probably get her license around the same age my oldest did. My youngest will be pushing me through all the practice hours and want me to take her on her 16th birthday.

 

My dh got his license on his 16th birthday. I got mine just before I turned 17yo. I wasn't in any hurry to learn to drive.

[SapphireStitch]

We have three cars, and I didn't think this was too unreasonable. Since he has a job, he can easily contribute towards this.

 

I'm curious as to why your son didn't get his license until the age of 20. Having a teen driver has been great.

 

My daughter didn't get her full license until she was 18. We have a graduated license system in NC, so she had a sort of pre-license...more than a permit, but not a full license. She could only drive with an adult in the car.

 

We did this for a couple of reasons. One, we live in an area with a lot of crazy driving situations and we wanted her to be a truly competent driver in as many situations as possible before cutting her loose on her own.

 

Two, our insurance company did not charge us to have her on our policy until she had an official license. Putting a licensed 16yo on the policy costs a LOT more than adding a licensed 18yo.

 

It's interesting to me how much insurance varies from state to state. It's highly regulated in NC, so prices don't vary a lot from company to company. My DD just bought her first car and it was cheaper for her to get insurance on our policy rather than get her own policy. This meant my husband or I had to take title with her on the car, but she was willing to do that to save the $$.

 

For those comparing costs, her insurance (20yo, no accidents, 10yo car, on our policy w/multi-line discounts) is about $100/month. When she turns 21 her rates will drop if she hasn't had any accidents.

[lllll]

..

[JoyfulMama]

- I also like the idea of our son learning about car repairs. He can do this during the summer while I am available to help and advise him. We save well over $1000/year by repairing our cars instead of taking them to a shop for repairs and maintenance.

 

While I agree that doing your own car maintenance is a big cost savings (and a great skill to have) doing that for yourself while at college can be difficult at times. When I was in college our parking was tight. Much of it was parallel, which left little room to do anything other than check and refill fluid levels. If I needed an oil change while I was at school there was no place for me to do so. I was 300 miles away from my folks, so I wasn't going to drive home just to do an oil change.

I only had a car my senior year at college, and that was because I had an off-campus internship. I worked on campus, and did tutoring on the side. My earnings paid for my car maintenance and gas, but my folks paid for my insurance for that year.

 

I do know that for my parents the most expensive driver to insure was assigned to the most expensive vehicle, regardless. That was many years ago, in MA.

[vonfirmath]

For much of my life, I've lived in houses/apartments where car maintenance (even oil changes) were not allowed in the parking lots.

[Nestof3]

We have State Farm. We've had it for decades. Currently we have:

 

2004 Ford F150 with full coverage

2007 Honda Odyssey with full coverage

1989 Ford F150 with liability only

 

We are incident-free and have muti discount because of our home insurance and personal articles policy.

 

Aaron (also 20) had been driving the 1989 truck since he got his license when he was 16. He was paying $38 a month. He was on our policy. He has a good student discount. He was the primary on the 89 Ford but allowed to drive any of our vehicles.

 

He just bought a 2003 Toyota Camry, got his own policy with liability only, and pays $41 a month. The car is in his name as is the policy, but he's still billed on our policy on a monthly basis. He has been saving a lot of money on gas going from an F150 to the Camry. He only fills up once every two weeks.

 

He had been changing the oil and cleaning the old Ford. He also helped with vehicle repairs such as radiator leaks, changed spark plugs, etc. He will continue on his new car. He helped a friend change out a flat tire at college the other day and installed a car stereo for a friend. I had no idea he could figure out how to do these things. LOL I'm sure my husband showed him how to change a flat tire.

Edited May 11, 2010 by nestof3

[Nestof3]

But they can never drive alone with a permit.

 

Our kids get their permits at 19yo - no driver's ed reqired at 19 and beyond. They are covered by our car insurance company at no cost. They keep their permits as long as possible. Rates drop drastically at 25yo. 22yod just got her driver's license and her rates are double what 25yos's rate will be when he gets his (probably this summer).

 

About those (VA) permits ... I took 19yod to the DMV to get her permit this spring. A birth certificate and a social security card are no longer enough for a female to get a permit at 19yo in VA. (Selective Service cards work for the males.) We had to get a passport for her. If she had been in ps or had a photo ID from the DMV or various other things (had a parole officer, been on welfare, driver's license from another country, etc.) ... no problem. But she's been at home, doing school. Thus, I had to go back to the DMV last week to get 19yod her permit (using her newly acquired, otherwise useless passport), and 17yod her photo ID - so she can get a permit when she turns 19yo.

 

BTW, it's MUCH easier to get a passport than it is to get a permit. It also costs a whole lot more. :glare:

[Nestof3]

I'm confused. If he doesn't have his own car, how do they know what vehicle to use to determine the insurance rate?

 

Erie Insurance. And after being their customer for 20 years I have nothing but good things to say about them. While I'm not a big fan of these policies, I suspect they are quite standard in the industry.

 

FWIW, they are quoting $600/year for my son with his own policy and $829/year if he is on our policy.

[Liz CA]

Inexpensive, older cars with liability only.

Another thing I never considered before talking to others: if you have a ds/dd who never gets insured either on their own or on your policy, they will have to pay "beginner's rates" even if they are older by the time they do get insurance.

This is what our agent told us.

[Sebastian (a lady)]

Ask again if there is insurance just to be an insured driver, but not to cover a specific car. We don't own a car in the US and our insurer doesn't offer coverage in the country we live in. So we have local insurance here for our Japanese car and we have a policy that covers us to drive when we visit the US. It had some particular name like a coach policy or livery policy (though I suspect I'm getting the name a little wrong).

 

It might still work out that what you listed earlier is less expensive. I just wanted to mention that it is in fact possible to have insurance as a driver without insuring a particular vehicle. (Although your state insurance laws might greatly impact the cost analysis.)