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It is common knowledge that if we get a speeding ticket, or have an at-fault accident, that our auto insurance rates might go up… but did you know that failing to let your insurance agent or insurance company know about all residents of your household, or changes to regular drivers of your vehicles, can lead to higher car insurance rates and potential cancellation of your policy?
When rating a policy, insurance companies are allowed to consider ages and driving records of all licensed household drivers, and regular drivers of your cars and trucks.
Here are a few situations where insurance policyholders should notify their insurance agent or company of driver changes:
When a grown son or daughter moves out of the family home, parents are understandably focused on the well-being of their child as they “leave the nest”. If the child happens to take a family car with them, often as a gift from parents, the last thing on a parent’s mind is to notify their insurance agent, or insurance company, of the move.
When a car is garaged and driven in a location different than on the policy, an insurance company needs to know about it. If this change is not discovered until a claim is made, the insurance company could potentially cancel a policy or deny a claim based on the failure of the policyholder to provide important information, leaving the family car unprotected. This exposes the family to considerable financial risk - the last thing concerned parents want for their child, or themselves.
If your son or daughter is moving out and taking a family car with them, please notify your insurance agent or insurance company as soon as possible so they can help you understand your options.
It is a significant milestone when a teen learns to drive, and gets a driver’s license. Unfortunately, the reality of higher insurance rates for teen drivers can lead some people to hide the teen driver from their insurance carrier. Concealing this information can have serious consequences.
Insurance companies have access to data resources for identifying undisclosed household members, including recently licensed teen drivers. If your insurance carrier discovers that you have an undisclosed licensed teen living in your home, consequences can range from a sudden jump in insurance premiums, to the teen being excluded on your policy, or even cancellation of your policy. After a cancellation, it might be difficult to find replacement car insurance at a reasonable cost.
It is best to add a newly licensed teen driver to your policy rather than trying to hide them. If the teen has good grades, or completes a specialized teen defensive driving program, your insurance agent can help you find discounts to lower the cost of insuring your licensed teenager.
Contact your insurance agent to discuss rates and options while your teen is learning to drive… don’t wait until an accident has occurred or the insurance company finds out through alternate sources.
If you sell your family car to a son or daughter, and title is changed into their name, you are no longer the car’s owner and can no longer carry insurance on the car because you don’t have an “insurable interest”. The new owner, even if they are your child, must get their own insurance. If your child is still a minor, you will likely be required to be named on their policy with them because an insurance policy is a contract.
If you don’t notify your insurance company about a change of ownership you could run into trouble should an accident occur and a claim is submitted. The insurance company might retroactively cancel the policy and deny the claim based on insurance fraud, or material misrepresentation.
If you sell the family car to your son or daughter, and they are 18 or older, it is best to change the title into their name and have them obtain their own car insurance coverage. If your son or daughter is a minor, contact your insurance agent to discuss your options.
In many cases, you can keep the car & child on your insurance policy if they still live at home with you. Be sure to contact your insurance agent to discuss your specific circumstances, since every situation is different.
A car insurance policy generally provides coverage for a friend who occasionally drives your car, and does not live with you. If you loan your car to a friend for an extended period of time, you’ll need to let your insurance agent or carrier know about it. With your friend as primary driver garaging the car at a location other than your home, risk factors might increase and your insurance company has a right to know about this change.
As owner of your vehicle, you are primarily financially responsible for California state minimum limits of $15,000 per person, $30,000 per accident for bodily injuries and $5000 for property damage should an accident occur and a third party incurs damage, or is injured. Loaning your car to a friend does not eliminate your financial risk or legal liability as the owner.
If a licensed friend, girlfriend, or boyfriend moves into your household, you must notify your insurance agent or carrier as soon as they move in. Loaning your car to a friend who lives with you but wasn’t disclosed might result in a claim denial and policy cancellation, should an accident occur.
Always contact your insurance agent to discuss your options if you plan to loan a vehicle to a friend for more than a few days, or if a friend, girlfriend, or boyfriend has moved into your household.
Drivers listed as excluded drivers on your car insurance policy are not covered by your policy and should not be allowed to drive your vehicles. If an excluded driver drives your car and causes an accident, you will find yourself financially responsible for resulting property damage, or injuries, up to statutory limits set forth in California law.
Even if you don’t give permission to an excluded driver to use your car, leaving keys where you know an excluded driver can find them might be considered implied permission. To reduce the risk that an excluded driver will “borrow” your vehicle without you knowing about it, it is a good idea to hide your keys from excluded drivers, particularly teenagers.
If an excluded driver no longer lives with you and no longer uses your vehicle, contact your insurance agent or carrier as soon as a change occurs so your policy can be adjusted to reflect your new circumstances.
With Armor Insurance as your car insurance agent in California, we can guide you on the best way to save money when driver or household member changes occur.