So your teenage son wants to go out with his friends to see a movie, do you recommend that he takes his car and drive them, or would you rather be a passenger in one of his friends’ cars? Believe it or not, this is a very important yet complicated question with huge financial and life altering implications. On the one hand, if son decides to drive, then he is responsible to any injuries incurred by his passengers. Worse yet, if the car is registered under either of his parents’ names, then they are partially responsible as owners as well. At the same time, what if you felt that your son was much more responsible and a better driver than his friends? Would you encourage him to drive with them just to ensure that there would not be any potential lawsuits or financial implications on him and your family? Naturally, the answer is no. That may be the main reasons why many parents (including mine) strongly discourage or even prohibit their kids from driving anyone with them, even if they are going and coming from the same location. Judging how that can affect a teenager’s social standing with his friends, I am not quite sure if any teenager would heed that demand for long (I surely did not).
This brings me to the main point of this blog: the importance of having good insurance with good policy limits. It’s amazing to me how much people shortchange themselves and their families on this extremely important safety net. People, I have come to realize, just do not think that bad things are going to happen to them; bad things only “happen to other people.” Unfortunately the reality is much different; I know this because I see it every day. And if these experiences teach us anything is that one cannot over-value the importance of having good insurance coverage.
The most astonishing thing for me to comprehend is why most people have high policy limits when it comes to liability coverage (when they cause an accident) but very low uninsured or underinsured coverage which kicks in when they are either injured by a party who has little or insurance coverage. Who is more important to protect, yourself or another party? Ideally the answer should be both, because if one has low liability coverage then they are exposed to be sued individually if the injuries exceed the coverage, but if one has to absolutely choose between the two, then it’s a no brainer: get high limits on uninsured motorist coverage. There are so many heartbreaking stories where a client has seriously injured by a party who only has the minimum coverage. And the only thing that is worse than being injured, losing time off of work or having a permanent disability, is not being adequately compensated for it.
The strange thing is that almost all insurance companies seem obsessed with marketing themselves as being cheaper than the others. I fully understand why price is an important factor, especially when times are tough, but when things get really bad, there is nothing worse than having a bad insurance company. To state it more bluntly, all insurance companies are not created equally. As a matter of fact, some are really good and others are bad, really bad. What do I mean by good or bad? Insurance is a very intricate business, and after one experiences an auto accident, then they begin to understand how involved the process could be, and how important every step could be. From the time it takes to process the claim, to the competence and professionalism of the adjuster to how cars are valued and how rentals are paid, and everything in between the insurance company that you have matters. It matters a lot.
Some people may ask: why should I pay more every month so that my insurance company can treat the other party good. If you are only thinking about getting liability insurance (as required by California law) then that is a legitimate point. But if you are only thinking about having liability insurance please consider the following factors related to being involved in a car accident:
1) If the damage to the other vehicle or injury to other party is over your policy limit, then you could be subject to lawsuit personally;
2) If you are injured or totally disabled by another driver with little or no insurance then you most likely have no other recourse (except to sue them and hope that they have assets);
3) If your car is stolen or damaged, then you have to pay out of pocket to get it replaced or repaired.
I have many people who inevitably tell me that “I only have liability coverage because I have an old car.” Yes but my answer is always: fine, do not buy comprehensive or collision coverage, just make sure that you get uninsured motorist. This makes sure you and your passengers are protected in case anything happens and the other driver either flees the scene of the accident or has little or no coverage. I would repeat this a million times over if I could.
This brings me back to the original question about what to tell your teenage son. My thought is this, if you can only afford liability coverage for your son or family, then I definitely discourage them from having any passengers with them in their car. But if you know that they are going to have passengers or friends with them, then having a good policy with high coverage is a must. Moreover, if you own property or have assets, then the vehicle should be under his name, so that there is no liability exposure on you. Also keep in mind that many home “umbrella” policies have specific exclusions for claims arising from a motor vehicle accident, so those policies would not protect you in those situations.
As to the question of whether you should tell your son to be the driver or a passenger in someone else’s car, I luckily do not have to personally deal with such a question for a very long time to come. Besides, the answer is not a legal one anyway, its up to you to decide.