Car Insurance Advice for Michigan Teens

There's a new teenage driving law in Michigan that restricts passengers of teen drivers and only allows them to drive until 10 p.m. In addition to questions about the new law, many No-Fault lawyers receive questions from concerned parents on insurance coverage for teen drivers.

Due to the fact that the cost of insuring a teen driver is expensive in Michigan, many parents may try to save a few dollars on their insurance policies. But this can be a big mistake – especially not listing your teenager as a “named insured” on your automobile insurance policies. If your teen causes or is injured in a serious car accident, driving a car that he or she normally drives but that she is not listed on as a “named insured” or “named driver” it can have disastrous consequences for your teen. These consequences include your child’s medical bills not being covered by your own auto insurance company, and being barred from suing an at-fault driver who causes serious personal injury to your teenager - even when your teen is completely innocent and not at fault.

To help parents sort through all the confusing scenarios, frequently asked questions are listed below, with answers on the best automobile insurance coverage for your new teen drivers.

Q. My child is now a teen driver. What changes do I need to make to my auto insurance to make sure my teenager is protected under the No-Fault law?

A. A parent must inform his or her insurance company that there is a new licensed driver in the home. Parents are also supposed to list the primary driver of each vehicle (named-drivers). If parents purposely avoid listing their teenagers, either as living in the house or as named-drivers, this could be considered insurance fraud, and coverage can be cancelled by your insurance company where the policy is considered void.

Q. What is the best level of coverage for my teen/college age driver?

A. Assuming the teen has her own separate auto insurance coverage, the minimum policies she should carry should be $250,000/$500,000for bodily injury (personal injury if they cause an auto accident) and $250,000/$500,000 Unininsured and Underinsured Motorist Coverage. If the teen is on her parents' policy, her coverage is the same. Every person should purchase Uninsured and Underinsured Motorist Coverage. Ask your agent about it, and if your insurance company doesn’t offer these important coverages, you should find a new insurance company to properly protect you and your family.

Q. How should a family’s policy be structured if the teen drives a parent’s car versus having his own car?

A. A teen should be listed as a named-driver, so the auto insurer can never say that it was unaware that there were teens in the house or that the teens drove the car. If the teen owns the car, then the teen really should be a named-insured or co-named-insured.

Q. If a teen is driving her car and the passengers are injured in an accident, how are those passengers covered by the Michigan No-Fault law?

A. The order of auto insurers would be the same as any car accident.

1. The passenger would receive No-Fault benefits through his own insurance.
2. If the passenger does not have auto insurance, they he would receive No-Fault benefits from a resident-relative.
3. If that relative is not covered, then the passenger would seek benefits from owner of the car.
4. If the car owner is uninsured then the passenger would receive benefits from the driver of the car.
5. If all else fails, the passenger would look to the Michigan Assigned Claims Facility for No-Fault benefits.

Q. What can a parent/teen do to make sure the teen is protected while riding as a passenger in a friend’s car?

A. As long as the teen or resident-relative has insurance, the teen is protected by the Michigan No-Fault law and can receive all of the No-Fault insurance benefits in case she is injured in a serious car accident. As long as the teen is not operating an uninsured vehicle that they could be considered an owner of by frequent use (constructive ownership), they are going to receive No Fault insurance benefits from somewhere.

Q. How can teens and parents minimize the costs and premiums of their auto insurance policies while still being fully protected?

A. Once the proper coverage has been determined, call an independent agent that represents several insurance companies, to determine which insurer will give the best rate. Also consider a higher deductible to lower your rate.