Insuring our Teenaged Drivers

My daughter will be entering her first year of university this September. As you might imagine, she already more or less has her bags packed and one foot out the door. But, who can blame her… she has exciting days ahead!

My husband and I, on the other hand, are left crunching the budget numbers, scratching our heads, and hoping against hope that we can make this all “work”.

We’ve opted to let her move to university with a vehicle so that she can have a student job, some freedom and a bit of spending money. In so doing, she is about to become the primary driver of a vehicle and she will go from driving in rural Ontario to driving in the big city. Her car insurance premiums are about to increase by over 400%. Ouch!

Given the costs that are involved in insuring teenaged drivers, many families in our position might choose to not report the change in circumstances to their auto insurers; families may choose instead to “accidentally overlook” the change in exchange for maintaining a lower insurance premium.

I previously worked as an accident benefits claims adjuster for many years. My experience is that young drivers often have policies that represent they live at home and have occasional use of a parent’s vehicle when they are, in fact, primary drivers living away at school. From an accident benefits perspective, these drivers can be severely impacted as a result of the misrepresentation on their policy.

In Ontario, an accident benefit claim can usually be accessed, regardless of fault, when an automobile accident results in an injury. To name a few, coverage can include benefits for medical and rehabilitation, attendant care, income replacement, non-earner, housekeeping and home maintenance, lost educational, and visitor’s expenses.

By being dishonest with our insurers, we put our teenaged drivers at serious risk. If the insurer proves that a material misrepresentation was made that induced the insurer to enter into the contract of automobile insurance, then exclusions may be imposed on the claim. Similarly, exclusions can also be imposed if the insurer proves there was an intentional failure to notify the insurer of a change in a risk material to the contract (such as could be the case with a child moving away from home and becoming a primary driver).

When misrepresentations are proven, regardless of the severity of injury, the insurer would not be required to pay any income replacement, non-earner, housekeeping and home maintenance, lost educational, or visitor’s expense benefits on the claim. In the case of a severely injured child, the application of such exclusions significantly limits coverage and can have significant lifelong consequence as a result.

From one financially stretched parent to another – please carefully consider the consequences before misrepresenting or omitting information in your dealings with your auto insurer.

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