Did you know that motor vehicle accidents are the No. 1 cause of death for teenagers? Michigan’s Department of Community Health reports, in fact, that three-out-of-five accidental deaths for 16- to 20-year-olds are because of car crashes. And, the Institute for Highway Safety reports that teen drivers are four more times likely than adults to be part of a fatal car accident. Accidents can result in serious injury that may or may not be immediately be obvious such as traumatic brain injuries, soft tissue damage, broken bones, or worse. In light of these alarming statistics, parents should know how to protect their teens, and one must is to understand no-fault insurance for teen drivers in Michigan.
When a teenager obtains a driver’s license and plans to drive a vehicle, he or she must be insured with no-fault insurance just like every other driver in the State of Michigan. Just like for adult drivers, no-fault insurance means that you don’t typically sue the other driver except in extreme circumstances, regardless of who is at fault. The benefit is that the no-fault system streamlines payment of medical bills and other covered expenses or losses.
The trouble is that statistics do show teenagers are more likely to get into accidents, often deadly. This means that insurance companies consider them riskier to insure. A teenager could obtain their own policy as the primary holder, but it would be cheaper to simply be added under a parent’s policy. Teens can get the benefit of being rated on their parents’ policy as secondary drivers.
To be listed under the parent’s policy as a secondary driver, the parent needs to first inform the insurance company. Once the teen is covered, if the teen in injured either while driving or as a passenger, they would be covered by their insurance. The teen would not be covered by the policy, however, if they are in an accident while driving an uninsured car that could be construed as their property simply because they use it frequently.
Rates can vary on a number of factors. Teens should work with licensed insurance agents to help them get the best rates possible. In general, however, the teen should carry at least $250,000 / $500,000 to cover bodily injury and an additional same amount in Uninsured and Underinsured Motorist Coverage. As discussed above, getting rated based on a parent’s policy can be more cost effective, but the rates that insurance companies charge can differ substantially. Shopping around is a smart idea to pick the best rates for the situation. Also be aware that different insurance companies will use different methods of choosing the vehicle to rate upon. Some may rate based on the vehicle most likely to be driven by the young adult and others will rate based on the most expensive vehicle in the family.
The type of car can also greatly affect the price. Typically, the newer and more expensive the vehicle to be driven is, the costlier the rate to add a teenage secondary driver. Insurance rates typically reflect make, model, and style of the vehicle to be driven. So while your teenager might be begging for a brand new luxury sports car, this is one (more) reason not to cave and opt either for driving the family car or purchasing an economical, safe, and reliable vehicle. Remember that paying for parts to repair an expensive vehicle will be higher and likelihood of theft will be higher – just two more factors why choice of vehicle is important.
Want to know find out more about Michigan's no-fault system and related topics? Check out more information from Sachs Waldman attorneys below:
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