Helping Your Teenager Understand Car Insurance

Helping Your Teenager Understand Car Insurance

When you are ready for your teenager to begin driving, you will do a number of things to help him prepare. You will enroll him in a driver's education course where he can learn the rules of the road and gain some experience driving with an instructor. You will also need to pay for a driver's learning permit and work to arrange your time so that he can drive with you for at least the requisite number of hours that your state requires. Another important thing you will do is to arrange for car insurance for him. Whether you include him on your current policy or get a separate policy for your teen, car insurance is required. You can really do your child a favor by helping him understand what car insurance is, why he needs it and have him at least help with paying its cost and working toward a deductible.
First, you will need to help him understand that the car insurance is a way to protect him from expensive repairs and medical costs that are often incurred when an accident happens. He needs to know that this coverage is there when he is the cause of an accident and would otherwise be required to pay for everything himself. Obviously, most teenagers are not independently wealthy, so they wouldn't have enough money on hand to pay for a small accident, let alone a large one without the benefit of the insurance coverage. You should help him set up a fund so that he can save enough to cover the deductible amount should he ever get in an accident that is primarily his fault.
Once he understands the benefits and costs of an accident, he should be helped to understand some of the coverage types that will be on his car insurance policy. This will help him when he is ready to buy his own car and arrange for his own insurance policy. Since most states require liability insurance, that is the most important coverage to understand. Again, it pays your liability if you cause an accident that creates physical damage to another vehicle or bodily injury to the people in that vehicle.
If you are helping your child purchase a car, you can explain that the bank requires him to carry collision and comprehensive coverage to protect the car they loaned you the money to buy. In other words, these types of insurance cover your car. Another type of coverage that you may be required by the state to carry is uninsured motorist coverage. This will cover your car and the people in it if the person who causes the accident doesn't have any insurance and cannot pay for the damages caused. There is also underinsured motorist that makes up the difference between what their insurance will cover and the cost of repairing your car or the medical costs associated with injuries from the accident.
As you can see, although insurance has a number of components, it is not too complicated to explain to a teenager. Involving him in the process and making him responsible for at least some of the costs will help him to understand insurance and be prepared.