Question: If a teen driver is not on the parent's policy, but drives their vehicle and gets two speeding tickets, how would the insurance company ever know about him or his tickets?
Answer: The insurance company may not know about the teenage driver or his tickets now. In time it’s likely that they will.
And if there is an accident claim against the policy where the teen is at-fault, the result won't be pretty.
Many car insurance companies verify important information when applying for an auto policy. There are a couple of different reports they can request to double-check that all household members are listed properly.
One is the undisclosed drivers report (also known as driver discovery report). It reviews driver’s license and other public records to hunt down any licensed household members that were not disclosed to the car insurance provider.
Another report is for uncovering any hidden driver between the ages of 15 and 25 that parents may have left off of their car insurance policy. (See "12 things your insurer knows without asking")
This “youth discovery” report is just for young drivers because youthful drivers under 25 are particularly high-risk to car insurance companies and can significantly change the car insurance rates of the parents, thus insurers know some parents try to hide licensed teens.
When undisclosed drivers are found out via a report, normally the policyholder is contacted with a notice to add the driver and pay the premium associated with that person, or the policy will be canceled. Or the policy may be straight-out canceled if the insurer finds the newly discovered driver to pose too much of a risk.
Why omitting a teen driver is a bad idea
It’s possible that the insurance company involved won’t run these reports and the parents could get away with not being charged a premium for the teen driver. Without the teen being listed as a driver, the insurer wouldn’t know to check his driving record.
However, the parents are taking a big risk by trying to avoid adding the teen to the policy and just hoping they won’t get caught.
See, states allow insurance companies to mandate policyholders divulge all licensed household drivers so that the insurers can accurately calculate its risk and then the premium for the household. If the parents fail to inform their car insurance company about their teenage son, this could be construed as material misrepresentation, a form of insurance fraud.
Misrepresenting who drives your cars or who lives in your household can result in the insurance company being able to deny claims and/or cancel the policy.
If the teenage son in this scenario is in an at-fault accident, the insurance company would receive a claim for a driver it wasn’t even aware existed.
States laws and insurance company guidelines would then dictate if the insurance company would have to cover the accident damages or not. If the accident is covered, then the car insurance company will usually require the parents not only place the teen on the policy now but also require them to pay the back premiums they should’ve been paid since the teen received his license.
If the insurer is able to deny the claim and cancel the policy due to misrepresentation, then the parents and teen will be left to pay personally for the auto accident – and need to look for a new insurance policy. It’s harder to find reasonable rates when misrepresentation is on file as the reason you lost your last auto policy.
The parents in this situation need to come clean with their insurer. Their rates will increase significantly, due to having a young driver and then the surcharge for his traffic tickets.
In time, the son will get older, and his tickets will drop off his driving record. In the meantime it’s important for the parents to take the time to shop around and find the cheapest car insurance rates possible. Compare car insurance prices and search for discounts (such as the good student discount) until the best-priced policy is found.