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How does liability insurance for teens work?

Teen driverParents should not assume there is automatic liability car insurance coverage for a newly licensed 16-year-old driver. While your insurer may indeed automatically cover your child for a certain period of time until you add him or her to the policy as a driver, insurance company guidelines vary, so you should find out your provider's rules and guidelines as your child starts the licensing process. 

Insurance company guidelines differ but in general insurance carriers will require you to list all licensed drivers in your household on your insurance policy. If you have a 16-year-old who got his driver's license you should inform your insurance company.

Some insurers require you to add teen drivers to your policy once they get a learner's permit, while others allow you to wait until the child has a driver's license.

If you don't add your teen to your policy and he gets into an accident, you'll have to pay for damages. In some cases, the insurer will cover the at-fault accident of a teen driver that wasn't listed on the policy, but only after you pay the premiums that should have been paid for the child to be on the policy and properly covered.

Does a parent have any liability or financial responsibility for a child who causes damages in a traffic accident?

This question is more appropriate for a legal professional. But yes, in most states the parent of a licensed minor has liability and financial responsibility for accidents caused by their teen driver under age 18. In many states, parents and guardians must sign their teen's driver license, stating they take financial responsibility for the child until they turn 18. This means having the proper insurance on the teen driver and being held liable for any damages the child may cause in an accident.

State laws do differ so if you want to find out if your assets are at risk by your minor child having a driver's license and operating a vehicle on the roadways, check with your local DMV or an attorney familiar with type of state law.

For instance the California Department of Motor Vehicles states that a minor's application for a driver license must have the signatures of:

  • Both parents, if the parents are California residents and have joint custody, or
  • Both parents, if divorced, with joint custody, or
  • One parent, if that parent has custody, or
  • Guardians of the minor, if neither parent is living or has custody, or
  • The person(s) having actual full and complete custody, if no legal guardian is appointed.

Nonresident parents cannot sign the application form and cannot accept liability for a minor in California. Nonresident military parents stationed and living in California can sign the application form and accept liability for a minor.

When parents or guardians sign for a minor to get a driver license in California, they are stating that they will accept financial responsibility for that minor. Financial responsibility in California requires that drivers and vehicle owners carry the following minimum monetary limits:

  • $15,000 for injury or death of 1 person per accident
  • $30,000 for injury or death of 2 or more persons per accident
  • $5,000 for any property damage per accident

In California and other states if the parent owns the vehicle the child was driving at the time of the accident, then the parent would have vicarious liability again as the car owner. If you have a child that has a driver's license you should make sure you have insurance coverages with limits high enough to cover your personal assets. An umbrella policy may help you be able to do so better than just a car insurance policy on its own.

My son is 18-years-old and still lives at home. Does it make a difference to my liability for any accident he may have if he has his own insurance and is the sole owner of his car?

It will depend on state liability laws if your son's actions could affect your own personal liability. If your adult son is still claimed as a dependent on your taxes, then in some states you can still be held accountable for negligent actions which he might take part in.

Typically, parents won't be held liable for an 18-year-old child if the child owns the car he drives and has his own insurance policy on the vehicle. You as a parent have not provided him with the vehicle so he should be held responsible for an accident he is at-fault in. Again, state laws will be the guide for this so you will want to check with a lawyer familiar with your state and local liability laws to find out. 

If you find out that you can be held responsible for your son's actions, even though he is now an adult, you may want to see about obtaining an umbrella insurance policy. This type of policy can help you protect your assets.

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6 Responses to "How does liability insurance for teens work?"
  1. Mike

    This was very helpful. I read this before contacting my insurer regarding my son, who just turned 16-year old, is anxious to get his permit. There is indeed a distinction between permit and actual license as far as it affects one's rates.

  2. Anonymous

    Will an accident be covered if my 16 year old granddaughter is driving my vehicle? She doesnt drive it regularly, but if she is visiting and wants to drive, I want to make sure she is covered. Pennsylvania

    1. BJ September 13, 2016 at 9:03 AM

      My 36 year old son and my 16 year old grandson are living with me. My grandson just got his drivers license. Does it make a difference to my liability for any accident my grandson may have if he is on his dad's insurance?

        Reply »  
  3. Anonymous

    im 17 years old i can take license

  4. Anonymous

    how much is insurance for my child if they are paying it themselves.?

  5. Anonymous

    it answered my question perfectly

Disclaimer: Answers and comments provided are for information purposes. They are not intended to substitute informed professional advice. These responses should not be interpreted as a recommendation to buy or sell any insurance product, or to provide financial or legal advice. Please refer to your insurance policy for specific coverage and exclusion information. Please read our Terms of Service.

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