I talked to a potential client earlier this morning and she about fell off her chair when her current insurance agent told her what her new premium would be after she added her 16 year old son.

It terrified her! How could insurance cost that much?

So she called me asking for a quote.

When I started gathering information and asking about all the drivers in the household, she said “oh, no we’re all fine staying where we are, I just want a quote for my 16 yr old. I want to get him on his own policy so it doesn’t affect the rest of the household as much.” and then she went on and on again about how much the premium went for “all their cars” when they added her son.

You can’t do that!

I had to interrupt her (politely of course) and take a few minutes to explain some of the legal mumbo jumbo that’s written in her current auto policy (and all auto policies that I’m aware of).

If you read your auto policy (really, who does that?), I mean if you talk with your insurance advisor (I hope you have one, cuz you really need one), he/she will explain to you that your auto policy will stipulate that you need to list all drivers in your household on your auto policy, and pay the appropriate rate for them.

What did we do?

Well, I said “look, if you’re happy where you are, then simply understand that this is one of the many costs you have paid, and will continue to pay for having a beautiful son.”

If you want to shop around, I think you should.

The first priority is to make sure you have the appropriate coverages to protect against the risks you have. Having a 16 year old son driving on the roads is a pretty big risk (hence the steep price), so don’t reduce your coverage to get a better price. Having the proper coverage is the 1st priority.

The 2nd priority is to get the best price you can for that coverage.

So shop around and see what the market is providing.

What happened next?

She agreed to let me shop her home, auto, motorcycles/ATV’s, and her motor home with our carriers. This is a big account and I would have loved to land it.

Turns out that, although she was paying more than she’d like to, she actually had a very competitive policy. I advised her to stay where she was and told that every time she wrote out that insurance check, to remember how much she loved her son and be thankful he had a good insurance policy to protect him if something were to ever happen.

Are you paying too much?

If you have a new driver in your household, please remember that there’s a reason insurance companies rate so much for young drivers. They are a higher risk because they cause more accidents.

Your first priority is to make sure you have the right coverages. Don’t lower your liability limits and expose yourself to a greater risk because you want to save a few bucks. It’s not worth it in the long run. In fact, from a risk standpoint, you should probably raise your liability limits because there’s a greater chance you’re going to need them.

Your next priority is to not pay more for your protection than you need to. Work with your insurance advisor (who should be an independent agent) and make sure you’re getting the best value for your insurance dollar.