Insuring your child’s car

Car insurance for a person under the age of 25 can be extremely high as they have a much higher risk rating than someone who has been driving for many years. They are also at that age where they are more likely to undertake risky driving behaviour.

To reduce these insurance costs, parents may be tempted to insure the car with the parent as the regular driver. The problem is that you have a good chance that in the case of an accident the claim will be rejected.

According to Nthabiseng Moloi, MiWay Head of Marketing & Brand, in circumstances where the incorrect person was noted as the regular driver, claims are often rejected, as the person behind the wheel is deemed not to be the car’s ‘regular driver’.

Moloi says that if from time to time your child or spouse drives your car and is involved in an accident, you will be covered subject to an additional excess, depending on the terms of your policy. If, however, it is found that the child is actually the regular driver, the claim will be invalidated and all those insurance premiums you paid will be a waste of money.

Moloi explains that a premium is calculated based on the risk profile of the regular driver, therefore in this case it would have been calculated based on the profile of the parent who is listed as the regular driver. Should the child be found to have been the regular driver, the claim will be rejected if it is found that the risk profile of the child is worse than that of the parent. This is due to the fact that the incorrect premium was collected (premium prejudice) based on incorrect information given and thus voiding the risk.

Insurance companies view the regular driver of a car as the person who drives it most often in a given period. Moloi says this can be tricky to define if your family has one car that is shared between multiple parties, but it should almost always be clear who drives the car most often. If you’re in any doubt, tell your insurer about any individuals who drive the car on a regular basis. Some insurers may ask you to name all the drivers, so check with them or your policy document to be 100% sure before you hand over your keys. And if you pass the car on to someone else in your household, don’t forget to update the details of the regular driver with your insurer.

This article first appeared in City Press.

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