TORONTO – It’s the time of year when students return home from school to celebrate the holidays with their families and start the negotiations to borrow their parents’ car.
But insurance companies say both parents and young adults should consider several factors about auto coverage before the keys are handed over.
Everything from safety habits to the specifics of the insurance policy can be discussed at the kitchen table, suggested RBC Insurance adviser Natalie Dupuis.
“Have a sit down conversation to refresh their memory about distracted driving or winter driving,” said Dupuis, who serves as the bank’s senior product manager of auto insurance.
“And really it doesn’t hurt at that point to call your insurance company and let them know you have a driver who’s going to have access to your vehicle for a week or two weeks.”
If you haven’t done it before, this is a great time to lay out the facts of insurance to young drivers because there might be a disconnect between their logic and the thinking of the insurance industry.
In most Canadian provinces, insurers are legally allowed to discriminate by gender, often charging hundreds of dollars more to male drivers under 25 because statistics show they’re more prone to accidents.
These factors can serve as a gateway to a bigger conversation about road safety, and the financial dangers associated with ignoring insurance rules.
For example, there are major risks if a youth lends his parents’ car to a friend, as the financial risks can fall to the parents.
If that friend has an accident, then it’s the vehicle’s owner who would likely be sued, not necessarily the driver. If the accident was the fault of the friend who borrowed the car, the owner would shoulder the collision deductible and the accident would be counted against their driving record.
Also, parents should make it clear that insurance won’t cover any damage to the vehicle if their son or daughter is driving while impaired.
Insurers say that a quick review of a collision scenario can help alleviate some of the confusion of an already stressful situation.
“Often the problem we see is somebody doesn’t know what to do,” said Steve Cohen, senior vice president of personal lines, underwriting and pricing at Aviva Canada.
“One of the first things you should do is call your insurance company.”
He warns against using the first tow truck that comes along, for example, since it may not take the vehicle to the most honest repair shop.
Tracey Neziol, manager of marketing at the Neziol Insurance Group, notes that insurance payments for young adults living away from their parents — typically considered “occasional drivers” — depend on the distance between the family home and school residence.
A young driver who lives only a couple hours away should be kept on their parent’s insurance policy in case they borrow the car while visiting for the weekend.
“If they’re far away from home, parents can take you off the policy,” Nezoil said.
However, all of these rules change when a young person graduates into the workforce. Once they’ve severed financial ties with their parents, mom and dad will need to reassess their insurance coverage to account for an occasional driver.
At some insurers, there is a fine line between who qualifies as “occasional” and who is just borrowing the car during a short stay.
The specifics would have to be negotiated with your insurance provider.
Other auto insurance tips:
— Don’t leave expensive items, including Christmas gifts, visible in car windows. Vehicle break-ins climb during the holidays.
— Put your registration and insurance cards in your wallet, not your glove compartment, which prevents thieves from stealing a valid identification card. Don’t even leave a photocopy in the car.