Should a parent register their teenager’s car in the parent’s name to save on insurance premiums?
Some parents register a car to be used by their teenager in the parent’s own name, to save on insurance premiums. This article explains the tremendous risks in doing so.
A parent should never…repeat…never… register a car to be used primarily by a teenager, in the parent’s name.
Here are the reasons;
1) Misrepresentations regarding the Principal Operator could void your insurance.
A misrepresentation made as to who the "principal operator" will be when the insurance is taken out, could void your insurance.
Some parents register a car in their own name, to save on insurance premiums. They misrepresent who the principal operator will be, saying it is the parent, when it is really a car to be used by the teenager. Premiums are based on who the principal operator is. Teenagers are a high risk group, and their premiums are priced accordingly.
If the teenager has an accident, ICBC could void the insurance entirely, if it can be proven the owner/parent did not tell the truth when the insurance was purchased.
ICBC could investigate who really drove the car, by interviewing the teenagers friends ( was it "his ‘ car ?). Did the parent have another car they drove instead?
The effects of a void policy can be financially catastrophic for the owner/parent.
If the teenager causes an accident, the parent is responsible for the damage claim, as the owner of the car. Owners of vehicles are JOINTLY AND SEVERALLY responsible to pay for any injuries caused by the driver. If there is valid insurance, and the claim is below the Third Party Liability Limits, then this is usually not a problem. The insurance pays for the injury claim, and all legal fees to defend the claim.
But if the insurance is voided for any reason, including misrepresentation when the policy was purchased, there is no insurance coverage.
This means that the owner/parent is fully responsible to pay all the injury claims associated with the accident, and all legal fees. These amounts can be substantial.
They may be into the millions. The effect often is that the parent loses all of their assets, their house, investments, business, etc, and has to declare personal bankruptcy.
2) If Your Teenager causes an accident, the Owner is at risk, even with valid insurance
As set out above, if the teenager driver causes an accident, the owner parent is jointly and severally responsible for the damage claim. If the claim is substantial, and exceeds the third party liability insurance limits, then the owner /parent is responsible for the amount of the claims(s) above the insurance limits.
For example, say the "insurance limits" on the car are only $1 million. Say the total value of the claims for all injured in the accident totals $1,750,000. This would result in ICBC paying out a maximum of $1 million on the policy, and the parent would be personally responsible for the remaining $750,000.
Some serious injury claims can be well into the multiple millions.
The correct amount of insurance coverage to purchase will be the topic of another article.
3) If your teenager drinks and drives, (and breaches the insurance policy as a result), the Owner/parent is responsible for the injuries in an accident
A policy can be breached in many ways. The most common is drinking and driving. Should your teenager drink and drive, (and be over the legal limit), and cause an accident, the insurance would be voided. Both the teenager and the parent would be held personally responsible for the injuries incurred by everyone involved in the accident.
4) If your teenager breaches the policy for any other reason, the owner could be held responsible for all injuries
A policy may be breached in any number of ways, other than drinking and driving.
If your teenager is convicted of "dangerous driving" under the Criminal Code, there would be a breach, and would result in no coverage. Should your teenager lend the car, or allow another teenager to drive, and that driver did not have a valid license, either because they did not have a license, or it was under suspension, again the policy would be breached. the parents would have to pay for all the damages.
So the moral of the story is never..repeat….never….have a car that is to be used primarily by a teenager registered in the parent’s name.
It certainly will cost more to insure the car when it is registered in the teenager’s name.
But the risk of any poor behavior by the teenager will be insulated from the parent.
Do not put all of your assets, and your home, at substantial risk by putting the teenager’s car in your name.
It is not worth the risk.
Avoid a potential financial catastrophe.
Register the car in the teenager’s name only.
Paul Mitchell, Q.C.is a BC personal injury lawyer who has extensive experience with BC brain injury claims, BC spinal injury claims, BC death claims, ICBC claims, BC medical malpractice claims, and other catastrophic BC injury claims.
He acts for injured clients all over BC and Alberta, and will not act for ICBC or any other insurance company.
For more information on this article, or for a confidential discussion of your claim, contact Paul Mitchell, Q.C. at 250-869-1115 (direct line), or send him a confidential email at [email protected]
