Why you need auto insurance with your learner driver permit and what to do about it

Learner driver permit holders need car insurance.

Congratulations on getting your learner driver permit! The question to ask now is: do you need insurance to drive now?

Even at this stage in your driving career, the answer is an absolute “yes” in all 50 states. All drivers and all vehicles must be insured — no exceptions.

But how exactly is this done? How do you get learner driver car insurance?

Sometimes it’s as simple as understanding car insurance for teens. But often the specific answer varies greatly depending on situation, company, and state.

Learner Driver Car Insurance for Teenagers

If the driver is a teenager, learner driver auto insurance is best acquired by placing the new driver on a parent’s policy. The insurance company will need the learner driver’s state-issued license number and a vehicle to place the driver on.

This can be a tricky proposition. Some companies insist on placing the highest-risk driver on a policy on the most expensive car – you’ll have to check with your agent or broker.

The ideal situation would be to place the teenager on an older, paid-for vehicle with liability-only coverage. Make no mistake – this is going to be expensive no matter how it’s done.

Even so, given the big expense of insuring a teenager on a full-coverage policy on a newer vehicle, it might make financial sense for the family to buy an older car to insure their teenager. Naturally, check with an agent to make sure this is feasible for your particular situation.

Learner Driver Car Insurance for Adults

The situation is a bit different for adults who are driving for the first time. Many companies will take an adult driver on a learner permit in their high-risk company. Being placed in high-risk is due both to their lack of driving history as well as their lack of insurance history. While this can be expensive, many adults can move to a less expensive standard company after six months if all goes well.

An option an adult may consider for learner driver car insurance is a “non-owned” policy. This is a liability-only policy that covers only a particular driver and not any particular vehicle. A non-owned policy satisfies state liability insurance requirements and at the same time starts the clock on the driver’s insurance history sooner than later.

To qualify for a non-owned policy a driver must not have a car registered in his or her name. Otherwise the company will require the policy to be written on that car, even if it’s not the car being driven.

When You Get Your Full License

It stands to reason that an insurance company will not continue to insure a driver on a learner’s permit indefinitely. The driver will need to show proof of obtaining a full license in a timely manner to avoid cancellation. Most companies will allow a few months for this.

No company will wait around forever. You should provide the insurance company your full driver’s license information as soon as possible to avoid any problems.

How kit cars are different, insurance considerations before and after building your own car.

Don't forget to insure your kit car before you start building!

A kit car may be the ultimate do-it-yourself project. It allows the hard core car enthusiast to build their own car from the ground up. But as with any car, kit cars need to be insured.

Given the unique nature of the kit car process, it’s insured differently as well. There are several kit car insurance considerations you wouldn’t even consider with standard factory-built cars.

How Kit Cars Are Different

Perhaps the important difference between kit car insurance and other types of auto insurance is the “builder’s risk” aspect of it. Whereas a standard automobile is built in a factory somewhere, and a classic car is built in a factory a long time ago, kit cars are by definition built by private individuals.

Auto factories carry a form of commercial insurance to cover their building process to protect against theft, damage and other perils that may hinder getting the finished product. In the same way, individuals constructing kit cars should insure during the building process as well.

Insuring the Kit Car Build

You should consider insuring a kit car before the first part is ordered. This provides coverage for such things as missing or damaged or parts during the building process. Without this coverage, a mishap involving parts could completely stop the build. After all, how much more useful is an unfinished kit car versus a totaled car?

Both cars just take up space.

Many traditional property and casualty insurers won’t insure kit cars (although some do). Even if your normal company doesn’t insure kit cars, they may have access to a kit car insurance market through a broker.

As with classic car insurance, there are several companies that specialize in the kit car insurance. Alternatively, you can shop for kit car insurance online. Check with your agent or broker for more details.

After Building Your Kit Car

Once the kit car is built, it’s insured in much the same way as a classic car. Material damage is covered at a stated value (generally the total amount spent to build the car) while liability is a secondary concern at best. State minimum liability limits must be satisfied to legally drive a kit car on the road.

If the car is meant to be primarily a display piece it’s not absolutely necessary. As with classic car insurers, most kit car companies won’t insure the finished product unless it’s used for primary transportation.

Things to consider when insuring high-performance vehicles and when to look at exotic coverage

What you need to know to insure this beauty!

High performance car insurance operates much the same way as car insurance for any other car. But it’s not cheap.

That’s why shopping around is even more important. It may even land you a good deal.

How High Performance Car Insurance Works

You need to understand the basics of insurance underwriting before seeing how high performance car insurance works. Basically, insurance underwriters rate risks based on cars, drivers, and hundreds of other factors. If the company decides to take on your risk, they assign a premium to the new customer – and you get a policy.

Since the type of car is a factor for underwriting, some automobiles cost more to insure than others. Rates differ from company to company, but high-performance sports cars like Vipers, Camaros, and Mustangs rank among the most expensive to insure. From an underwriter’s perspective, there’s more risk involved.

But it’s not just about the car you drive.

Other factors, such as safety record, play a large role as well. If you haven’t already purchased your high performance car, it may be a good idea to research insurance rates before buying. The differences can be quite significant between models and companies for reasons that may not be readily obvious.

Coverage for Your High Performance Car

Theoretically high performance car insurance can be purchased legally at state minimum liability limits. However for a variety of reasons that’s probably not a good idea.

For one, minimum liability limits are often insufficient for even lower-cost models. Repairs and other associated costs for larger-than-fender-bender accidents can easily exceed minimum limits if you’re at fault. When dealing with high performance vehicles, the problem will probably be larger because it’s a more conspicuous car.

In addition, high performance cars represent an investment. As such, good material coverage is often recommended even after the bank is paid off. You wouldn’t want to treat your sports car in the same way as you would an old beater. After all, it may become a bona fide classic in a few years.

Exotic Coverage for Your High Performance Car

A standard full coverage policy may be sufficient for a domestic high performance vehicle. But it doesn’t work that way for all sports cars.

If you own a six-figure vehicle like a Ferrari, Lamborghini, or Masarati, you should consider exotic car insurance. Standard companies that would insure other high performance models may need to refer you to a special insurance broker.

As a general rule, when the car becomes more like an investment than a means of transportation, special insurance considerations should be addressed.

Why fleet auto insurance is different and what you need to know about fleet coverage

Why you need fleet insurance for company vehicles.

Fleet car insurance is different from a typical auto insurance policy. For one, it’s handled by a commercial insurance company.

As such the considerations for writing a fleet policy are different from personal auto insurance.

What’s Different about a Fleet Policy?

A fleet car insurance policy usually requires two or more vehicles owned by a company – not an individual. The company can be a sole proprietorship, but there must be a certain commercial element to the ownership.

If you have a company trying to get a fleet policy, be sure to include all vehicles when writing the policy. This includes trailers and other secondary vehicles, as they all need to be listed separately.

Another factor is that material damage options and deductibles. These can be different for each vehicle, but the liability limits are usually the same for all vehicles. In other words, changing liability limits on one vehicle means changing them on all of them. One should keep this in mind when getting a new policy.

Equipment that is commonly used with the vehicle but not intrinsically part of the vehicle itself may need to be insured separately. This policy is called an “inland marine” policy. This can include things like generators and mobile construction equipment. These items are typically insured at a stated value and depreciated based on age. Talk to your commercial agent or broker when getting this policy – they’re not covered under the fleet car insurance policy alone.

List Each Driver on the Fleet Policy

In addition, all drivers should be listed separately on fleet auto insurance. This is interpreted much more strictly than with a personal auto policy. There can be more than one driver per vehicle on the policy, but all drivers should still be listed along with the amount of driving they are expected to do.

If a claim occurs in an insured vehicle, but the driver is not listed, the claim could be denied. While drivers don’t need to have perfect driving records, they should also not have any serious problems. Drivers with poor driving records can also be declined. Many insurance companies will not accept drivers younger than 25 on commercial policies regardless of driving record.

Also keep in mind that drivers need to show they’re properly licensed to drive your vehicles. If you have a truck larger than 26,000 GVW, for example, your driver needs to document proof of having a CDL license.

Changes to Fleet Car Insurance

Fleet car insurance is always subject to change. Vehicles are bought and sold. Employees come and go. As a result it’s normal to change policy items on a fleet insurance policy regularly. Commercial insurance agents and brokers are used to this, so don’t be afraid to call them.

Bottom line: make sure you keep your policy as up to date – or there could be a problem when there’s a claim.

Why having continuous coverage helps keep you out of high-risk insurance companies

Longevity and continuous coverage count with car insurance.

Having continuous coverage on your car insurance is very important. A 35-year-old driver could have a problem when getting insurance again if he lets his policy lapse.

He may have a spotless driving record, but if he hasn’t driven for a couple years the insurance company will view him with suspicion when he gets a new policy – almost like a first-time driver.

So what’s the problem?

The Importance of Continuous Coverage

Continuous coverage is one of the most important things insurance companies look at when considering a new policyholder. Regardless of past history, if you’re unable to document at least six months of past insurance coverage it’s enough to disqualify you from a standard auto insurance company. In such cases a high-risk company is often the only alternative.

(Exceptions can be made for spouses and children of existing policyholders.)

That’s why keeping continuous coverage makes sense so that you avoid the ‘first-time car insurance pitfall’. This can be accomplished even when one doesn’t own a car through a non-owned auto insurance policy. This type of auto insurance policy insures the driver rather than a vehicle. Since there’s no car involved, non-owned policies are liability-only.

Continuous Coverage or High-Risk Insurance

But what if you don’t keep continuous coverage and you can’t get standard auto insurance. A high-risk company is probably your next step. A high-risk insurance company specializes in drivers who have a spotty driving history or who can’t document previous coverage. As a result premiums with these companies are higher than comparable policies with standard companies.

The good news is first-time car insurance policyholders with good driving records only stay with the high-risk company for a short time. Most standard companies will take new drivers after they spend six months in a high-risk company without incident. Unless there’s a ticket, accident or claim during that period, it’s rarely necessary for a new driver to stay in a high-risk company longer than that.

Non-owned policies are often available in high-risk companies. If you don’t have a car, but plan to get one soon, getting a non-owned policy can be a cost-effective way to establish that all-important insurance history sooner rather than later.

Moving from High-Risk to Standard Coverage

Most property and casualty insurance carriers have a high-risk subsidiary. When a driver becomes eligible to move over to the standard company it’s usually a seamless process.  The company simply transfers the driver’s information. Proof of prior insurance is already there.

If a driver wants to change companies, they must provide proof of coverage to the new company. An insurance liability card or policy declaration page documenting six months of continuous coverage will do the trick.

Even so, it’s the driver’s responsibility to initiate the process. Otherwise he or she may simply be renewed in the high-risk company, paying more than necessary.

Bottom line, keep continuous coverage on your car insurance whenever possible. If you’re not going to be driving for awhile, get a non-owned policy to maintain coverage and avoid high-risk insurance.