Teenage Drivers and Auto Insurance Liability Limits

Ask Kim

Teenage Drivers and Auto Insurance Liability Limits

If your family's car insurance liability limit is too low, you could be on the hook for thousands of dollars.

My wife, 18-year-old son and I have a multicar insurance policy with a $300,000 liability limit. My son drives one of our cars daily, but the title is in his mother’s name. Are we financially liable beyond the $300,000 if my son causes an accident? And would it make a difference if the car were titled and registered in his name?

You could be on the hook for any damages above $300,000 if your son – or anyone in your family – causes a major accident. That is a good reason to boost the liability limits on your car insurance, especially if you have a teenage driver, and to consider buying an umbrella policy. With umbrella coverage, you can add $1 million or more to your auto and homeowners liability coverage, generally for $200 to $400 per year. See Why You Should Have Umbrella Liability Insurance for more information.

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If the car were titled in your son’s name, he could get his own insurance, which should limit your liability. But it can be very expensive for an 18-year-old male to buy auto insurance coverage on his own; it’s usually less expensive to keep family coverage with a multicar discount. See 8 Ways to Cut Insurance Costs for Teen Drivers for details.

For more information about saving money on auto insurance, see 4 Reasons to Reshop Your Auto Insurance.

Got a question? Ask Kim at askkim@kiplinger.com.