insurance

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.

CALCULATOR: How Much Umbrella Insurance Do I Need?

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.

Most Popular

Don’t Be Tricked Into Voluntarily Paying Higher Taxes on Your IRA
IRAs

Don’t Be Tricked Into Voluntarily Paying Higher Taxes on Your IRA

Traditional IRAs are set up in a way that basically incentivizes you (and your heirs) into paying the highest tax bill possible. Don’t fall for it. Co…
July 4, 2022
Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
The 15 Best Stocks for the Rest of 2022
stocks to buy

The 15 Best Stocks for the Rest of 2022

The lesson of the past two years: Be ready for anything. Our 15 best stocks to buy for the rest of 2022 reflect several possible outcomes for the seco…
June 21, 2022

Recommended

Short-Term Insurance Plans' Good, Bad and Ugly
retirement

Short-Term Insurance Plans' Good, Bad and Ugly

You'll need a clear-eyed analysis to gauge the value of short-term care insurance plans and if they're right for you.
May 26, 2022
7 Things Medicare Doesn’t Cover
Healthy Living on a Budget

7 Things Medicare Doesn’t Cover

Medicare Part A and Part B leave some pretty significant gaps in your health-care coverage. But Medicare Advantage has problems, too.
May 4, 2022
3 Paths for Getting Vision Insurance in Retirement
Healthy Living on a Budget

3 Paths for Getting Vision Insurance in Retirement

Medicare Part B's restrictive coverage of vision care means you'll have to find a different route to get the right insurance. Here's some guidance.
May 2, 2022
What to Look for in a Disability Insurance Policy
insurance

What to Look for in a Disability Insurance Policy

Income protection insurance will keep your paycheck working, even when you can’t. Here are five key features of an individual disability insurance pol…
April 12, 2022