However, if the parents do not properly insure the car with the details of the actual driver, they could be in for a massive financial outlay if their child is involved in a motor vehicle accident.
This is according to Nazeer Hoosen, CEO of PPS Short-Term Insurance, a subsidiary of the PPS Group, who states that the most common mistake parents make when insuring their child’s car is failing to specify the child as the primary driver or as one of the drivers of a vehicle.
He explains that when the correct driver is not specified at the inception of the policy, or if the existing policy is not updated to include the primary driver in the event of the car being handed down from parent to child, the insurance risk is incorrectly underwritten.
“In this instance, insurers could argue that they would not have accepted the risk at inception of the policy and they may reject the claim during claims stage due to misrepresentation of facts or non-disclosure.”
This is why it is vital to ensure that when arranging the cover for the child’s car that the main driver’s details (i.e. the child) are given to the broker or insurer so that the premium is correctly calculated and that the policy reflects the correct risk details, says Hoosen.
One of the reasons why parents sometimes neglect to name their child as the primary driver is because premiums for younger drivers are typically higher as the younger a driver the less experienced they are.
“They are generally more open to take risks and the lack of experience is more likely to be exposed to an accident.
“Once a driver has passed the initial period of driving for two to three years as a licensed driver, the risk decreases and possibly the premium too.
“When they are over 25 it decreases even further. In a nutshell, the claims frequency and severity is higher with young or inexperienced drivers.”