5/17/2013 4:45 PM ET|
When good drivers marry bad drivers
There's usually no mention of auto insurance in wedding vows, but it doesn't hurt to know whether your intended is safe behind the wheel.
"For better or for worse" includes car insurance.
Most couples will find cheaper rates after tying the knot because of multicar and multipolicy discounts, and the fact that most insurance companies view married people as less risky than single drivers.
But some newlyweds might be better off saying, "I don't" to a car insurance policy shared with a spouse who has too many moving violations, insurance claims and accidents. The spouse's lousy driving record will likely increase your insurance rates if you have a policy together.
"You're marrying their driving record, too," says Cristofer Pereyra, a Farmers Insurance agent in Phoenix.
When both drivers have clean records, the savings are substantial. We compared rates for an Oklahoma City couple, both 29, driving a 2009 Jeep Grand Cherokee and a 2010 Toyota Matrix with full coverage on each.
Assuming they bought the cheapest policies we found, Jim would pay $1,544 a year to insure his Jeep, and Mary would pay $1,396 for her Toyota. But married they would pay just $2,014 for both cars -- more than $900 off their combined individual bills.
But if one of those drivers brings a spotty record to the marriage, all those savings can disappear. Adding three speeding tickets to Mary's record brings their joint car insurance bill to $2,876. And a DUI or other major violation on one spouse's record can mean neither qualifies for an insurer's standard policy and best rates.
What you're required to do
The first thing to do is tell your insurance company soon after getting married that you're living with, and married to, another driver, says Lynette Simmons Hoag, a Chicago lawyer who deals with auto insurance claims. Most states and insurers require any licensed driver living in the same home as the insured driver to be covered under the same policy. That's because all the licensed drivers in the household have access to the car.
"The other person's driving record is going to affect your rates," CarInsurance.com consumer analyst Penny Gusner says. "And it's probably cheaper to have one policy."
As Allstate notes, most insurance companies consider married couples to be more stable and responsible and therefore a lower risk to insure. Gusner says the discount for marriage runs about 10 percent, though that may come in the form of a lower base rate rather than separate items.
She recommends shopping around when merging policies. If each of you has a policy and you want to combine them, get quotes from each of your current insurers. Comparison shop outside of those two companies as well. Look for multicar and multipolicy discounts, such as having homeowners or renters insurance with the same insurer.
Should you split up?
Spouses can get separate policies if one has a bad driving record. Separate policies might be a good idea anyway, even if both spouses are good drivers, if one person uses his or her car for business and has employees driving the car, Simmons Hoag says. Not all states allow a named-driver exclusion for spouses. Even in states that allow it, not all insurance companies do.
While Farmers Insurance wants to know about all licensed drivers living in your house, it does allow a spouse to be excluded from using your vehicle, Pereyra says, adding that it's rare for such an exclusion to be requested. Having a separate policy would mean you wouldn't get any multicar or multipolicy discounts.
Sometimes an insurance company will make the exclusion request. "Then it may be worth it, since some insurers will otherwise cancel your policy if you don't exclude a bad driver from your policy," Gusner says. "Of course, you shouldn't allow an excluded driver to use your insured vehicle, because your insurance coverage would not extend to them in any way."
If a spouse who hasn't been added to the policy yet gets in an accident and the insurance company decides to cover the accident anyway, the policy may then be canceled and the insured may have to pay back premiums for that driver, she says. But an exclusion means no coverage under any circumstances.
Other ways to save
If you decide to merge auto insurance policies with a spouse who has a bad driving record, check with the spouse's current insurer to see when driver's license points for accidents or infractions will expire. Waiting a bit to merge may lead to a lower rate if there are fewer points on the spouse's driving record.
Gusner also suggests:
- Assign the spouse with worse driving record to the cheaper car.
- Take a driver improvement course, if offered, to help balance out the higher rates.
- Raise your deductible.
- Drive fewer miles. Car pooling or public transportation may allow you to reduce mileage on one of the cars to a discounted level.
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