photo credit: sterno74

We’re right in the thick of summertime driving, especially for teens, who spend 44 percent more hours driving each week now than during the school year.

If you haven’t looked at the financial and safety implications of adding a young driver to your household, here are some tips to consider from the Insurance Information Institute, a nonprofit group sponsored by the insurance industry:

Talk to your teen about costs. Explain how a driving infraction or accident can drive up insurance costs.

Insure your son or daughter on your own policy. It is generally cheaper to add your teens to your own policy than it is for them to purchase their own. If they are going to be driving their own car, insure it with your company so you can get a multi-vehicle discount.

Find out how your insurer assigns drivers to cars. Some insurers assign the driver who is the most expensive to insure (typically the teen) to the car that is the most expensive to insure. If you can, try to have your teen assigned to the least valuable car. Some insurers will allow policyholders to do this if the number of autos equals or exceeds the number of insured drivers on a policy. However, with this kind of deal, your teen can only use the car he or she has been assigned – even in an emergency.  You face penalties and your premiums might rise if your teen is involved in an accident in a car he/she was not assigned to drive.

Increase your liability insurance. State minimums for liability insurance will not be enough to fully protect you from lawsuits if your teen gets into an accident. If your teen is found negligent in an accident and the damages exceed your insurance limits, you will be held financially responsible and could be sued for those amounts not covered by your insurance. Consider an umbrella liability policy, which kicks in when you reach the limit on the underlying liability coverage in a homeowners, renters, condo or auto policy. For about $150 to $300 per year, you can buy a $1 million personal umbrella policy.

Let your insurer know when you teen is at school. You may be eligible for lower premiums once your teen is at college, providing he or she leaves the car behind.

Tell ‘em to get good grades. Most companies will give discounts for getting at least a “B” average in school and for taking a recognized driver training course.

Here’s a tip that the III didn’t offer, but I will: don’t let your teen drive an SUV or a sports car, which are tricky for inexperienced drivers to handle.

Above all – make sure you talk to your teen and get them into a good driving program. And set a good example. Their lives are at stake.

Need more information on insurance? Check out my columns for more advice:

• Cut the cost of insuring your teen driver
• What a car wreck could cost you
• Cut your auto insurance bills in half

Your coverage is there to protect your from catastrophic expenses that might otherwise wipe you out. The smarter approach: look for ways to reduce your premiums by shopping around, paying more small costs out of pocket and keeping your coverage for the big expenses so you’re able to recover from an accident, theft or disaster.

A few tips:

Insure your house – not value of the land. Your property value has probably plummeted but rebuilding your house will still be expensive, according to the Insurance Information Network of California. Make sure your coverage reflects the rebuilding cost and not the real estate value. To save money, consider raising your deductible to $1,000 or higher, and put an equivalent amount in savings to cover smaller expenses. Also, many insurers offer discounts if you buy multiple policies, such as homeowner and auto insurance, with them.

Rethink your auto insurance. If you’re not driving as much these days–you’re carpooling, working from home or unemployed–you might be eligible for a low-mileage discount. Raising your deductible is another way to trim costs, as is dropping comprehensive and collision coverage on older vehicles. One rule of thumb: if your insurance premium equals 10% or more of the value of the car, it may be time to drop collision and comp. Edmunds.com can help you determine your car’s current value.

Don’t put off buying flood insurance. Regular homeowners insurance doesn’t cover floods. Flood insurance from The National Flood Insurance Program generally runs about $500 a year, but those costs could be higher if you buy later under a higher flood risk.

Shop for service as well as price. Yes, price is important. But should you need your coverage, you also want your claims paid without big hassles. Many states have consumer complaint surveys, such as these at the California Department of Insurance, to help you judge an insurer’s customer service.

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1.    Does auto insurance automatically cover a rental car?
2.    Can you own a house without homeowners insurance?
3.    If you need life insurance, in general how much coverage should you buy?

If you answered: No, yes and 5-7 times your annual salary – Bravo!!! You know more about insurance than the majority of 1,000 American adults who answered those questions incorrectly on a 10-question quiz about insurance. On average, Americans flunked the test – receiving only a 40% score.

That shows that consumers know a lot less about insurance than they think, says the National Association of Insurance Commissioners, a group of state insurance regulators that sponsored the poll.

Among the poll’s findings, which covered several areas of insurance:

• Health insurance: Less than half of those surveyed (49%) know that if they leave their job and choose COBRA (Consolidated Budget Reconciliation Act) insurance to continue their health benefits, they must pay the full cost of coverage.
• Life insurance: Only 14% knew that the amount of life insurance typically recommended for individuals is 5 to 7 times your annual salary.
• Home insurance: About 19% understand that the requirement for PMI (private mortgage insurance) depends on the size of the down payment and law.

You can see how well you do on the rest of the quiz by clicking through to www.insureUonline.org and taking the Insurance Quiz. (Look for a small light-blue box on the right-hand side of the page. It’s near the top.)

If you didn’t do so hot or have questions, educate yourself. NAIC’s Web site at www.insureUonline.org is one place to start.

But see my columns for other tips:

• 3 costly myths about insurance

• Refinance your life insurance

• 10 things your insurance may not cover

Usually, your standard homeowners and business insurance policies cover a lot of problems caused by storms, including:

• losses from burst pipes
• ice dams (when water can’t drain properly and seeps into your house)
• wind damage
• a building that collapsed because of the weight of ice/snow
• damage from a tree crashing into your home

Even your car is covered for auto accidents caused by slippery weather under most standard auto policies. If a tree or branch or other falling debris smashes into your car, you’re usually reimbursed if you opted for comprehensive coverage.

What’s typically not covered: long-standing problems that aren’t promptly spotted and fixed. Most insurers, for example, won’t pay for rot or other damage caused by a slow leak.

So make a complete tour of your house after every storm to identify problems and get them fixed promptly.

If you have no clue what your policy covers, find out. You never know when Mother Nature will throw another weather curve ball at us.

Here are some of my columns related to insurance issues:

• 3 costly myths about insurance

• Should you buy pet insurance?

• Close the gap in your car insurance

• A home warranty is no guarantee

Thirty-two states require insurers to pay the sales tax when you buy a replacement vehicle (for a list, CLICK HERE). Some require insurers to pay for title and registration fees, as well. Even in states that don’t require such payouts, some insurers will cover these costs.

But you may have to ask to get the benefit, Danise said.

“Consumers should always ask their insurers for reimbursement of sales tax, title and registration fees when they buy a replacement car,” Danise said. “Even in states that don’t require it, policyholders could receive the reimbursement, depending on the company.”

That would be the highest percentage for the U.S. in two decades, says IRC Vice President David Corum.

The IRC estimates that for every 1% increase in unemployment, the percentage of uninsured drivers increases three-quarters of a percentage point.

Which states have the highest percentage of uninsured drivers on the roads? Based on 2007 data, the IRC found that New Mexico was the highest at 29%. Next was Mississippi at 28%. California ranked No. 7 at 18%. Massachusetts had the lowest percentage at 1%.

If you’re struggling financially, dropping your auto insurance might seem like a good move, but it’s not. A single accident could wipe you out financially. Plus, you risk having your vehicle impounded, your license suspended and steep fines.

Corum says there are several things consumers can do to lower their insurance costs — some with almost immediate effects:

• Raise your deductibles
• Eliminate coverages you don’t really need, such as comprehensive coverage for an older vehicle of little value
• Get rid of vehicles that aren’t being used
• Shop around for the best rates

And here are some of my columns for more insurance tips:

• Dump the insurance on your clunker

• Close the gap in your car insurance

• A survival guide for the uninsured