Michigan's Big Industry

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My Michigan-dwelling grandson will be 15 soon and will start learning to drive. He can’t get a full license until he’s 17, though, as the state wants to limit times and amounts of teen driving, presumably for safety reasons. That’s sensible – teen drivers are more likely to get into accidents. Despite this, the state prevents insurance companies from requiring people to purchase additional coverage for the teenager, even though between ages 16 and 17 the boy will be driving on his own.

Why is this? It seems strange for an insurance policy not to reflect known risks. Apparently, this restriction is imposed by the State of Michigan. It is yet another way in which the state subsidizes purchases of the local product – automobiles. (The same thing is not true in Texas; once a kid obtains a limited license that allows him/her to drive without an adult, additional insurance must be purchased.) (HT: AH)


Vi

...the state wants to limit times and amounts of teen driving, presumably for safety reasons...

I hardly find this to be sensible. Isn't the state basically saying that they want teens -who are new at driving and are not particularly good drivers- to decrease the amount of practice time they have? It's like telling a chef that's not particularly good at knifework to chop less things in hopes that they'll nick themselves less often. It's a short-sighted, short-term solution that'll result in larger problems down the line.

levi

Do you think its an effective substitution? Isn't it just transferring the additional cost of teen drivers to the rest of the population? Thereby increasing consumption of cars among teens (parents of teens), but decreasing consumption of cars among those without teens. Seems like a 0 sum gain.

Josh W

The state is not doing the subsidizing. The insurance companies are passing along the cost of your teenager to all other customers..... We are doing the subsidizing like it or not....

Andrew

Hey Vi,

If it's anything like NY where I grew up the idea is to limit it to the times that the roads are safest (during the day). This may limit the amount of practice, but it lets you get that practice in a safer environment so that by the time you're driving at night (well known to be riskier both for lighting and social reasons) you have more experience.

MikeM

If the rest of the residents of the State of Michigan all had their hands on that chef's chopping block, then yes, they might ask him to chop less.

Jesse

I also don't find it "sensible" to limit teen driving hours. Elderly drivers are responsible for as many accidents per mile driven as teenagers (if not more) -- and in the case of elderly drivers, it seems indisputable that the cause is biological, not simply a lack of practice.

Why are there no such restrictions on the times and amounts of elderly driving? Because elderly drivers have the right to vote. This is about political power, not safety.

TM

"...the state wants to limit times and amounts of teen driving, presumably for safety reasons..."

Perhaps times, but not amounts. There's nothing that says a teenage driver can only drive X hours a day.

It's within reason that someone new to driving should first get enough experience driving during the daytime before driving at night.

However, the question is why the state doesn't require insurance policies to reflect teenage drivers. Perhaps I'm wrong, but I thought all drivers ages were reflected in insurance policies, teenage or not (including in Michigan).

jonathan

Or ... the state could feel that having a teen on your policy is an incentive toward monitoring that teen's driving. Much of Michigan is very conservative and this sounds as much like a social measure as an incentive for car buying. It is the parents' responsibility and a big part of Michigan thinks that is the way it should be and that making the child responsible through separate coverage is somehow morally and economically wrong because it encourages bad behavior.

Chad

@Vi

Poor teen driving is not just an issue of practice. Teens are more likely to participate in other risky behaviors and are just less risk-averse in general. The average first-time driver who is 30 is going to be a safer driver than the average first-time driver who is 16.

Joe D

Vi @1: No, the *amount* of behind-the-wheel time is not restricted with a "Level 2 Intermediate" license for 16-year-olds; they are prevented from driving between midnight and five a.m. without an adult (age 21) licensed driver (unless they're traveling to or from emplyment). In fact, there's a *minimum* supervised driving time to get the license.

Full details are at www.drivinglaws.org/tenn/michigant.php, including the minimum qualifications for applying for each stage.

Jacob AG

Presumably the insurance companies shift the price of risk from parents to the driving public. So the risk is still covered, but the incentive to keep your kid off the road isn't there.

bree

The difference between a new chef and a teenage driver is that a teenage driver doesn't always make the best decisions and often thinks of themselves as impervious to danger. I think that MI hopes that a 17-year-old has better judgment than a 16-year-old.

The 17-year-old driver also has more driving experience in the daytime which would help them once they are allowed to drive at night (which is one of the typical restrictions along with not having too many other teenagers in the car).

econobiker

"even though between ages 16 and 17 the boy will be driving on his own."

When I looked up this info it appears that there are two tiers for licensing. A true learners permit level 1 age 15 to 16 with an adult present. The level 2 (which is basically the full license) at 16 but with hours restrictions until age 17 plus the parents can boot the child back down to level 1 if they need to for any reason. It also looks like the level 2 is pretty tight in regards to accidents/tickets/ suspensions to get to a full unrestricted license.

http://www.michigan.gov/documents/gdl_parent_16316_7.pdf

On the subject of insurance:
If I remember correctly, some insurance companies (and not necessarily in MI) got sued because they required full insurance on parent's policies even when the youth was in a limited permit situation requiring an adult along. This was supposed to be wrong to require the same insurance for this permit level as an 18 year old full time driver on the parents policies. This would have be about 25 years ago as my parent's suffered from their insurance company raising the rates this way.

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I wonder

There's a big difference between "cannot require teens to purchase a million-dollar insurance policy" and "is not permitted to sell high-dollar insurance policies". The state is doing the first, not the second. Parents can freely buy million-dollar insurance policies for their teens if they want to.

If Michigan sets a minimum standard of insurance coverage for any driver, then that minimum standard ought to apply to ANY driver, not merely "any driver except unmarried males under the age of 25".

trader n

Jacob AG has it right. The cost of the additional risk is being transferred from parents to the driving public.

It's not really about subsidizing cars, it's pandering to parent voters at the expense of the childless or those with grown up kids.

Michigan Driver

The minimum insurance required for a vehicle in MI (PLPD) is much more expensive when one of the household drivers (or the primary driver of a vehicle) is under 21.

G Wolf

"It seems strange for an insurance policy not to reflect known risks."

No, not really that strange. New laws make it so health insurance companies can't reflect the known risks of pre-existing conditions in their pricing models.

keith

Could this simply be a laboratory of democracy: some states treat minor children as chattel of their parents, some states treat minor children as individuals?

rbs

if separate insurance for teens was required, and the teen had an accident, then a parent could take driving privileges away, cancel the teen insurance, and save some cash in not only the cost of the separate insurance, but also, the increased cost of family insurance, as premiums went up on the all in one family policy.

Don

I would like to know where Jesse (#6) gets the information that elderly driver as just as accident if not more so than teenager.