Your Passenger Panics: Are You Covered?

Written by Andrew Freiburghouse and Gary Bangstad on February 3, 2010 & Posted in Auto Insurance

To your mother, you'll always be a child. That's why, when she's a passenger in your car, she tells you how to drive. Needless to say, it drives you nuts.
Last Tuesday, she freaked out when you rounded a corner and started screaming, causing you to freak out, and?well, you both rammed into a U.S. postal service mailbox. Luckily, no one was hurt. But will your pocketbook be? Or will your car insurance cover this incident?

Distraction: A Common Car Insurance Story
As strange as your freak-out story may seem to you, it's nothing new or out of the ordinary. In fact, passenger-related accidents are all too common. A survey by the Farmers Insurance Group of Companies showed that more than 80 percent of drivers admitted to being distracted while driving. Passenger-related distractions include:

? Cell phones
? Radio issues
? Eating and drinking

Another study, by the AAA Foundation for Traffic Safety, found that passengers caused distractions in 10.9 percent of all road accidents with distraction as their primary factor. And there are a lot of distraction-related road accidents. According to the National Highway Traffic Safety Administration (NHTSA), between 4,000 and 8,000 distraction-related crashes occur each day, resulting in an estimated $40-$80 billion in damages annually.

Yes, Car Insurance Covers That--Unless?
If your passenger caused the accident by panicking, that's no excuse for the insurance company to deny your claim. After all, accidents happen.

However, if the car insurance company can prove that you or your passenger caused the accident through negligence or malfeasance, your claim could be complicated or even denied. If your passenger, for example, grabbed the steering wheel while "messing around" and caused the accident, your passenger could be construed as liable.

All in all, though, standard policies cover passenger-related damages.

Special Cases
Pay special attention, however, to special cases related to passengers. Teen drivers with passengers in the car, for instance, cause significantly more accidents than those driving without passengers. A recent NHTSA study showed that 16-year old drivers were 50 percent more likely to be killed in a car accident when a passenger was in the vehicle. When three or more passengers were in the car, the increase in fatalities was a staggering 200 percent.

Car insurance companies read these statistics and write policies accordingly, so check your policy for the specifics if you're a teen driver. There could be conditions limiting passengers.

Motorcycle passenger situations are another possible special case. For example, if your passenger on a motorcycle is not wearing a helmet as mandated by law, making an insurance claim if they are injured is far from a sure thing.

An Ounce of Prevention
If you're the driver, you're responsible for the car. Part of this responsibility is to make sure that passengers do not impede your ability to drive safely. This may include turning off the radio, asking someone to wait on a phone call, or not driving with certain passengers in the car.

Including your beloved mother.

"Colorado Teen Driver Safety Week." Journal Advocate. October, 2008
Insurance Information Institute
"Motorists Claim Distractions Affect Their Driving." Business Wire. May, 2005.

About the Author

Andrew Freiburghouse is a writer and businessman. As a partner at Los Angeles tax preparation firm Pronto Income Tax of California, Inc., Andrew has served thousands of clients both face to face and over the telephone. Currently, Andrew lives in Brooklyn, NY, and is in the process of starting up his own tax practice.

Gary P. Bangstad, Ed. D. is a freelance writer in the area of business and insurance. Previously, he worked for Midwest Financial Planning LTD, selling insurance and investment products. He has also taught music at the university level.


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