SALT LAKE CITY — The day your teen becomes old enough to drive is both exciting and terrifying for you and your wallet. Bankrate estimates the average 16-year-old driver in Utah adds $5,327 to their parents’ insurance premiums that first year.

Some parents curb that cost by not adding their kids to their policy, believing the State of Utah only requires the car to be insured, not the driver.

That’s not quite right, according to Utah’s Insurance Commissioner, Jon Pike.

“It’s really a combination of the two,” Pike said.

He said once your kid passes the driver’s test and gets a license, you must tell your insurance company.

What the law says

“Well, the law says that auto owners and drivers are required to have insurance,” Pike said. “They’re required to have security.”

Utah insurance commissioner Jon Pike explains to KSL’s Matt Gephardt some of the legal consequences parents can face if they don’t add their teen drivers to their insurance. (Stuart Johnson, KSL TV)

That law is spelled out in Utah’s Financial Responsibility of Motor Vehicle Owners and Operators Act. In it, it reads:

“Every resident owner of a motor vehicle shall maintain owner’s or operator’s security in effect at any time that the motor vehicle is operated on a highway or on a quasi-public road or parking area or registered within the state.”

An operator means anyone who is in “actual, physical control” of the car, i.e. your kid. And security means an insurance policy.

Your insurance probably requires it

The law aside, Pike said the odds are super strong that your insurance requires you to add your teen driver.

“If you want to transfer some of that risk to your insurance company, then you got to pay them to take some of that risk,” he said.

If you don’t, your insurance company might not cover an accident caused by your teen driver. Then, you’re on the hook for repairs, medical bills, legal fees, on and on. Plus, Pike said your insurance would be required to report you for misrepresentation.

“If an insurance company suspects there’s been fraud or misrepresentation, they’re required to report that to the Insurance Department,” he explained. “Our fraud division is then required to investigate the matter.”

The potential consequences of that include jailtime.

“I think it’s a really bad idea to not tell your insurance company you’ve got a teenage driver,” Pike said.

Permit drivers

For teens with a learner’s permit, it’s a bit different. Pike said there is no legal insurance requirement. Still, he said you should let your insurance know. You probably won’t have to pay a higher premium for a permit driver. Your insurer knows there’s an extra pair of eyeballs in the car with your teen.