Who is Covered on Your Auto Insurance Policy?

If your spouse drives your car, will he or she be covered under your auto insurance policy?  How about your cousin who lives with you?  Or the same cousin who has now moved out?  Your roommate?  Your boyfriend who lives across town? How about your teenaged daughter? Or your teenaged son who you have forbidden to drive your car after he got back-to-back speeding tickets?

So the simple question is, can other people drive your car and still be covered?  The simple answer is yes, with some caveats.  First, since your auto insurance is basically attached to your car rather than to you, pretty much anyone who drives your car with your permission will be covered.  The “Named Insured” (usually one or two people, but sometimes more) listed on your policy declarations page will tell you who is definitely covered.  Beyond the named insureds, coverage is typically extended to the following people:

•    Your spouse, if he or she lives in your household;
•    Other family members related by blood, marriage or adoption, who currently reside in your household;
•    Your son or daughter who is away at college, but still considers your address as “home” and resides with you during school breaks and vacations.
•    Anyone not living with you, to whom you give permission to drive your vehicle, or one who has the reasonable belief that he or she has your permission to drive it.

There are some exclusions, so you would need to review your particular insurance policy to be certain. All members of your household who have the potential to drive your car should be listed on your insurance policy if they have a driver’s license.  It can be a bit confusing, though.  For example, if a girlfriend you live with uses your car, she may not be covered if you did not list her on your insurance policy. On the other hand, if you live separately, she can use your car with your permission and be covered.  It is very important to check your policy terms in order to fully understand who is covered and what restrictions and limitations apply to that coverage.  This will prevent problems if a driver who is not listed on your policy were to get into an accident while driving your car. Otherwise, such an event could slow the claims process or cause coverage to be denied.

Excluded drivers
In general, you can specifically exclude a driver from your policy by adding an endorsement to the policy stating that the named driver having access to your insured vehicle will not be covered by the insurance provider to drive the vehicle as long as the vehicle remains covered under the terms of your car insurance policy.  The endorsement specifically excludes from all coverage any loss or accident involving this named individual if he or she was driving your car at the time.  Why would you want to exclude a member of your household?  Often such an endorsement is attached when the underwriter is aware of a “problem driver” who might be allowed to use an insured automobile (e.g., the teenaged son or daughter of the named insured) in the absence of this endorsement. A ”problem driver” may be a person with a suspended license, someone who has a DUI conviction, numerous accidents or traffic violations, etc.

Some insurers may request that the driver be excluded because the risk that they pose as a driver is enough to cancel your policy. Another possibility is that the policyholder may not want their rates to increase because of another household member’s poor driving record whose inclusion on the policy could raise the premiums significantly. Thus, they choose to exclude that person from their car insurance policy.

The wording of exclusions may vary, but here is an example of how the document might be written: No insurance is provided by this policy while any automobile is being driven by or under the direct control of [named driver]. In another example, the policy might read: In consideration of the premium charged for the policy to which this endorsement is attached, it is agreed that the [insurance company's name] shall not be liable for damages, losses or claims arising out of operation or use of your insured car, or any other automobile to which the terms of this policy are extended, either with or without expressed or implied permission of the named insured(s) by the driver(s) listed below as excluded.

Excluded drivers and liability
Basically, a named driver exclusion is an endorsement to an auto insurance policy which the policyholder signs acknowledging that the person(s) named on the exclusion form will not be afforded any insurance coverage if they operate the vehicle(s) listed on the policy.  It is important to note that this policy exclusion by endorsement does not take away liability from the excluded driver or car owner if the excluded driver does operate the vehicle and has an accident. He or she, as well as the car owner (who has vicarious liability for who they allow to drive their car), can be held personally responsible for any damages the driver causes. This means that if the excluded driver causes bodily injuries and/or property damage to others, the insurance on the car will not cover the accident and the expenses of the accident will be the responsibility of the driver and car owner. This can be quite costly and so anyone that excludes a driver should not let that driver operate the car, even in an emergency, since no insurance coverage will be extended to the situation at all.

State laws do differ, however, if the excluded driver took the car without the owner’s permission. In some states the owner will not be held personally responsible but that likely would be something that the courts would decide. Otherwise both the excluded driver and the car owner can be held responsible; the named driver exclusion is not a way for a car owner to get liability taken off of them for the acts of a driver.  Remember, for a person to be excluded from auto insurance coverage, he or she should be a member of the household who is listed on the exclusion endorsement.  If a car owner lets a friend borrow a car, then normally insurance coverage would extend to this friend since they are not listed as an excluded driver on the policy.

I know it’s not as much fun as reading Sports Illustrated or Vogue, but do read your policy so you know who the named insureds are and what limitations and restrictions might apply.