Understanding Driver Exclusions
Everyone knows “that guy” whom you wouldn’t trust behind the wheel of your car, even in a matter of life and death. For the truly unfortunate, “that guy” is a member of your household—and looks not only to your vehicles as a source of transportation but also to your auto insurance as a source for coverage.
Personal auto policies can be extremely broad, extending coverage for not only members of your household but others while using your auto with your permission. The broad nature of the policy is excellent from a coverage perspective, seeing as driving other cars is an accepted habit in our society.
A common course of action is for the auto insurance company to pay the claim if the person driving the car at the time of the accident is you, your spouse, family member, or a permitted user. The company will then adjust your policy to reflect for the increased risk of damage or worse, issue a notice of non-renewal. The latter makes it more difficult to obtain comparable auto insurance from another company.
Over time, many auto insurance companies have attempted to put the kibosh on the driver free-for-all, creating specific amendments, typically called exclusions, to policies that eliminate coverage for specifically named people. These exclusions are placed on policies by companies that determine—through information you provide and general driver information—that a person with access to your vehicle is too risky.
So what kind of red flags do insurance companies notice? In most personal policies, exclusions are designed for people with lousy driving records or who have been convicted of certain traffic-related crimes, such as DUI. Some companies have even drafted exclusions intended to eliminate coverage in cases where an insured person knowing allowed someone with a suspended license drive the car. Others have gone as far as to try to limit coverage to apply only to accidents caused by drivers who are licensed—a scary thought for parents of teens who are cruising nervously around parking lots learning manual transmission.
Other exclusions seek to remove coverage for damage to the vehicle itself caused by a collision while continuing to extend ever-important liability coverage for injuries or damage to a third party.
As stated earlier, the good news is that most personal auto policies will apply to the persons specifically named on the policy, their family members and others using with permission if involved in an accident. However, the fact that such exclusions are available should remind you of the importance of reviewing your policy with your Trusted Choice® insurance professional before letting someone else drive your car. You don’t want to end up paying damages out-of-pocket.