Car insurance terms such as, ‘named driver’ and ‘excluded driver’ can be complicated, even for seasoned insurance professionals. So, it is no wonder that many people get confused about what the terms mean. Thus, we have done our best to outline what they mean, and why they’re important.
The named driver portion of your insurance policy simply lists the names of all drivers who will be using an insured vehicle. If you’re the only driver of the car, then only your name needs to be on the policy. However, if you live in a household where there are multiple people capable of driving, then you might want to consider adding them to your policy, or excluding them if they will not be using it.
The owner (or most frequent driver) of the car must be listed as the primary driver, with others being listed as secondary or occasional drivers.
Adding A Named Driver
The process of adding a named driver to an existing auto insurance policy is usually very straightforward. Generally speaking, all you have to do is phone up your insurance company, and let them know about the change.
However, you should know that adding drivers to your insurance policy can affect your insurance premiums. If the added driver is a new driver or a high-risk driver, you could face a substantial hike in the rate you pay for coverage.
So why add drivers to an insurance policy? To put it simply; it is the law in many states to list all drivers who will be using the car on a regular basis on your insurance policy. If you don’t, your claim could potentially be denied in the event of an accident. Moreover, there is also the risk that the non-named driver could be charged with driving without proof of insurance.
Exuded Driver or Named Driver Exclusion
Most insurance companies now also give you the option of listing excluded drivers or named driver exclusions on your car insurance policy. This works in the opposite way that adding a named driver does. Instead of letting your insurance company know that an additional driver will be using your car, you are saying that a driver in your household will definitely not be using your car.
So what are the benefits of named driver exclusions? If you live in a household with high-risk drivers, your insurance company may assume that they will drive your car from time to time. This could lead to higher insurance premiums than you would enjoy on your own. Therefore, by excluding them, you’re letting your insurance company know that they will not be using your vehicle, and thus should not add to the cost of your insurance policy.
In most states it’s up to your insurance company as to the degree of savings you will enjoy from excluding drivers in your household. Yet, this may be changing. For example, Utah passed a 2009 law that provides regulations into how insurance companies deal with named driver exclusions.
Pitfalls To Avoid
Now that you know the basics, there are some very important pitfalls you should avoid. Young drivers between 16 and 25 years or age are the most common reason people either fail to add named drivers or exclude drivers that actually use a car. Young drivers are among the most expensive groups of people to insure. Insurance premiums for this age group can easily exceed $3,000 per year.
Thus, it can be tempting to omit your teen driver from your insurance policy to save both you and them money. Who doesn’t like paying less for insurance? The only problem is that your insurance company may not cover your claim in the event of an accident; if you are found to have been economical with the truth regarding who uses your car.
Another very similar pitfall is buying a car for your teenage or young driver and having yourself listed as the primary driver. In this case your child would still be a named driver, but would be listed as a secondary driver rather than the primary one. This leads to lower insurance rates, but is forbidden by insurance companies and is illegal in many states.
The primary driver of the car, must be listed as the primary driver on the insurance policy. Now if they drive your car, there is no issue adding them as a secondary named driver. The issue only arises when they are the primary user of a vehicle. In almost all states you can’t even register a vehicle if the owner and primary driver on the insurance policy are different.
Nevertheless, buying a car in your name and being listed as the primary driver on the insurance policy, but not in fact being the primary driver, can lead to all sorts of problems; from denied claims to possible fines and even fraud charges. If you’re unsure about any aspect of how adding or excluding a driver on your insurance policy works, or affects your insurance rates, please speak to a licensed insurance agent or company in your state. They can explain the rules and laws where you live.
At the end of the day, do yourself and your child a favor, be honest when you buy insurance. If either of you are caught, both of you will face an increase in insurance premiums for years to come. The small savings today are not worth the potentially huge headaches in the years to come. There are lots of other ways to keep your premiums down besides lying to your insurance company.
For example, try getting some free car insurance quotes: