Ever heard of a named driver exclusion? This is an interesting option in the auto insurance world that just may come in handy to save you some cash. So, buckle up and let’s take a look.
First, the facts
What is a named driver exclusion? Short answer, it’s an endorsement on your insurance policy that identifies a specific person who isn’t covered by your insurance.
Not all states allow named driver exclusions. If you live in Kansas, Michigan, New York, Virginia or Wisconsin, you won’t be able to do this. Also, you may encounter limitations depending on where you live; for example, you may not be able to exclude your spouse.
However, in most states, you can decide which drivers you don’t want your insurance to protect. If that person does get behind the wheel – and into an accident – your liability insurance will not cover them.
If you’re wondering why anyone would want to exclude a driver in this way, we thought an example might help.
Let’s say you have a 16-year-old son, George. You live under the same roof, of course – he’s family, after all – but the fact is, George is a risky driver. He’s had his license for only four months, and already he’s racked up two speeding tickets. Because he lives with you, even if you tell him not to drive your car, your insurer will still charge you a higher premium.
If only there were a way to remove him from your policy, without removing him from the house … ah, yes. There is! Name George as an excluded driver (he can drive his own car!) and your costs may fall quite a lot.
Why is this necessary?
Normally, liability coverage follows the vehicle, regardless of who’s driving. If a friend hops into your car to run an errand, and if they accidentally rear-end someone along the way, your policy will cover the liability, whether or not your friend has an insured vehicle of their own somewhere or not.
This coverage model, which applies to the vehicle regardless of the driver, ensures that any collision caused by that vehicle will be paid for.
So far, so good. However, the price you pay for coverage is very much affected by the drivers you live with, even if they never drive your car. In these cases, by removing them from your policy, you can bring your premium down significantly.
Isn’t that risky?
There are risks involved, yes. If an excluded driver ends up crashing your car, they can be held personally liable for the damages. You don’t want George to have to deal with that. Also, it’s possible that you, as the owner of the vehicle, could be held responsible, too.
So if you do choose to exclude a driver, it’s important to be fully confident that they’re really going to respect the rule and never drive your car. You know George better than we do: is he likely to take the van out for a spin, even though you’ve told him not to? If so, it’s in your best interest to make sure he’s not excluded. Otherwise, his error in judgement might end up hurting you both.
But if George is willing to commit to the plan, naming him as an excluded driver could save you some money.
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