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'Excluded' drivers not covered by your car insurance

By Matt Brownell on June 14th, 2012

Some auto insurance policies come with what's known as a "named driver exclusion" that explicitly excludes a member of your household from being covered as a driver.

An insurance company may exclude a driver if the driver's history suggests he or she is too risky to insure. Or, a policyholder can request an endorsement that excludes a family member from coverage.

Ordinarily, an insurance policy operates on a principle known as "permissive use," which states that a driver who borrows your car and gets into accident will still be covered under your policy. A named driver exclusion singles out a particular person and says that this principle does not apply if he or she is the one driving.

If an excluded driver is behind the wheel and gets into an accident, the insurance company won't pay for any damages to the insured car, or to the other party in the accident.

Good drivers only, please

As a general rule, an insurance company has a very good reason for excluding a member of your household from the policy: That person has a bad driving record (for instance, a DUI or a bunch of speeding tickets), so allowing them to operate your vehicle increases the risk that there will be an accident.

The good news for policyholders is that this same concept can save them money. The insurance company will underwrite based on the assessed risk of all drivers in the household, so living with a spouse or child with a bad driving record can drive up your premiums. As such, a policyholder may request to exclude a bad driver from the policy, thereby lowering premiums.

State laws on exclusions vary -- they're illegal in some states, while other states prohibit certain members of a household (such as a spouse) from being excluded.

No loopholes

It's important to note that an exclusion isn't a mere suggestion. If the excluded driver gets into an accident, the insurance company won't accept any excuse for why he or she was driving. Even if the person was forced to get behind a wheel because of an emergency situation, the contract still has legal force, so don't expect a court to make the insurer to pay up.

An exclusion will stay in place until you and the insurer mutually decide to remove it. So if you want your excluded husband or child to be able to drive your car, you'll have to request a change from your insurance company. But if the person in question still has black marks on his or her driving record, don't expect your insurer to be keen on removing the exclusion -- at least, not without raising your premiums.

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