What is an excluded driver?
An excluded driver is someone you intentionally remove from your auto insurance policy. If that person uses your car, either with or without your permission, and has an accident, your car insurance will not provide coverage. Note, however, that some states prohibit named-driver exclusions on the theory that they essentially create uninsured drivers, something that puts other people on the road at risk.
Sounds risky. Why would I even want to exclude a driver?
To save money. Imagine your teenager racks up a couple of speeding tickets, or your beer-loving elderly father gets a DUI. You know their insurance premiums are likely to shoot through the roof, right? Well, if you live under the same roof, so, too, will yours, even if you have your own car and haven't had a ticket since college.
Compare car insurance quotes and you can see the effect of removing a driver. Input your information with all your household’s drivers on the policy, then omit the problem driver and run again. It’ll give you an idea of what you can save.
To formally exclude a driver who would otherwise be insured on your policy, though, you’ll need to jump through the proper hoops with your insurance company.
Why would I get penalized for my son's or father's bad driving?
Car insurance covers the vehicle first and foremost, no matter who's driving. Say you have a houseguest who decides to surprise you with a big grocery run. Without asking, he borrows your car. If he hits someone, it's your insurance that steps in first to cover damages, even if the considerate houseguest has his own auto insurance at home. (Your premium will also likely go up, a good reason to keep car keys away from bad drivers.)
Knowing that family members are apt to borrow each other's cars, even if only occasionally, insurers consider the driving history of all licensed household members when pricing premiums. Family, even roommates, are called "permissive drivers" and are automatically covered, although eight states allow insurers to provide them reduced coverage.
Sign me up. How do I exclude my teenager from my car policy?
In some states it’s a snap.
A 1988 California law requires that insurers offer good-driver discounts, a rate cut of at least 20 percent for those with a near-impeccable record the previous three years. Furthermore, should a driver fail to qualify due to the poor record of a household member, he must be given the opportunity to exclude that driver in order to get the discount. The unusual law makes driver exclusions a popular feature for policy holders in that state.
Mercury Insurance, based in California, says its named-driver exclusion is indeed popular.
"We have many excluded drivers on our policies, and we have many claims where the excluded driver was driving and we deny coverage," says Kenneth Kitzmiller, the company's vice president and chief underwriting officer.
He says drivers need only fill out a form with an agent, or contact the insurer directly to request a named-driver exclusion.
Is it always this easy to exclude a problem driver?
Not at all. Several states - Kansas, Michigan, New York, Virginia, and Wisconsin - don't allow named driver exclusions at all, calling the creation of an uninsured driver antithetical to public policy. Some states prohibit exclusions only for spouses.
And in states that do permit exclusions, insurers could be reluctant to expose themselves, just in case the excluded driver uses the car anyway.
How can an excluded driver still be a risk to the insurance company?
"Exclusions haven't held up all the time in court," says Toni Matous, an agent with Magnolia Insurance Agency, in Seattle. "If there's a bad enough accident, the court's going to say, 'You knew this driver was in the house. You can't just with the flip of a pen absolve that. … You insured this car, and this is the car that got in the accident.' "
"At the very least, the insurance company is going to be spending a lot of time defending itself," she added. "It's a situation that's not the easiest to maneuver."
But I can't afford insurance with a problem driver. How do I convince my insurer to exclude them?
Matous, who represents nearly a dozen insurance companies, says insurers typically require the named driver to turn in his license first. "So the only way they can't be a driver, is if they can't be a driver," she says.
And even then, it can take some convincing. "An underwriter will only allow an exclusion to a longtime client, with excellent credit and everything else in order," Matous says. "And they will do it only as a courtesy."
What else can I do to get the driver excluded?
Separate the problem driver as much as possible. Roommates, for example, are more easily excluded, if they own their own cars and have their own insurance. Treat a family member the same way.
"Get the car out of the insured’s name. Have it in the kid's name," says Matous. "Have the kid buy his own insurance."
Matous recommends that people contact an independent broker to review options when there's a problem driver before calling the insurer directly. "You never want to be the person to call and say, 'Hey, I've got this problem driver,' because the usual response will be the insurance company will cancel your policy," she says.
But an excluded driver would be covered in an emergency, right?
No, and this is a common misperception. Even if the excluded driver takes the wheel in a medical emergency, the insurance company will argue it doesn't have to pay out in the event of an accident. You would personally be on the hook.
"I obviously don't recommend excluding anybody who has any potential possibility of driving any vehicle," says Mercury's Kitzmiller.
Does the exclusion end at the end of my policy period?
No. The typical exclusion form notes that the agreement is binding not only for the current policy period but applies to “all future renewals, reinstatements and changes made to the policy unless mutually agreed to by the insurance company and named insured.”
That means to get the excluded driver back on your policy, you’ll have to ask your insurance company for its approval to add the individual back on as a covered driver. Hopefully, the person is no longer a high-risk driver at this point and will be accepted by your insurer. If not, you’ll need to shop around to find an insurance company that will.