Determining which drivers should be listed on your car insurance policy

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Who should be listed on your car insurance policy, and how will that impact your premium? While a fully licensed teen driver certainly needs to be listed, what about a teen with a learning permit, a parent living with you, or a neighbor who borrows your truck to move? 

Anyone who regularly uses your car should be listed on your policy. If they are not, you could be liable for any damages if they get into a car accident. 

Having the right drivers listed on your car insurance policy ensures you won’t be liable for the damages if they get into a car accident. Read on to make sure you have a robust auto insurance plan and are completely covered in an accident.

Who should be listed on your insurance policy

Having enough car insurance gives you a front-line defense if an accident happens. Your auto insurance company becomes the primary payer for damages and injuries so that you are not liable — but only if you’re properly covered.

If you fail to list a driver that your insurer requires and they are responsible for an accident, your claim may get denied. That would leave you on the hook for all of the costs of the accident, especially if you leave a driver off of your policy in order to pay less.

In general, the majority of insurance companies expect the following people to be listed on your car insurance policy:

·   Licensed family members living in your household

·   Unrelated licensed drivers living in your household (who do not have a policy of their own, such as an au pair, nanny, or housekeeper)

·   Anyone driving your vehicle regularly who is not insured on another policy (such as a friend, relative, or neighbor living outside your home)

“Auto insurance is intended to financially protect you and your family members from covered losses. When purchasing car insurance, you want to make sure all licensed drivers in your household are covered under the terms of your policy,” says Mark Friedlander, director of corporate communications for the Insurance Information Institute (III).

Insurers obtain reports that list potentially undisclosed drivers, including newly licensed drivers and additional drivers. While these are general guidelines, policies vary by the insurance company, so always check with your insurer if you have any doubts.

Here’s who else should be listed on your auto insurance policy: 

Newly licensed teenagers

According to the American Academy of Pediatrics, the crash rate for teen drivers is four times greater than the general population of drivers; this is particularly true for brand-new drivers. CDC data shows that crash risk is exceptionally high during the first months of licensure.

If your teenager just got their license, you should have them on your insurance because you are legally responsible for any accidental mishaps.

Adding your teen to your policy might actually increase car insurance rates by an average of 161%. However, if you don’t add them to your policy, you are responsible for any incidents they cause. Some insurers may cover the claim but will charge you unpaid premiums from the day your teen was licensed. Either way, you are getting a significant bill.

When you add a teenager to your policy, reviewing and possibly increasing your liability limits is a good idea. Liability coverage pays for injuries and property damage caused by drivers of your vehicle. The higher the limits, the better, because if the liability limits on your policy are exceeded, you may have to pay the remainder. Limits of 100/300/50 are a good start. Limits of 250/500/100 are even better.

If you put your teen in a newer vehicle, you might also consider carrying collision insurance, which will pay to repair your car if it is damaged in an accident. Collision insurance is optional coverage and relatively affordable.

Some insurers don’t require a teenager with a driver’s permit to be listed on the policy. Most often, they will be covered by a parent’s policy. Once your teen gets a permit, alert the insurance company before your teen gets behind the wheel to see where your insurer stands. If you don’t and your teen is in an accident, you may be shelling out a lot of money for a loss you thought was covered.

A teenage driver who doesn’t live with you

Divorce or a teen moving out of your home can make things complicated. If your child stays with you regularly and has vehicle access, they should be on your car insurance, even if your teen lives with another parent with car insurance. Your auto insurance company will likely assume your teen will drive your car while living with you.

Car insurance always follows the car, not the driver. So, if your teen is in an accident while driving your vehicle, your insurance will pay for any damage.

Consider that the national average yearly cost to insure a teen driver (ages 16 through 19) in 2023 is $2,762, according to fresh data collected by Insure.com. Here’s a breakdown of what you can expect to pay for teen driver coverage by state:

Young adults living at home with their own vehicle

All young adults living in your home who have their own cars should carry the appropriate coverage limits. While getting low coverage limits and keeping costs low is cheaper in the short term, it can have dire consequences. If they are in a serious accident, they may not have the necessary coverage to cover all the bills.

If your adult child borrows your car occasionally, your insurance will be primary. You should carry high liability limits and collision coverage because their auto insurance policy won’t extend to your car.

Currently, the national average cost to insure a young adult driver is $1,386 a year. More details are found below, per data gathered by Insure.com:

A parent who lives with you

If your parent lives with you, uses your car regularly and doesn’t have their own car insurance policy, you should add them to your policy.

If you don’t add them to your policy and a parent living with you gets into an accident, your claim may be denied. As with teens, senior drivers pay a higher more for car insurance because statistics show they are involved in more accidents. If you’re sharing your car with a senior driver, you should consider increasing your liability limits. Also, keep collision and comprehensive on your vehicle if you want it covered in the event of an accident, theft, fire, or vandalism.

You can expect to pay $841 for an average annual premium covering a parent living with you, based on national average premiums obtained by Insure.com. Here are more detailed price estimates:

Caregivers

If you have a caregiver that drives you around, you will need to add them to your car insurance policy as a listed driver — but only if they use your car. If you’ve lost or given up your license, you can request that your insurer list the caregiver as the primary driver on your policy. As the car owner, you still need to be the one to insure your car.

Do all drivers in a household have to be insured?

No — if someone lives with you and doesn’t drive your car, they do not need to be listed on your auto insurance policy. But if a member of your household regularly drives your insured vehicle, you may be required to add that driver to your automobile insurance policy.

“Most auto insurers will also allow you to share a single car insurance policy with someone if you live with them,” Friedlander continues. “You may typically also allow a driver outside your household – such as a friend or relative – to use your vehicle as long as they have their own auto insurance policy. In this situation, their policy would cover an accident while operating your vehicle.”

The best practice is to ensure that every permitted or licensed driver is listed on their own policy or their family’s policy, per Howard Goldberg, vice president of customer solutions center for Plymouth Rock Assurance.

“If you are not sure, your auto insurance agent can advise you on the right approach. You are not required to all be covered by the same carrier; however, many carriers will extend lower rates as someone transitions from their family’s policy to an individual policy,” Goldberg says.

Who doesn’t need to be listed on your car insurance policy

There are some people you can avoid adding to your policy to save some money:

Random people who drive your car

Most standard car insurance policies do not require you to add a neighbor, significant other, friend, or relative who doesn’t live with you to your insurance policy as long as they are not using your vehicle regularly.

However, if the person you lent the car to is involved in an accident, your insurance policy will cover the damage. While most insurance policies have a “permissive driver” clause, some policies restrict coverage to drivers listed on the policy.

Delivery or rideshare drivers

If your friend or relative uses your car to earn money by being a rideshare or delivery driver, they might not be covered under your insurance policy. Most standard car insurance policies exclude coverage if you use your vehicle for commercial purposes.

Likewise, if you use your car to earn money as a delivery or rideshare driver, your insurance won’t cut it. You’ll need to get commercial car insurance or rideshare insurance. 

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Can an insurance company add a driver without your permission?

Yes — if they find out there are people who regularly drive your car and are not listed on your policy.

Friedlander points out that auto insurers obtain reports from each state’s department of motor vehicles that list potentially undisclosed license drivers.

“This includes newly licensed drivers in your household and other household members who are licensed. In these cases, your insurer has the legal right to add these drivers to your policy without your permission, depending upon state regulations,” he says.

However, your insurance company cannot charge you an additional premium after adding someone to your policy without your permission.

“They would first need your written permission. However, an insurance company can decide to exclude a driver in your household because of a bad driving record or some other disqualifier,” explains attorney Marc Lamber, chair of the personal injury practice group at Fennemore, a Mountain West law firm. “In this case, though, they would need to advise you ahead of time, and you would not be charged a premium for that person.”

What happens if you don’t add a driver to your car insurance policy?

If you don’t list a driver living in your household on your policy and that driver gets into an accident, your carrier may deny the claim and you may be personally liable for all the bills.

“Also, if you allow an unlicensed driver to use your vehicle and they get into an accident, coverage will be denied, and you may also have your policy canceled,” warns Friedlander.

A denied claim can include the costs to repair damage to your vehicle and damage to other vehicles involved in the accident, adds Goldberg.

“There are differences from state to state, however. The best approach is to talk to your local agent and carrier to ensure you obtain the best coverage for you,” Goldberg recommends.

Does adding a driver mean they are insured?

Per Friedlander, all drivers listed on your policy “have the same level of auto insurance coverage as the primary policyholder. Auto insurance policies are written as ‘all-inclusive.’”

However, adding a driver to your policy doesn’t automatically mean they are covered.

“For example, your carrier may deny coverage if it is determined that you lied on the application process about a disqualifier, such as a poor driving record or a suspended driver’s license,” says Lamber.

In general, the rules here will vary from state to state.

“In some cases, a state or carrier may want to list everyone in the household, even those with their own policy. These drivers may be excluded or insured elsewhere on your policy without impacting your rate. You should list them to ensure transparency and to ensure you have the right coverage for the right rate and the right protections,” adds Goldberg.

Be sure to check with your insurer to make sure you are adequately covered.

Methodology

Insure.com commissioned Quadrant Information Services to calculate auto insurance rates from 2022. Rates are based on full coverage for a single, 40-year-old male who commutes 12 miles to work each day, with a Good insurance score and no violations on their driving record. 

Erik Martin

Contributing Researcher

 

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Erik J. Martin is a Chicago area-based freelance writer whose articles have been published by AARP The Magazine, The Motley Fool, The Costco Connection, USAA, US Chamber of Commerce, Bankrate, The Chicago Tribune, and other publications. He often writes on topics related to insurance, real estate, personal finance, business, technology, health care, and entertainment. Erik also hosts a podcast and publishes several blogs, including Martinspiration.com and Cineversegroup.com.