‘Named Driver Only’ Policy – What does it cover?

auto accident

Times our tough and sometimes we need to pinch pennies to make ends meet.  When this situation occurs we look for ways to slash our costs. Insurance can be costly prompting us to buy a discounted policy. Insurance companies consider certain groups to be a greater risk: new drivers, youthful drivers, elderly drivers, drivers with prior claims, tickets or accidents.  Insurance for these drivers will result in a high premium.

One policy that exists that helps cut costs is the ‘Named Driver Only‘ policy which carry specific wording that may expose you or your family to liability. A word of warning though.  You will find that these ‘Named Driver Only’ policies state:  ‘ WARNING: A NAMED DRIVER POLICY DOES NOT PROVIDE COVERAGE FOR INDIVIDUALS RESIDING IN THE INSURED’S HOUSEHOLD THAT ARE NOT NAMED ON THE POLICY.’ These policies are substandard but are allowed in California.

While this policy is cost effective and is an alternative when in an economic  pinch, people who purchase these policies should clearly understand that the policy is actually quite limited.  Literally, the policy is proving coverage only to the named people on the policy.  If the person is not named on the policy, there is no coverage. Brokers who sell these policies will have had to have told you that the policy will not cover any other child, spouse or roommate who borrows or occasionally drives the car unless you specifically name them on the policy.

If you purchased your insurance policy some time ago when times were tough you may want to read your insurance policy or call the insurance company yourself to confirm if you have a Named Driver ONLY policy.  If you do, think about switching policies.  At the very least, take care to add every single person who uses your car.

If possible, these policies should be avoided as they will not cover anybody else who drives your vehicle. Why can this be a problem?  Parents know that as children get older and become teenagers, at some point or another, the possibility exists that a child will take the car without our knowledge.  Additionally, we may have purchased the substandard policy and with the passing of years we may forget the stringent rule associated with the policy. In a moment of generosity we may loan the car to a relative for just a ‘run to the store’ when an unexpected collision occurs.

If you would like your policy reviewed to determine any potential problems, call Ed Smith, of Law Offices of Edward A. Smith. We can be reached at (916) 921-6400 0r (800) 404-5400.   I have written books that have detailed advice on the best insurance coverage amounts that you should purchase to protect yourself.  I would be happy to provide you with this publication to learn the ins and outs of insurance coverage.

 

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