Auto Insurance: Am I Covered?

Car insurance can be pretty complicated stuff. Most of us aren’t attorneys or insurance policy experts. Heck, have you ever actually read your entire insurance policy?

We all like to think we’re covered in any situation as long as we purchase a policy, but combine complex policy language with our complicated daily lives and you’ve got a recipe for insurance coverage disaster.

While every policy or insurer may be slightly different in how they “handle” things, it’s a pretty safe bet to remember the following situations in which coverage likely exists, and when you might either decline to drive or lend your car to someone else before calling your agent or insurer to verify coverage.

The Basics of Who Is Covered

There are two basic categories of covered individuals when it comes to the typical personal auto insurance policy. Be sure to note we are not discussing commercial auto insurance coverage in this post.

[Commercial vs. Business vs. Personal Auto Insurance]

Again, be sure to contact your insurance agent for a coverage consultation if you are using your car, or anyone else’s for that matter, for any type of business. The rules and coverage can get pretty complicated and you don’t want to discover you are not covered AFTER you cause an accident that results in bodily injury or property damage.

Category 1: Family Members

This category includes your family members living in your home. Specifically, your children (even when temporarily not living at home), blood and marriage relatives, and adopted or foster children are “insured” on your policy.

This does not mean your car insurance policy is a free-for-all and you can have 10 family members living in your home and only “pay” to have two people listed on your policy. Anyone who has “regular access” to your vehicle and resides in your home must be listed on your policy and charged accordingly as a “household driver.”

A common mistake people make is not adding their newly licensed teen driver to a policy. This may be because you don’t want to pay the higher insurance premium or really believe your teen won’t drive one of your vehicles without permission.

This is a no-no. Insurance companies demand you list all potential household drivers or members over the age of 15 (some even make you list 14-year-olds). The reality is teenagers have been disobeying their parents since the beginning of time. Yes, your teenager may even disobey you at some point…Gasp!

And one momentary lapse in judgment by your unlisted teen driver may land you in financial ruin.

[How much is insurance for a 16 year old?]

Thinking about trying your luck to save some money? Think again! In the event an accident is caused by a household resident who is not listed on your policy, your insurer will certainly add that driver to the policy and collect their money from you in the form of additional premium.

Even worse, your policy may not be renewed or worst-case-scenario…your claim can be denied based on your failure to disclose the driver to the insurer when you completed your application.

The term is “misrepresentation,” and can land you in hot water, as it can be considered insurance fraud if it’s blatant enough.

I Swear I Am the Only Driver!

Of course, there are people out there who actually own multiple cars and no one else drives them. You have two options if this is the situation in your home. You can list and exclude anyone who doesn’t drive, or simply purchase a unique type of insurance policy.

Both the specific driver exclusion, which says, “This person lives here, but I guarantee they don’t drive any car on my policy,” and the Broad-Form policy allow you to put your money (or liability for claims) where your mouth is. In both cases, your policy contract simply stipulates there is no coverage on the policy for anyone who is not specifically listed on the declarations page.

The Broad-Form auto policy is designed for individuals who do not have any potential “other” drivers who will operate their vehicle…whether you own one or 10.

Instead of your insurance company being on the hook for any potential drivers on your auto policy, they simply exclude all other drivers who reside in your home from coverage.

Insurers are protected against any “unlisted” drivers in your home by simply excluding coverage for them. So if your roommate’s cousin with 2 DUI’s causes an accident and injures someone, there is simply no coverage. Period.

Category 2: Anyone Else

We’ve covered people living in your home, which should be 99.9% of the potential drivers of any vehicle you own. The next group of “covered” individuals includes any person driving your vehicle, as long as the vehicle is listed on your policy.

It is important to note that the person driving your car must have permission to drive the vehicle or reasonably believe they had permission to use it.

This is the other .01% of people who can get behind the wheel of your car. There are not many people (who don’t fit into the “I swear I’m the only driver category”) who haven’t let someone else drive their car at some point.

Insurance companies determine your rate by calculating the statistical chance of an insurance claim being filed on your policy. If there is only a .01% chance that someone other than you is going to cost them money, they aren’t too worried about it.

[Am I covered if my friend crashed my car?]

Final Word

We at TTAI have real world insurance experience, so we’re not going to sugar coat this for you.

Do not attempt to “beat the game” when it comes to admitting who actually lives in your home and may have regular access to your vehicle.

The couple-hundred dollars you might save by not being entirely truthful may negate your entire insurance policy.

You would not be the first person to try to side-step a few premium dollars. In fact, you’re the 300-millionth person to try it. For ever one person who gets away with it, there are thousands who wind up paying more money for having a claim denied altogether.

Let’s just make it clear; every policy is different, and there are many exclusions and additions possible when it comes to who has liability coverage while driving any insured auto. The above is an overview of the most common policies.

Call your independent agent or direct insurer for the details of your policy if you are ever unclear on anything. With insurance, it’s always better to be safe rather than sorry.


One Comment

  1. Bryan October 9, 2015 at 4:21 pm -

    I was rear ended by an unlisted unlicensed driver driving his fathers vehicle, so the fathers insurance company is saying that they will probably deny my claim. What can I do to have my vehicle paid for?

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