Car Insurance and The Problems with Excluding a Driver

A mom called me last week. She’d received a notice from the insurance company she’s been with for over 37 years. They are not renewing her car insurance policy. The issue, as she suspected, are the accident claims for her adult son over the past three years. Her agent confirmed if she excluded her adult son from her car insurance policy would she be allowed to stay with them. However, what they didn’t explain was doing so may raise unexpected problems.

There are a couple of major and minor drawbacks when anyone excludes a driver living in the household from a car insurance policy. The biggest two are what happens if the excluded driver drives a car(s) that is on the policy they are excluded from and is involved in an accident?

  • The claim will be denied by the insurance company since an excluded driver was the one involved in the accident. By denying the claim, the car owner and / or excluded driver may be personally liable for repairs to the other vehicle(s), as well as their own vehicle.
  • In addition, the car owner and excluded driver could be personally liable for injuries to the other party, as well as, anyone riding with the excluded driver.

The financial consequences in either case can be disastrous for the vehicle owner and excluded driver and can last for years regardless of who’s at fault. In addition to the claim being denied, the car insurance company may immediately cancel the policy.

The minor drawbacks of excluding a household member from the car insurance policy include:

  • They can never drive for you if you’re on a trip, take your car to be serviced, etc.
  • There may be a loss of the multi-vehicle discount (this is a discount when there is more than one vehicle on the car insurance policy) meaning the savings is not as large as expected.
  • The excluded driver may end up paying more to have their own policy.

This may still be worth it if, as in this case, the policy is not being renewed. It may also be time to review other options from different car insurance companies as there may be affordable options for the mom and son to be on the same policy. I don’t know what this mom will do, but I can say, I’m glad I was able to give her a more complete understanding of what excluding her son means if that’s what she chooses.

What do you think? Share your thoughts, questions, and experiences with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!

Evie Wise
Evie Wise


Evie Wise
Evie Wise

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