You are in your car, stopped at a red light patiently waiting for it to turn green so you can get to your destination. A car zooms up behind you and rear ends you. Maybe the driver wasn’t paying attention, or texting, or some other equally frustrating reason the driver didn’t stop. You know your car sustained significant damage just from the force of the impact.
If you’re not hurt, you get out of the car to get the driver and insurance information from the person who hit you. They present you with what appears to be a legitimate insurance card, only their name does not appear on the policy. You call the insurance company listed on the card long after you’ve left the scene of your accident only to find out the driver who drove the car isn’t on the policy and therefore the damage to your car (and even their car) isn’t covered. You’ve just discovered what a named driver policy is.
A named driver policy is a car insurance policy that covers the named driver, the person listed on the policy, but no one else in the household. Not the person’s spouse, significant other, children, parents, relative or roommate living in the home with the named insured. In fact, if anyone other than the named insured or driver drives the car and wrecks it, the insurance does not cover it. And here’s the rub; if you compare the ID card for someone with a named driver policy versus an ID card from someone who has car insurance with a major carrier, you can’t tell the difference. That will change on January 1, 2014.
The Texas legislature wasn’t able to get these policies eliminated in the current session; the House passed it but the Senate committee let it die. They did agree though, and Governor Perry signed into law, the first step on how to approach named driver policies. The changes are:
- Insurers are now required to notify orally and in writing that the insurance policy does not cover anyone else in the household, only the listed driver.
- The limited protection must be clearly stated on the insurance ID card.
The good news is now if you’re hit by someone who has one of these policies, you’ll know it. In addition a police officer will know if the driver is violating the law and will be able to issue a ticket or arrest the driver if there are multiple violations.
Named driver policies are purchased by someone who doesn’t want to pay the premium for all the drivers in the household to be on the policy. In other cases they’re sold to uninformed consumers who think they’re getting a great deal instead of a “junk” policy as referred to commonly. Most policies from standard insurance companies cover permissive drivers, someone we give permission to drive our car. These don’t.
The Texas Department of insurance estimate there are 1.2 million named driver policies in Texas. To put that in perspective, that’s almost the entire population of Dallas. For this reason, we recommend our clients carry uninsured motorist coverage. If you’re hit by someone with one of these policies and the person listed as the named driver isn’t the driver, you will be left to file the claim on your insurance.
If you’d like to see these policies done away with, let your Texas State Senator know. Send them a letter or an email. They need to hear from you! If you have a comment, question, or experience you’d like to share with us, please do so in the comments section of our blog or on our Google + and Facebook pages. I’d love to hear from you.