No one likes to feel excluded, but if it's an insurance company
that's singling you out for an exclusion, you'd better listen.
Some insurance policies come with a "named driver exclusion." It
states that one or more individuals in your household may not
operate the insured vehicle. If an excluded individual drives the
car and gets into an accident, the insurance company doesn't have
to pay for the damage.
Car insurance typically operates under a principle of
"permissive use," explains John Montevideo, past president of the
Consumer Attorneys of California. If you loan your car to someone
and he or she has an accident, that driver typically is covered as
a "permissive user" under your policy.
If the driver has been explicitly excluded on your policy,
however, the concept of permissive use goes out the window, as do
the insurer's traditional responsibilities to defend and indemnify.
Damage to your vehicle won't be covered by the insurer, and both
the policyholder and the driver can be held personally liable for
any damages caused to others in the crash.
Exclusions typically aren't arbitrary. They're meant to make
sure that a high-risk driver in your household won't get behind the
"It could be somebody that perhaps has a suspended license, or a
DUI, or a bad driving record," says Penny Gusner, consumer analyst
for CarInsurance.com. Excluding such drivers minimizes risk for the
Exclude and save
It's not always the insurance company that inserts exclusions
into your policy. Sometimes policyholders request exclusions to
car insurance rates
"Some [exclusions] are from insurance companies, or it could be
you saying, 'This person is not going to drive and he's pushing up
my rates,'" says Gusner.
She points out that California has a good-driver discount, which
can save you big money. Drivers who qualify for the
good-driver discount get rates at least 20 percent lower than those
who do not qualify for the discount.
A California law allows you to exclude drivers in your
household who could cause you to lose that discount.
"In many states the discount is substantial, which is the reason
the insured might request for an exclusion to apply," says Chris
Wukovits, manager of AAA New York Insurance Services.
Wukovits notes that not every state allows car insurance
companies to write policies with such exclusions. They're legal
under the state laws of Arizona, California and Texas, he says, but
are prohibited in New York.
Some states allow exclusions but impose limitations on their
use. For example, Gusner says North Carolina doesn't allow you to
exclude your spouse. Contact your state department of insurance to
determine what is permitted.
"It's a mixed bag," says Gusner.
On his website, Dallas-Fort Worth attorney Mark S. Humphreys
how exclusions work in Texas
If your policy has exclusions, your insurance company won't
accept any excuses for allowing excluded persons to drive.
Perhaps no one would fault you for allowing your excluded spouse
to drive you to the hospital if you were having a heart attack.
However, if he or she got into accident on the way, the insurance
company would be within its rights to refuse coverage. Excluded
means excluded, period. There are no loopholes.
The good news is that an exclusion isn't forever, but you'll
have to contact your insurance company and ask for it to be
removed. Keep in mind that the insurer is under no obligation to
comply with your request.
Once an exclusion is imposed, typically it remains in place
until you and your insurance company mutually decide to take it off
the policy, says Gusner. "Some drivers think it's only until the
end of the policy term, but that's not usually the case."
If the exclusion has been prompted by a black mark on someone's
driving record, such as a DUI, you'll likely have to wait until the
offense drops off their DMV record before you can have the
exclusion removed from the insurance policy.
Car insurance for risky drivers
article discusses how to improve your driving record in order to
reduce your insurance premiums.
Don't skip the fine print
Typically, only high-risk drivers wind up excluded from
policies. But that's not always the case. Montevideo says he has
seen a trend among small, low-cost insurers -- which tend to offer
monthly policies rather than six- or 12-month contracts -- to
every member of a household
other than the policyholder. It's a way to control claims
He says there are extreme cases where children too young to
drive are excluded from policies. "They're basically saying,
'We're going to exclude even the dog, if we can find his name.'
It's overkill, really."
So even if you haven't asked for a member of your household to
be excluded, check with your insurance agent and read your policy
carefully. The last thing you want is to find out too late that
your child or spouse wasn't supposed to be driving the car he or
she just crashed.