What is a Named Driver Policy?
Named driver policies list specific individuals on an auto insurance policy, affecting coverage eligibility and premium costs. There are risks, though, if someone other than a named driver has to drive your vehicle.
What is a named driver policy?
If you have a named driver car insurance policy, the only drivers covered in the event of a crash are those specifically listed on the auto policy. If you allow your friend — unlisted on the named driver policy — to borrow your vehicle and they get into an accident, you would have no coverage. Let’s explore the pros and cons of carrying named driver auto insurance coverage and why you might want to think of adding other drivers when comparing quotes.
Named driver policy vs. standard auto insurance
The key difference between a named driver policy and a standard car insurance policy is permissive use. Permissive use, while not always standard, is a common feature of car insurance policies. Permissive use provides coverage to an additional driver if they are given infrequent permission to use your vehicle. While the definition of infrequent may vary, it typically pertains to a driver who uses the vehicle less than 12 times a year.
Named insured policies do not include permissive use clauses. Even if an accident occurred the first time an excluded driver used the vehicle, you would be left without coverage.
This is the only major difference between a named driver policy and standard coverage. State law requires all drivers to carry at least the minimum liability insurance. Bodily injury and property damage coverage still apply.
Insurers can accurately price the policy because they know exactly who is driving.
These policies may cost less since risk is limited to a few listed drivers.
Only listed drivers are covered — claims may be denied if someone else drives the car.
Some states, like Texas, have strict rules requiring clear disclosure and signed agreement.
How to Read a Car Insurance Policy
Make sure you know where to find important information on your policy documents.
Important details for named driver policies
Below are need-to-know details regarding named driver policies and named driver exclusions.
Insurers will often limit the number of vehicles, rather than drivers, on a policy. The number of vehicles allowed is usually limited to four. This limit may or may not apply to the number of named drivers on a policy. This is state and insurance company specific, so reach out to your state insurance department and your agent for the fine print.Â
There are two common situations if you’re a named driver and want to drive another vehicle:
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Driving a friend or family member’s car not on your policy:
If your policy is a named driver policy but your friend’s policy is a standard one, you may be allowed to drive their car under permissive use — as long as their insurer allows it. This usually applies to occasional, not regular, use. -
Driving another car listed on your named driver policy:
If the vehicle is already covered by your policy, you can usually drive it as long as you are listed as a named driver. However, always check your policy details for any restrictions.
Outside of seeking legal action, you might be out of luck. Your insurance company will argue you were aware of the limitations of your named driver policy ahead of time and thus they are not responsible. Because of instances like this, many states are passing legislation to clarify the restrictions of a named driver policy.
💡 What is a "rated driver"?
A rated driver is the person whose driving record is used to determine the insurance cost for a specific vehicle on the policy. Every car on the policy has a rated driver assigned to it.
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Named driver policy FAQs:
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About The Zebra
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