What is a named driver policy?
If you have a named driver car insurance policy, the only drivers covered the event of a crash are those specifically listed on the policy. If you allow your friend — unlisted on the named driver policy — 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.
Named driver 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 a non-named 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.
Named driver auto insurance policies: pros
Insurers like these policies because they remain aware of all of the risk presented to them. They have on file the age and driving history of each covered driver, and can very accurately price the policy to suit this profile.
Customers might like a named insured insurance policy because they sometimes cost less. The cost will vary based on the driving history of all named drivers on the policy.
Named driver insurance policy: cons
The major con of named driver insurance is pretty simple: only the listed drivers are eligible for insurance coverage. Even if you’re in the car with them — in the event of an emergency, for instance — your insurance company can deny coverage. Many states require very clear language regarding this coverage.
Texas, for example, requires insurance agents to present the guidelines for named driver policies orally and in writing to a prospective client, and the contract must be signed by both parties.
Frequently asked questions
Below are frequently asked questions regarding named driver policies.
How many additional drivers can be added to a named driver policy?
This is a state — and insurance company — specific question. 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.
Are named drivers insured to drive other cars?
There are two potential scenarios to cover here.
- If the second car is not on your policy (such as a friend's). If your personal policy is a named driver policy but a friend’s whose vehicle you want to drive is not, you are eligible to drive their vehicle under the permissive use clause.
- If the other vehicle you want to drive is on your named driver policy. Unless there’s specific language in your policy that states otherwise, you should be able to drive any car that is covered on the policy as long as you’re a named driver.
Another important term to keep in mind when shopping for a named driver policy is rated driver. A rated driver is the driver whose profile is being used to price the premium for that particular vehicle.
Can you still file a claim if a non-named driver gets into an accident?
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.
If you’re looking for additional information regarding car insurance, see our related articles below:
- Car insurance premiums for young drivers
- How to get car insurance with no driver’s license
- Is uninsured motorist coverage required?
- How to get insurance with a bad driving record