Auto Policy Protections
“Can I please tell my mother-in-law she can’t drive my vehicle because she’s not covered on my auto policy?” We receive such questions more often than you’d expect. Similar ones include, “What if I loan my car to someone else and they have an accident? Whose insurance pays if there’s an injury? And who pays to repair my vehicle?” Auto insurance is the most commonly-held form of personal insurance. Ironically, it is also the most misunderstood.
Much confusion is because we use our vehicles in such a variety of ways. Although most of us primarily drive our cars to work or use them for pleasure, sometimes we also use them for work errands, work travel, in-home businesses, or loaning to family or friends (or mothers-in-law). Understanding who is covered on a typical auto insurance policy provides peace of mind.
Huge legal disclaimer: policies vary state-to-state and company-to-company. Bring any concerns to your insurance agent.
Who is the “Insured”?
Insurance policies often reference the “insured”. This is the person(s) specifically named on the policy. Auto policies are issued to someone, and those people are, understandably, protected by the policy. Additionally, spouses living under the same roof are automatically considered an “insured”, even if not named on the policy.
Immediate family members, those related by blood, marriage, or adoption, and who are a resident of your household, are automatically covered. This keeps you from needing to name every member of your household on your policy. That said, insurance companies require they be made aware of all regular and newly licensed drivers of your vehicles.
However, as convenient as this family member coverage may be, it can also cause issues. For example, several of our clients have had older family members move back into their home, affecting auto policy rates. Because the older member began living under the same roof, they were automatically covered by the policy and rates were adjusted. Thus, you can tell your newly resident mother-in-law she can’t drive your vehicle and blame it on the insurance company, but it will not be truthful. In such a situation, the only way for your mother-in-law to not affect your rates if for her to take out her own insurance policy.
Most auto policies include protection for other drivers. If you give someone else permission to drive, they are covered. Most policies also do not require you be in the vehicle with them, but some may. If your friend has their own auto insurance, your policy still covers them if they cause an accident, and it pays for your own damage as well. If your policy does not have enough coverage, then theirs may be used to fill the gap.
Family Outside Your Household
Curiously absent is protection for family members who do not live with you. This may be children while away at college. Some policies are amended to cover this specific situation, but there are other reasons you may want your coverage to protect family not in your household. If so, talk to your insurance agent as it may require the other family member be added to your policy by name. This is especially important if you provide the non-resident family member a vehicle to use. For example, claims periodically arise whereby a client’s child at college gives permission to a roommate to borrow their car. In such a case, your policy may or may not provide protection depending upon whether your non-resident child is named on the policy.
Non-Family Living with You
This issue is larger than most realize and is handled in a variety of manners, depending upon insurance company. By default, most insurance companies require everyone living under the same roof be covered by the same insurance policy. This is because those living in the same household generally use that household’s vehicles. Therefore, even non-family members living with you, if they have a valid driver’s license, may affect your insurance rates. However, do not assume they are automatically covered like a family member. The best solution is for them to obtain their own insurance policy.
Accidents happen, which is why we carry auto insurance. Know who is covered before getting on the road. If you have further questions, visit Car Insurance or Contact your Bankers Insurance agent. We will help determine your risks and advise regarding how to cover them. Not a client of ours? Let us compete for your business! Each of our clients is assigned a personal insurance agent and provided their email address as well as a phone number that rings right on their desk.