Insurance companies are always concerned about risk. When you get an insurance quote or pay for a policy, the insurance company is taking on the risk of covering you and your car. But what if other people drive your car? Are they covered? That depends. One way to ensure others are covered is to purchase a named auto insurance policy.
A named auto insurance policy is different than a standard policy. Let’s explore the differences.
What Is A Named Auto Insurance Policy?
The main difference between a named policy and a standard policy is in something called permissive use. Permissive use, which is a common part of standard insurance, gives coverage to another driver who you have given permission to use your car. The only hitch is that the other driver’s use must be infrequent, usually less than 12 times per year.
Permissive use is like an extension of coverage for special circumstances when someone needs to borrow your car. If another driver uses your car consistently, permissive use does not apply.
Named auto insurance policies do not have a permissive use clause. With a named policy, only you and any other named drivers are covered. If someone borrows your car and gets into an accident, and they are not a named driver, you will be left without coverage.
What’s the Difference Between Additional Drivers and Named Insured Drivers?
Additional drivers on your standard policy are not the same as named insured drivers. The difference comes into play in the event of an accident.
If there is a payout, for instance, additional drivers are not eligible to receive any compensation directly. The money goes to the insured driver or the policyholder.
Are There Limits to a Named Driver Policy?
Rules vary between insurance companies and between states. You must always carry the minimum amount of coverage required by your state. As far as upper limits, generally, the only limits on a named driver policy have to do with the number of vehicles you can insure with this type of policy. Most commonly the limit is four vehicles per named insured policy.
Pros of Having a Named Auto Insurance Policy
Knowing that only you and a named driver will be driving your car can save you money. A named driver policy can be cheaper since the insurance company knows up front who it is covering and does not have to cover in permissive use situations.
Cons of Having a Named Auto Insurance Policy
The obvious con of have a named driver policy is that only you and any other named drivers will be covered in the event of an accident. This can be a risk for policyholders.
For instance, what if you are a passenger in your car driven by a driver who is not on your named policy? It’s simple: your insurance company can deny coverage because a named driver was not behind the wheel.
If you want to see how much money you can save with a named driver policy, InsuranceWins can help. Just fill out our simple form to receive quotes from auto insurance carriers and open the discussion with them about a named driver policy. Make sure you understand the pros and cons of a named auto insurance policy before you buy. When you’re ready to shop around, let InsuranceWins help!