What should I do if an excluded driver got in an accident in my car?

There are many ways to save money on auto insurance, and excluding a driver who lacks driving experience or has a record that makes them look like a risky driver is one such way. However, you can get into a lot of hot water if an excluded driver gets into an accident while driving your car.

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There are not many options with positive outcomes if an excluded driver gets into an accident in your vehicle. The easiest and safest option is to never allow an excluded driver to use your vehicle.

What is an excluded driver?

When you purchase car insurance, you are expected to add all licensed drivers in your household to your insurance policy who will be driving your car with any regularity. Neglecting to add a driver increases the chance of having your claim stalled or denied.

However, there may be a driver in your household who has such a bad driving record that adding that driver to your auto insurance policy will cause your premiums to skyrocket. This driver might have a suspended license, multiple driving infractions, or a DUI. In an effort to keep your auto insurance premiums affordable, you can add a clause to your auto insurance agreement that excluded that driver from coverage under your policy.

An excluded driver’s auto accidents will not be covered by your policy, thus the driver’s poor record will not be taken into account when calculating your premiums.

The downside is that you, the policyholder, will still be generally liable for damages along with the excluded driver who causes an accident while in operation of your vehicle.

If you choose to exclude the high-risk drivers in your household from your auto policy, they must never drive your vehicle. Your insurance coverage will not extend to them when they’re behind the wheel and you could end up paying extremely expensive bills for damages out of pocket.

What’s the difference between tort insurance and no-fault insurance?

The National Association of Insurance Commissioners (NAIC) divides auto insurance into tort or no-fault, and each state is one or the other. In simplistic terms, tort insurance is an at-fault system whereby the at-fault driver is liable for damages from an accident; in a no-fault system, a driver’s auto insurance will usually cover damages despite which driver is at fault. Visit the state map here.

This an important distinction if an excluded driver has gotten into an accident in your car. If you live in a tort state, which is most common, then the liability is yours and the excluded driver’s for an at-fault accident. If you were driving the car, your liability coverage (which consists of bodily injury liability coverage and property damage liability coverage) would kick in and pay for the other driver’s damages. However, if the excluded driver was behind the wheel, your insurance provider will not pay out on any insurance claims for your vehicle’s damage, the damage to the other driver’s vehicle, any injuries, or any property damage. Under tort insurance, you can be sued for any and all damages. If this has happened to you already, contact an accident attorney right away.

No-fault insurance is slightly different, but the auto insurance laws vary from states to state, so it is best to investigate the insurance laws for your particular state. Information can be found at your state’s department of insurance website, such as New York’s Department of Financial Services. Generally, in no-fault states, the other driver’s auto insurance will cover the damages caused to their vehicle by an excluded driver. However, that is no guarantee that you will not be sued, and the damages to your vehicle, property or injury will not be covered.

What will your auto insurance company want you to do?

When you agreed to an excluded driver clause, you were essentially promising that the excluded driver would never drive your car, even in an emergency situation. To prove that you did not break that promise by allowing the excluded driver to drive your vehicle, your insurance company will want you to file a police report against the excluded driver for vehicle theft.

This essentially cancels your liability for the accident if your vehicle was stolen. However, if you did give the excluded driver permission, and it can be proven, then you might face criminal charges for filing a false police report.

What are your options?

Obviously, it is in your best interest to never allow an excluded driver to operate your vehicle under any conditions. However, if you do, your options are limited.

To protect yourself from the costly liability of an auto accident that can include vehicle damage, personal injury and injury to property, your only option is to file a police report for the theft of your vehicle.

If you are unwilling to file a police report against an excluded driver because they are a family member or a friend, or you are unable because you gave them permission, then you should prepare yourself for possible litigation in court, an assessment of you liability in terms of money, and garnishment of your wages or seizure of your property to pay for the accident.

Your best hope is that the other driver’s car insurance will cover their car’s damages and that you can fix your vehicle out of your own pocket. Also, be prepared to be dropped by your insurance company if they get wind that you allowed an excluded driver to operate your vehicle and to look for a new insurance carrier.

Auto insurers will raise the cost of coverage if you add a person with a poor driving record to your policy, but you’ll be paying a lot more coverage if you get caught letting an excluded driver drive your car.

There are other ways to save money on your auto insurance besides excluding drivers. Look into any auto insurance discounts your provider offers, like the good-driver discount, multi-policy discount, or good student discount. Inexperienced drivers can often get a cheaper rate by taking a defensive driving course.

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