An “excluded driver” is a person whose “crashes” are not covered on a California commercial auto insurance policy for any of the coverages on the policy. Your insurance carrier must have written a “named driver exclusion”, for a specific individual, for him/her to be considered as “excluded” on your insurance policy.
This does not mean however that you or the “excluded driver” are not responsible for the damages and/or injury resulting from an accident in which this “excluded driver” is at fault. In fact if you have such an individual in your household, realize that you can be held personally liable if such he/she drives a vehicle on your insurance policy, and causes damages or injury. This is true even in an emergency.
An insurance company will generally “exclude” a driver to prevent their insuring a person with multiple vehicle citations, a number of at fault accidents, a suspended license, a DWI conviction, impaired mental capacity, or the like. If you are a “good driver” and have someone in your household who is not, a “named driver exclusion” will allow you to continue to be insured at the discount afforded to persons with clean driving records. In many states this discount is substantial; 20% in California.
A person who is an “excluded driver” on your insurance policy may still be able to obtain coverage separately under the “Assigned Risk” plan in your state. Applications for insurance that are submitted to the “Assigned Risk Plan” are forwarded to one of the auto insurance companies which write coverage in your state. The “Plan” services the policy, but losses and expenses are shared by all companies “admitted” to write auto insurance in your state. The percentage of “assigned risk” policies received for coverage by an insurance carrier, is based the percentage of the auto insurance market covered by that insurance company in your state. The types of coverages offered by the “Plan” are generally very limited, as are the available policy limits
After three years with a clean driving record, your “excluded driver” may be eligible for insurance with a standard auto insurance company, once again. Of course, this possibility is subject to the reason for exclusion and circumstances involved.
Most importantly, if a driver is “excluded” on a policy, this does not absolve him/her of any responsibility under Tort Law. Unless you are in a no-fault state, liability still applies, as it would in the absence of any insurance policy. Moreover, you as the vehicle owner can be held “vicariously liable” for his/her actions.
Having one or more excluded drivers on your auto insurance policy creates a heavy burden of responsibility on you as the policyholder. If you should be in the horrible situation of finding that the “excluded driver” has used your vehicle and been involved in an accident, do not be surprised if your insurance company insists that you file a police report against the “excluded driver”, and press charges against him/her for vehicle theft. How this situation is handled by your insurance carrier and/or the courts varies according to the laws in effect in the jurisdiction which applies.
A recent auto insurance fraud case in California, in which 16 separate insurance carriers were victimized, involved claims presented for “excluded drivers”. Unfortunately keeping insurance premiums low is a challenge when bogus claims must be investigated and their attendant litigation expenses paid. Luckily in this particular instance 28 suspects were arrested and warrants were issued for five more.
It is somehow ironic that excluding a driver from coverage on an insurance policy can lower the premium, and fraudulent claims with “named driver exclusions” have caused higher premiums for all auto insurance consumers in the state. Hopefully the arrests and convictions will send a warning message to others who would steal premium dollars from the insurance buying public.
We as auto insurance consumers are lucky that the “named driver exclusion” is available, to keep drivers that truly are in a different class of moral responsibility, from directly impacting the insurance premiums of prudent and cautious automobile drivers.