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What is Designated Persons Coverage Exclusion? Why is it required, if at all?


In basic terms a Designated Persons Coverage Exclusion form is something you sign stating that the person listed is excluded from your auto insurance coverages.

In general a named driver exclusion is an endorsement added to an insurance policy that states a specifically named driver that has access to your insured vehicle will NOT be covered by the insurance provider to drive the vehicle as long as the vehicle remains covered under the terms of your car insurance current policy.

This endorsement would be added to an automobile policy and specifically exclude from all coverage losses involving a named individual. It is may be required when the underwriter is aware of a problem driver who might be allowed to use an insured automobile (e.g., the child of the named insured) in the absence of this endorsement. A problem driver may be that the person has a suspended license, DUI conviction, etc.

Some insurers may request that the driver be excluded or the risk that they pose as a driver is enough to cancel your policy. Or the policyholder may not want their rates to be affected due to a household driver that has multiple convictions, a DUI, etc that would raise the premiums too high and thus choose to exclude the person from their auto insurance policy.

Normally this exclusion applies to the designated person(s), regardless of where they reside or whether they are licensed to drive, until they are added to the policy and the person is approved in writing by the company as an additional driver on the policy.

When a person is excluded from the car insurance policy the form usually states that this exclusion is applicable to all coverages provided now or later added. Some people believe that the exclusion ends after a certain time period automatically or at renewal time. This is not so, with most all insurers the exclusion will apply to the policy, or any continuation, renewal or replacement of the policy by the Named Insured, or reinstatement within 30 days of any lapse thereof.

The Designated Persons Coverage Exclusion endorsement on an auto insurance policy does not take away liability from the excluded driver or car owner if the excluded driver does operate the vehicle.

If the excluded driver does operate the vehicle and gets into an accident, he or she as well as the car owner (who has vicarious liability for who they allow to drive their car) can be held personally responsible for and damages the driver causes. This means if the excluded driver causes minor or serious bodily injuries and/or property damage to others that the insurance on the car will not cover the accident and the expenses of the accident will be the responsibility of the driver AND car owner. This can be quite costly and so anyone that excludes a driver should not let that driver operate the car, even in an emergency since no insurance coverage will be extended to the situation at all.

So this exclusion form may be required by the insurance company due to a person in your household that they feel is too much of a risk to insure (someone with a suspended license or DUI) if you want to continue coverage with them. Or a policyholder may request to exclude a household member that they do not allow to drive the car and thus do not want to pay premiums to be a driver on their policy.

If your agent is not able to explain you these type of insurance terms or fulfill your car insurance needs, contact a CarInsurance.com agent and they can explain not only insurance terms but also tell you how they get you the best rates.


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