Question: My husband and I live with my grandmother. Her auto insurer sent her a letter saying that if she doesn’t sign a document stating that my husband won’t drive her car, her policy will be canceled. He doesn’t have a valid license. Can the insurer do this?
Answer: Insurance companies can require policyholders to exclude certain drivers if it finds that person too much of a risk. The policyholder then has the option to sign an exclusion form or to look for a new insurance company that doesn’t require the exclusion.
Your grandmother’s car insurance company feels that your husband being without a valid license is a concern and wants to be assured that he won’t drive any of the insured vehicles in the household, which could result in the insurer holding the bag for claims if there were an accident.
It’s good that your husband isn’t driving because he doesn’t have a valid license, but many insurers won’t take a person’s word. In their opinion, since your husband lives in the home, he has open access to the cars.
Insurers generally cover the named insured driver and anyone the owner permits to drive the car. They charge premiums based on the drivers’ records the company expects to be behind the wheel.
In this case, the insurer isn’t charging premiums based on your unlicensed husband’s record but — without the exclusion — would be on the hook for the damage he caused while driving your grandmother’s car.
Exclusions aren’t allowed in every state, but in states that do allow it, an insurance company can request an exclusion form be signed to continue to keep a policy active — without fear that a high-risk household member will cost it money. The main categories of drivers insurers will target to exclude include:
- Individuals without a license
- Individuals with a suspended or revoked license
- Individuals with a bad driving record
- Individuals with a DUI or other major offense
- Young drivers under 25
If your grandmother signs the exclusion form, her car insurance company should be guaranteed that it wouldn’t be liable to pay for an accident that is at the hands of your unlicensed husband.
Named driver exclusion forms say that if the named person (your husband in this instance) were to drive an insured vehicle, even in an emergency situation, and be in an accident, the car insurance company would not provide any of the coverage or policy benefits.
Suppose your grandmother feels uncomfortable signing this form. In that case, she should shop around for car insurance to find an auto insurer that will offer her a policy without excluding your husband.
She may find that insurance will be more expensive without excluding your husband since when she compares shops, she will need to disclose that your husband lives in the household and is without a valid license. But at least she can determine what the cost is to exclude him or not and decide which way she wants to go.
— Penny Gusner contributed to this story.