When taking a look at who is or is not covered under an auto policy, it’s common to hear “just add them as a driver so that they always have coverage.” But it might be worth your while to find out what it does when you add a driver as well as what it doesn’t do.
When a driver is added onto a car insurance policy, it is mainly done as an underwriting tool to give the insurance company the ability to get a Motor Vehicle Report for each listed driver. For example, the majority of insurance companies would prefer, on a personal auto policy, that anybody living with the named insured and any other regular driver(s) be listed as a driver. Similarly, on business auto policies, it is desired that all employees that drive insured vehicles be listed as drivers. This enables the insurance company to correctly underwrite any risks, surcharge for accidents/violations and, if needed, cancel the risk or non-renew it.
The section of “who is an insured” in a car insurance policy must be examined to determine who is covered. Under a personal auto policy, who is insured tends to include the named insured, their spouse, family members living in the same house and any driver with permission to drive the insured vehicle(s). But, note that the section of “who is an insured” says nothing about listed drivers also being covered. In an example, Henry’s auto insurance policy has him as the named insured and his daughter, Samantha, is a listed driver.
If Henry lets his friend Mary borrow the car and she gets in an at-fault accident, she is still covered under his policy as a permissive user even though she isn’t a listed driver. In another scenario, Samantha goes on vacation and borrows a car from her friend but she is negligent and has a collision with a pedestrian. Samantha is still covered under her dad’s personal auto policy but because she is a family member and not because she is a listed driver on his car insurance policy. To give an example of how a listed driver is not covered, let’s say that Henry and Mary are living together (unmarried). Henry owns the household’s only car and is the only named insured.
Mary is a regular driver and Henry, being responsible, adds her as a listed driver to his policy. When she drives his car she’s considered “an insured” since she drives with his permission, but being a listed driver has no affect on her coverage. That being said, Mary goes out of town, rents or borrows another vehicle and is involved in an at-fault accident. At this time, Henry’s car insurance policy does not cover her because she isn’t a named insured, Henry’s wife, a member of his family, or operating Henry’s car. For Mary to be seen as an insured under Henry’s personal auto policy for Liability, Medical Payments, Personal Injury Protection, Uninsured Motorist and/or Physical Damage she has to be driving Henry’s car.
This gives Mary a gap in her coverage but she can fill it with a Named Non-Owner policy which can give her coverage for Medical Payments, Liability and Uninsured Motorists. The above is a good example of a court case that occurred in Louisiana.
Bob was the named insured on his personal auto policy and was living with his fiancée, Jen, who was a listed driver. One day, Jen was driving her sister-in-law’s car and was involved in an accident that injured a third party who sued her and others. Jen went to claim that she had coverage under her fiancée’s policy as a listed driver. But, the Louisiana Supreme Court found her as having no coverage stating that “…being listed as a driver on the declarations page does not transform that person into a named insured.” It was also decided by the court that she also did not qualify as a family member. (Lemoine v. Illinois National Ins. Co., March, 2004) When it comes to a business auto policy, insurance companies apply the same principles.
For an employee that is listed as a driver they would have coverage only when driving insured vehicles under that policy. Borrowing another’s car or renting one for personal use does not cover the employee. To cover situations in another’s vehicle they would need to either purchase their own personal auto policy or the previously mentioned Named Non-Owner policy. One other option is to add an endorsement of Driver Other Car to their companies’ business auto policy, but that may or may not require the permission of the business owner.
If you have any questions about how or why being a listed driver does not affect one’s coverage, please give us a call at 305-270-2100.
Your home insurance policy may offer you a wide range of covered events, but it is not a comprehensive policy and, like anything, has its own set of exemptions. In order to understand the specific events that are not considered insurable incidents by your insurer, be sure to take a look at your policy. The following is a general list.
- Flood damage: Believe it or not, the damage caused by a flood is not covered in your home insurance policy. Even if the flood comes on the heels of a hurricane, if the damage is due to flood waters, your home insurance policy will not cover your claims. Instead, you must make sure that you have a flood insurance policy in place.
- Bed bugs: Unfortunately, those creepy creatures, the damage they cause and the expenses related to getting rid of them are not covered in your home insurance policy.
- Mold: While this isn’t the case in every single home insurance policy, many of them do not cover the damage associated with mold nor the expenses of treating it.
- Intentional damages: If you damage your home while completing home renovations, or if you intentionally damage your home in the hopes of getting paid from an insurance claim, then you will find that the damage is not covered. Remember, insurance is meant to make you whole after an unexpected insurable incident that was not your fault.
- War: Acts of war that cause damage to your home (including nuclear war or damage from wars fought on home territory) are not covered under home insurance policies.
- Neglect: As a homeowner, you have an obligation to perform upkeep and preventative maintenance on your home. If you neglect these responsibilities and your home falls into disrepair, your home insurance policy will provide no protection.
- Government action: If your home is seized or confiscated by a government entity, it may not be a covered loss under your home insurance policy.
- Mandatory building code upgrades: If you suffer a complete loss and the cost to rebuild exceeds your limits due to mandatory building code upgrades, the higher costs will not be covered (this can be avoided with special riders added to your home insurance policy that complement your limits in the event of code changes).
- Policyholder injury: A liability portion of your home insurance policy will cover the medical and other expenses for a person who is injured on your property under the right circumstances, but it will not cover your injuries or anyone else who lives in the home if they are injured on the premises.
Every policy has its own exclusions; therefore, you should read yours to find out what particular risks are not covered. Some policies, depending on the class, may exclude natural incidents like earthquakes and sinkholes, while others won’t cover things like water damage, which includes sewer problems and foundation issues due to water leakage. Home insurance policies have many different classes (noted as HO-1, HO-2, etc.) and each class has its own subset of covered and not covered risks. Ask your agent or insurance company if you need help understanding your policy or homeowners insurance class. To learn more about Miami home insurance and to answer any questions you may have, give us a call at 305-270-2100.
A homeowners insurance policy offers you and your family the financial reimbursement you will need to get your life back on track after an insurable event. But the financial benefits of having homeowners insurance are not experienced by policyholders unless they endure an insurable event with a financial impact that exceeds their deductible. Of course, that doesn’t mean that there are no intangible benefits to enjoy as you pay your premiums each month.
Peace of Mind
When you know that you have an insurance policy protecting you and your family, then you have peace of mind. That might not prevent an incident, but it can definitely help you sleep at night. Without homeowners insurance you are left with a subconscious nagging prompted by the insecurity that being uninsured brings with it. In this state, a lot of mental and emotional energy is used up wondering how you would rebuild your family's life if your home were to become ruined in an insurable event.
Insurance also ensures your financial stability. You probably have big plans for your retirement, your children's educational future and the repayment of your debt. But, without homeowners insurance to ensure that your personal savings do not need to be used after an insurable event, there is no guarantee that you will be able to realize any of these plans and dreams in the manner you want. Instead, you may be forced to use the money you saved just to rebuild your home after a tragedy. Saving money without knowing that you will be able to use it the way you expect can leave you feeling insecure and may even impact your motivation to save.
Insurance is a serious matter. It's not a fun purchase and it is not something that you will use in your everyday life. A homeowners insurance policy gives you permission to not dwell on how expensive and devastating an insurable event can be and the confidence to know that you will be able to recover financially after one.
Call us for a free quote on homeowners insurance in Miami or the surrounding South Florida area
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