There are times when a person might let a family member, neighbor, roommate, lover, or friend drive their car when asked or simply out of their own will. Some fail to consider the specifics of their insurance coverage when a returning child from college for a Christmas break suddenly borrows the family car to go to the mall with some friends. But is it ok to let a family member drive a vehicle that is not registered under his name?
Many people who apply for auto insurance do not know just how important it is to disclose all possible drivers of the insured car when getting quotes for insurance regardless if they will drive or not. It actually affects the extent of coverage which can have a chain reaction in case of an accident. Things must be clear regarding claims because insurance companies will only pay in accordance with the signed policy.
Insurance providers have noticed a significant increase in the number of undeclared drivers for a particular vehicle. It could be the teen in the family, a live-in lover, or a friend who occasionally borrows the vehicle with frequently cited violations or has been involved in accidents. Most of the time, policy owners do not disclose everything for a hope to lower the premium of the insurance policy.
When there are accidents involving the undeclared driver, claims for the insurance are usually denied because of the owner’s failure to list the name of the driver as one of the designated drivers of the vehicle or a member of the household. Insurance companies will conduct their own investigation to get to the bottom of things. Failure of the vehicle owner to list the name of the driver involved in the accident as one of the drivers is a violation of the policy which could mean that the owner committed fraud or a misrepresentation of document. Instead of getting paid, the owner might be required to pay fines or face jail time.
A Given Scenario
Erika has her own car which she insured. Months passed by, she and her boyfriend Richard decided to move in together.
Richard had a car once which he insured but when he was laid-off, he could no longer pay for his insurance and let it lapse. He eventually stopped driving his car because repairs were too costly for him. Then he and Erika decided to live together.
Erika lets Richard drive her car whenever he needs it for job interviews or to run errands when Erika’s car is available. A year after being out of job, Richard begins sharing Erika’s car on a regular basis, but he is still not included on Erika’s policy as one of the designated drivers. During the renewal of Erika’s policy, the agent asks her if she needs to include other household members and drivers. She thought that Richard is not a regular driver of her car so it is alright not to add him aside from the fact that she knows Richard has a less than stellar driving history that would likely increase her premium.
One night, Richard is driving the car when he loses control over a patch of black ice. The car slams into another vehicle injuring the passengers who are rushed to the hospital. Erika quickly files the claim but the adjusters discover that Erika was not the driver. Erika committed misrepresentation by failing to include Richard.
If the insurance provider had learned about Richard, Erika would have gotten a different rate for the policy or the insurance provider might even opt to reject the application to avoid risk.
After the accident, the insurance carrier can deny extended transportation and loss due to collision. It can cancel the policy back to the original effective date and refund the appropriate premium.
If there was a lien holder on Erika’s car, the lien holder could harass Erika for the balance owed. In case the medical bills exceed the minimum liability boundary set by the state, Erika will be obligated to pay the rest in favor of the parties injured. Her assets and future income might be affected.
Real Life Situations
Events such as the one described can happen in real life. Both the insurance carrier and the policy owner may fall victim.
Safeguarding the fruits of one’s hard work must be properly secured. Contact your insurance carrier to make sure that all areas that must be disclosed are properly documented especially all possible drivers for the insured vehicle and the limits of liability are enough to cover anyone in case an accident suddenly happens.