Unless you’ve been living under a rock of the past few years, you’ve probably come across an insurance company that offers “named-driver” auto insurance policies. Just in case you have been residing in the West Texas desert, let me explain what a named-driver policy is. A named driver auto insurance policy is a policy that restricts coverage to only drivers listed on a policy.
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As I’ve previously written, all auto insurance policies are not created equally in Texas. In most standard and preferred policies, offer coverage for “permissive use” as long as a driver operates within the scope of permission has been a way of life. Suppose you have a relative that moves into your household and you give them permission to drive your car. If that driver has a wreck, that driver is covered by your insurance company.
This is where policies in Texas diverge. There are a number of companies that have a provision in their policy that every household driver must be rated on a policy or excluded from coverage. That means, the relative that moves in must be added to your policy or they stand the risk of not having coverage if they have an accident in your car. Aside from not providing coverage for unlisted drivers, these limited Texas auto policies also reduce additional features that are too long to list in this post.
Subsequently, you should beware of the policy that asks you to exclude drivers, reject coverage initial your life away. In fact, here’s a novel thought. Read everything and question the agent before signing everything on your application. Hopefully, like most people, you purchase insurance to protect you and your family. If your agent cannot or will not explain the level of coverage, then run fast!
With all that said, the Texas Legislature recently passed a new regulation targeting these limited policies. Effective January 1, 2013, insurance companies that write limited insurance policies must specify that the policy is of the “limited variety”. According to the Dallas Morning News, “a measure that the Legislature enacted and Gov. Rick Perry signed into law this year requires that insurers who sell “named driver” auto policies disclose the limits of the coverage to drivers. They must also list the names of covered drivers on insurance ID cards they issue to customers.”
So the next time you’re looking for auto insurance, keep this post in mind. Comparing rates is not the only means by which you should compare your auto insurance. Now more than ever, your level of coverage should be the most important feature. At the time of a claim, if you could have paid $10 more, would it have been worth it to add your relative or more coverage to your policy? Hopefully this post makes you think.