Standard auto insurance policies cover named insureds, listed drivers and occasional drivers, who are permitted to use the vehicle with the permission of the owners. However, they offer 100% of the coverage to named insureds, including extending it to cars they hire and providing secondary liability coverage when they use someone else’s auto. But listed drivers are only covered to drive the insured vehicle.
People may have the option to choose between naming a person as insured or listing as a driver, especially when they are spouses. Each choice may have different implications in terms of managing the policies and legally.
Families may not pay close attention to who is a joint policyholder or named insured and who is a listed driver on auto insurance and arrange them as a matter of convenience. However, these terms are different from each other in many ways, including legally and practically. Choosing one over to the other may come with advantages or disadvantages.
Named Insured vs. Listed Driver
Named insureds benefit 100% from auto insurance coverage. They can hire a car and drive someone else’s auto and still be covered by their policies too. They are usually the vehicle owners and policyholders, can make changes to policies, add or remove cars, listed drivers, increase deductibles, make claims and even cancel it. They are also responsible for premium payments and cannot be removed from coverage without their prior consents. Vehicle insurers send them any notifications and renewal notices. So, they have full control over the policy with its rights and responsibilities.
On the other hand, listed drivers are the people who are explicitly allowed to use the automobile as they are mentioned by name on the car insurance policy declaration page. Policyholders can take them off whenever they want as long as state laws and carriers allow it. Also, a listed person would not have a say or would not be able to make a claim. Other people may be allowed to use the vehicle even though they aren’t listed either way. A standard policy normally covers everyone in the household and occasional drivers.
Another distinct difference between a named insured and listed driver is that listed drivers are only allowed to drive the car they are insured for and not covered by this policy when they drive someone else’s or hired auto like a named insured would under their policies.
It may sound like it is a great idea to get listed as a named insured with your partner rather than being listed as a driver but it has downsides too. Joint ownership of a policy means that you are equally responsible and can be sued jointly or separately for the losses third parties suffered as a result of an accident caused by the insured auto.
It could totally be someone else who was driving it at the time of the accident. As long as that person was permitted (not stolen the automobile), either or both named insureds would be open to lawsuits. This alone, convinces many partners to make separate arrangements to avoid being responsible for others’ mistakes. Being a listed driver may make sense if you have more assets than your partner. Often people buy separate coverage and get listed in each other’s policies. That may be fine when each party keeps their own automobile.
How it is set up may have legal and practical consequences and you should take time to digest them all and make a choice that suits your circumstances. All these decisions are fairly personal and based on relationships. It is best that partners go through options, discuss their benefits and problems and come to a mutually agreeable conclusion.
Named Driver Insurance
It is a type of policy that only covers the drivers listed and nobody else even if they are living in the same house. They may be cheaper but it may be problematic too, especially if you cannot keep others away from the keys.
Named insured refers to legal ownership and rights over a policy but “named driver insurance” refers to limiting people to only the ones who are clearly mentioned on the declaration page and excluding everybody else from your policy. Named driver insurance limits a standard policy that usually covers drivers who aren’t mentioned in the policy by name, but allowed to use the vehicle by the owner.
By limiting the drivers to only the ones listed on the policy with a “named drivers only” clause, the carriers control exposure and this often results in lower premiums. And often it may be necessary to insure a high-risk automobile at an affordable premium.