Becoming A Licensed And Insured Driver: The Complete Guide

Becoming an insured driver is a necessary step to being able to drive, and there are a few ways to go about it. If you're a new driver, you can be added to a parent or guardian's existing insurance policy, or you may need to purchase a separate policy. If you're sharing a vehicle with a partner, you can either be listed as a secondary driver on their policy or take out a joint insurance policy. It's also possible to get non-owner car insurance if you frequently drive a car you don't own, for example, if you rent cars or drive for ridesharing services.

Understanding the difference between a named insured and an additional driver

When it comes to car insurance, there are a few different ways to set up your policy, especially if you're sharing a vehicle with your spouse or partner. Understanding the difference between a named insured and an additional driver is crucial in ensuring you have the right coverage.

A named insured is the owner of an insurance policy and is listed at the top or on the first page of the insurance contract. They have full coverage and are responsible for paying premiums and making changes to the policy, such as adding or deleting vehicles or drivers. In the context of car insurance, if you are the named insured, your insurance will cover damages even if you are driving someone else's car, including a rental car. It's important to note that there can be multiple named insureds on a policy, such as in the case of a married couple with joint ownership of a vehicle. Both individuals can be listed as named insureds and have equal rights and responsibilities regarding the insurance.

On the other hand, an additional driver, also known as an insured driver, is someone who is authorised to drive the insured vehicle but does not have the same rights as a named insured. They are typically a person who resides with the named insured and/or regularly uses a shared vehicle. While an additional driver is covered by the insurance policy for the vehicle they are listed under, they cannot make changes to the policy, file claims, or cancel it. Additionally, they are not responsible for paying premiums. It's worth noting that the insurance company will consider the additional driver's record when determining rates, but their driving history will not impact the named insured's coverage or premiums as heavily.

The distinction between a named insured and an additional driver is crucial, especially when it comes to claims. In the event of a loss or accident, the named insured is the person the insurance company will issue a cheque to. Therefore, it is essential to ensure that the owner (registrant) of the vehicle is listed as a named insured on the policy.

Adding a driver to an existing insurance policy

In general, you should add any licensed driver who lives in your household and has access to your vehicle to your insurance policy. This includes partners, teenage children, and college-aged children who drive your vehicle when they are home. You may also need to add people who don't live with you but use your car regularly, such as a nanny or a home healthcare worker.

When adding a driver to your insurance policy, you will likely need to provide the following information:

• Marital status
• Social Security number
• Address (if different from yours)
• Driving history, including the number of years they have held a license and any accidents or traffic violations
• Driver's license number, issuing state, and status
• Whether they need an SR-22 financial responsibility certificate
• Any information that may help you secure a discount, such as completion of a defensive driving course
• Vehicle's make, model, year, and vehicle identification number (if sharing a policy for separate vehicles)

Adding a driver to your insurance policy may affect your rates, but this impact can be positive or negative depending on the age and driving history of the added driver. In some cases, adding an experienced driver with a clean driving record can even lower your rates. However, adding a teenage driver will almost certainly increase your insurance costs.

It's worth noting that most car insurance policies have a "permissive use" clause, which means that occasional drivers who are not listed on your policy may still be covered in the event of an accident. This includes friends or family members who borrow your car from time to time but do not live with you.

When to get a non-owner car insurance policy

If you don't own a car but drive regularly, a non-owner car insurance policy can provide liability coverage for bodily injury and property damage. This means that it will cover you if you're liable for damages or injuries in an accident. Here are some scenarios where a non-owner car insurance policy might be a good idea:

You're Seeking to Get Your License Reinstated After a Serious Infraction:

If your license has been suspended due to a DUI or other serious traffic offence, you will likely need to file an SR-22 or FR-44 form to get your license reinstated. Non-owner car insurance can help meet state requirements in this case and is typically cheaper than traditional car insurance.

You Frequently Rent Cars:

If you rent cars often, a non-owner insurance policy might be more cost-effective than purchasing liability coverage from the rental company each time. While it won't cover any physical damage to the rental car, you may be able to buy a collision damage waiver from the rental company to add to your liability coverage.

You Frequently Use Car-Sharing Services:

Car-sharing services often provide some level of liability coverage, but it may only meet the minimum state requirements. A non-owner insurance policy can supplement this coverage and provide additional peace of mind.

You're Borrowing a Car from a Friend or Family Member:

While the car owner's insurance policy will typically cover expenses from an accident, you're not the one choosing the level of coverage. With your own non-owner policy, you can be certain you have adequate liability coverage.

You're Temporarily Between Cars:

If you don't currently own a car but plan to buy one soon, a non-owner insurance policy can be a cost-effective way to maintain continuous coverage and long-term customer status with an insurer.

However, there are also situations where a non-owner car insurance policy might not be necessary. For example, if you only borrow a car from someone you live with occasionally, you should be covered by their policy. Similarly, if you rarely drive at all, the expense of a non-owner policy might not be worth it, and you could instead rely on the owner's insurance policy or purchase insurance at the rental counter.

How to save money on auto insurance

To save money on auto insurance, you can:

Shop around for insurance

Prices differ from company to company, so it's worth getting a few quotes. Ask friends and family for recommendations, and do your research on the company. Remember, you'll be relying on them if you ever need to make a claim. You can also consult an independent agent, who represents multiple insurance companies and may be able to find you a better deal.

Compare insurance costs before buying a car

Insurance premiums are based on the car's price, the cost to repair it, its safety record, and the likelihood of theft. Insurers offer discounts for features that reduce the risk of car theft or personal injury, or for cars that are known to be safe. So, when comparing vehicles, also research what each will cost to insure.

Increase your deductible

By choosing a higher deductible on your car insurance, you can lower your premium costs. Just make sure you have enough money set aside to pay the higher deductible if you ever need to make a claim.

Drop collision and comprehensive insurance on older cars

Collision insurance covers damage to your car if you're involved in a crash, while comprehensive insurance covers damage caused by acts of nature, vandalism, theft, and more. As your car gets older and its value decreases, it may not be worth paying for these. As a rule of thumb, if your car is worth less than ten times your insurance premium, having collision and/or comprehensive coverage may not be cost-effective.

Bundle your insurance

You may be able to get a discount if you purchase multiple types of insurance (e.g. homeowners and auto) from the same company.

Maintain a good credit history

In most states, insurers use credit information to price auto insurance policies. People who effectively manage their credit tend to make fewer claims, so establishing a solid credit history can help lower your insurance costs.

Take advantage of low-mileage discounts

Some companies offer discounts to motorists who drive less than the average number of miles per year. So, if you're driving less due to a change in your job location, for example, you may qualify for a lower premium.

Take a defensive driving course

Some insurance companies offer discounts to drivers who take a safe-driving course. In some states, you can get a discount of around 10% on your premium by taking an approved course.

Seek out other discounts

There are many other discounts that your insurer may offer. For example, some companies offer discounts to those who haven't had any accidents or moving violations during a specified period, or who have taken a drivers education course. You may also qualify for a lower rate if there's a young driver on your policy who is a good student or is away at college without a car.

Understanding the permissive use clause

Permissive use is a clause in an insurance policy that allows someone who isn't the policyholder to drive the insured vehicle. This is usually a friend or family member who does not live with the policyholder and only borrows the car occasionally. The driver must have explicit or reasonably assumed permission from the vehicle owner, and the insurance policy will typically cover them in case of an accident.

The scope of coverage and limitations can vary significantly between insurance policies and companies. Some policies may offer lower coverage limits for permissive users than for listed drivers, or exclude certain types of drivers (such as inexperienced drivers) or limit use under specific circumstances.

For example, your policy may only cover a permissive user if they borrow the car 12 or fewer times a year. It's important to review your policy details and consult your insurance provider to understand the specifics of your permissive use clause.

Permissive use is typically designed for out-of-the-ordinary instances when a non-listed driver borrows your vehicle. If someone is driving your car regularly, they should be added to your policy as a listed or named driver. If your insurance company finds out that a non-listed driver was regularly using the vehicle, they could deny coverage in the event of an accident.

It's worth noting that permissive use assumes the person has permission to drive the vehicle. If your car is used without your consent, such as in the case of theft, your insurance policy will not cover any damages caused by the unauthorised driver.

Additionally, there are a few important exceptions to permissive use coverage. One exception is commercial use, where a car used for business purposes may not be covered under a standard auto insurance policy. Another exception relates to unlicensed or inexperienced drivers. If you lend your car to an unlicensed or inexperienced driver and they get into an accident, your insurance company will likely deny coverage.

In summary, the permissive use clause in an insurance policy allows occasional non-listed drivers to operate the insured vehicle with the owner's permission and still be covered by the policy. However, the extent of this coverage can vary, and there are certain exceptions to be aware of. It's important to understand the specifics of your policy and consult your insurance provider if you plan to lend your car to someone else.

Frequently asked questions