Auto Insurance: Spouse Inclusion And Its Benefits

Whether or not to add your spouse to your auto insurance policy is a significant financial decision that can impact your premiums and coverage. While it is not always mandatory to list your spouse on your car insurance, it is generally recommended and can offer several benefits. Married couples are often considered more stable and responsible, resulting in lower insurance rates. Additionally, having a joint policy simplifies administration and can provide bundling discounts. However, if your spouse has a poor driving record or low credit score, it may be advisable to exclude them from your policy to avoid higher premiums. Ultimately, the decision depends on individual circumstances, and it is essential to carefully review insurance company requirements and state laws to make an informed choice.

Discounts and savings

While adding your spouse to your car insurance policy may increase your insurance costs, it can also result in significant savings. Married couples with clean driving records could save between 4% and 10% by combining their auto insurance plans into one. This is because insurers generally charge lower premiums for married couples than for individual drivers. You may also get additional car insurance discounts for insuring more than one car and driver on the same policy.

If you and your spouse have separate vehicles, you can still benefit from getting listed on each other's policies. Consolidating your current policies under the same insurer will likely qualify you for a multi-car discount. You will probably pay less for your combined policies than you would individually with separate policies. Additionally, when your insurer finds out that you are married, there is a good chance your car insurance rates will decrease. Married people tend to file fewer claims and so can generally secure lower premiums.

Bundling two policies under one account is also more convenient. You can manage your car insurance coverage in the same place and pay your bill together, rather than juggling multiple companies and providers, each of which may have a different claims process and billing cycle.

Furthermore, if you have a clean driving record and your spouse has a poor one, listing them as an excluded driver on your insurance policy can help you avoid a premium bump. However, if they ever drive your car and are in an accident, your insurance company will likely refuse to cover the claim.

State laws and insurance requirements

Some states allow you to exclude your spouse from coverage if they never drive your vehicle, but this can be dangerous. For example, if your spouse runs to the store in your car because theirs is in the shop and gets into an accident, they may not be covered.

If your spouse has a poor driving record or low credit score and never plans to drive the family car, excluding them from the policy may reduce your premiums. However, named-driver exclusions are not allowed in some states or by all insurance companies.

In the state of New York, the law requires supplemental spousal liability, so it is important to ensure that both spouses are fully covered.

Driving records and credit scores

Driving Records

Auto insurance companies typically consider all licensed drivers in a household when calculating rates. A spouse with a poor driving record can boost insurance rates or make it difficult to get coverage, depending on the severity of their record. If the insurer finds that a driver on the policy has multiple traffic violations, it will increase the rates. If any of the violations are major offences, such as reckless driving or DUI, then the rates will go even higher.

Credit Scores

Many car insurance companies also use credit scores to calculate insurance rates. This is because data shows that there is a correlation between credit scores and the likelihood of filing a car insurance claim. Drivers with poor credit scores tend to have higher insurance rates compared to those with good credit scores. Insurance companies argue that the better the credit score, the lower the chances of filing a claim, which leads to lower insurance rates.

However, it is important to note that the use of credit scores in calculating insurance rates is controversial and banned in some states such as California, Hawaii, Massachusetts, and Michigan. Additionally, improving credit scores can take time but is worth doing to ensure that individuals are getting the lowest possible rate for their policy.

Exclusion of a spouse from a policy

While it is common for spouses to be listed together on an auto insurance policy, there are some circumstances in which excluding a spouse from a policy may be beneficial. The main reason for excluding a spouse is to avoid an increase in insurance premiums due to their poor driving record or low credit score. If one spouse has multiple traffic violations, accidents, or a DUI conviction, they could be considered a high-risk driver, leading to higher insurance rates. By excluding them from the policy, the other spouse may be able to obtain a lower premium.

However, excluding a spouse from an auto insurance policy has important implications. Firstly, it is essential to understand that an excluded spouse will not be covered by the insurance in the event of an accident. This means that if the excluded spouse ever drives the car and is involved in an accident, the insurance company will likely refuse to cover the claim. Therefore, exclusion should only be considered if the spouse truly never plans to drive the vehicle.

Additionally, it is important to note that not all states or insurance companies allow named-driver exclusions. Some states prohibit excluding household members from coverage, while others may require the excluded driver to have their own insurance policy first. Therefore, it is crucial to check the laws and regulations in your specific state and with your insurance provider before excluding a spouse from your policy.

Furthermore, there are situations in which excluding a spouse from an auto insurance policy may not be advisable. For example, if you live in a community property state, excluding your spouse from your auto insurance policy could have negative consequences. In these states, insurance companies may still consider the excluded spouse's credit history and driving record when determining your rates. Therefore, excluding your spouse may not result in any savings on your premiums.

In conclusion, while excluding a spouse from an auto insurance policy can be done in certain circumstances, it is essential to carefully consider the implications and ensure that it aligns with your specific situation and state regulations.

Joint vs separate policies

Married couples have the option to maintain separate car insurance policies or share a joint policy. However, there are several factors to consider when deciding between joint and separate policies.

Joint Policies

Joint car insurance policies, also known as combined policies, allow both spouses to be covered under the same plan, with a single premium payment. This arrangement often leads to cost savings as insurance companies offer discounts for multi-car policies. Additionally, it simplifies the administrative process as there is only one policy to manage. Joint policies also offer flexibility, as both spouses can drive any of the insured vehicles. Furthermore, insurance companies often provide bundling discounts when different types of insurance, such as home and auto, are combined.

However, it is important to note that if one spouse has a poor driving record or low credit score, adding them to the policy may increase premiums. In such cases, it may be more advantageous to exclude them from the policy, provided they do not drive the family car.

Separate Policies

While it is less common, married couples can choose to maintain separate car insurance policies. This option may be preferable if one spouse has a poor driving record or low credit score, as it prevents their history from affecting the other spouse's premiums. Separate policies can also be beneficial if the spouses have vehicles with different insurance requirements, such as classic cars or high-performance vehicles.

However, separate policies may result in higher overall premiums, as the couple may miss out on multi-car discounts. Additionally, in the event of an accident, managing claims and settlements can be more complex with separate policies.

The decision to choose joint or separate car insurance policies depends on various factors, including the driving records and credit scores of both spouses, as well as the number and type of vehicles owned. It is important for couples to carefully consider their options and choose the arrangement that best suits their needs and provides adequate coverage.

Frequently asked questions