Driver Advantage: Auto Insurance Benefits Explained

Auto insurance is a necessity for all drivers, offering financial protection in the event of an accident or natural disaster. While the specifics of auto insurance vary, most policies cover the driver's medical bills and vehicle repairs, providing peace of mind and essential financial assistance. Understanding the intricacies of auto insurance is crucial, especially when it comes to knowing what is covered and what isn't. This knowledge empowers drivers to make informed decisions and ensure they have adequate coverage.

Discounts for safe driving

Safe driving can lead to lower insurance premiums. Many insurance companies offer discounts for drivers who have completed a driver's education course. These courses teach safe driving techniques and aim to prevent accidents and traffic violations. For example, GEICO offers discounts for those who take defensive driving courses, and Nationwide offers a 10% discount for signing up for their usage-based insurance program. State Farm also offers a discount of up to 30% for those who use their Drive Safe & Save app.

In addition to taking courses, maintaining a clean driving record is essential for keeping insurance premiums low. This means avoiding tickets for speeding, reckless driving, and other violations. It's also important to note that insurance companies may offer lower rates for drivers who have gone a certain number of years without an accident or violation. For example, Nationwide offers lower rates for drivers with at least five years of safe driving.

Furthermore, some insurance companies offer discounts for safe driving habits tracked through usage-based insurance programs. These programs monitor driving behaviour through a smartphone app or a device installed in the car. By signing up for these programs and demonstrating safe driving habits, drivers may be eligible for additional discounts on their insurance premiums.

Adding a new driver

When to Add a New Driver

You should add any licensed driver who lives in your household and has regular access to your vehicle to your insurance policy. This includes roommates, partners, teenage children with learner's permits or driver's licenses, and adult children who have moved back home. If you're unsure, contact your insurance agent for guidance.

How to Add a New Driver

• Name
• Date of birth
• Driving history
• License information
• Vehicle Identification Number (VIN) if you're sharing a policy for separate vehicles

Cost Implications of Adding a New Driver

Temporary Coverage

If you want to allow someone to drive your vehicle temporarily, many insurance policies have a permissive use clause that allows this for up to a week. If you need to extend this period or your policy doesn't include this clause, speak to your insurance agent about temporarily adding the driver to your policy.

Excluding Drivers

In some cases, you may want to exclude a driver from your policy, especially if they have a poor driving history and you want to avoid paying higher premiums. This is generally an option for drivers who live with you but won't be driving your vehicle. However, be aware that if an excluded driver does operate your vehicle and gets into an accident, your insurance company may not cover the damages.

Discount Opportunities

When adding a new driver, be sure to inquire about any available discounts. For example, some insurance companies offer discounts for good students, defensive driving course completion, or multi-policy bundles.

Permission to drive another car

When it comes to auto insurance, one of the most common questions is whether car insurance follows the car or the driver. The answer isn't straightforward, as it depends on the insurer and the specific policy. However, understanding the concept of "permission to drive another car" is crucial.

The term “permissive use” refers to allowing another licensed driver to borrow your vehicle when they are not listed on your car insurance policy. In most cases, your auto insurance policy will extend coverage to a driver whom you authorise to use your vehicle. This means that if they are involved in an accident, your insurance may cover the damages and injuries up to your policy limits. However, it's important to note that anyone who regularly drives your vehicle should be listed as a driver on your policy.

State Requirements and Insurer Guidelines

State requirements and insurer guidelines play a significant role in determining coverage. Depending on your state and insurer, you may be required to list all drivers residing at your permanent address, regardless of how often they drive your car. Additionally, family members or roommates who live with you and drive your vehicle should be listed as drivers on your policy.

Scenarios for Coverage

• Driving with permission: If you give consent to another driver, either verbally or by handing over the keys, they are typically covered under your policy.
• Extended family visits: When extended family members are staying with you and borrow your car, they are usually covered.
• Sharing driving responsibilities: During a long drive or road trip, sharing driving duties with friends or family is generally covered.
• Vehicle repairs: When friends or family members borrow your car while theirs is being repaired, your insurance may cover them.

When Coverage May Not Apply

On the other hand, there are situations where your insurance may not extend coverage:

• Non-permissive use: If someone borrows your car without your permission, their insurance may be responsible for any damages or injuries.
• Excluded drivers: If a driver is specifically listed as excluded on your policy, they are typically not covered.
• Commercial activities: Using your vehicle for commercial purposes, such as delivering pizzas or ride-sharing, usually requires a separate policy or supplement.
• Rental or shared vehicles: When renting or borrowing a vehicle from a car-sharing service, your full coverage may not apply.

Tips for Sharing Vehicles

To ensure proper coverage when sharing vehicles, consider adding the other driver to your policy and vice versa. Additionally, always ensure they have a valid driver's license and seek supplemental insurance if the car will be used for commercial purposes or rented out.

Excluded drivers

An excluded driver is a person in your household who has been explicitly excluded from coverage under your car insurance policy. Their name will show as "excluded" on your policy, and they won't be insured to drive any vehicles on your policy. Generally, when you purchase car insurance, the insurer will ask for the names of all the licensed drivers in your household. That's because car insurance typically covers losses from an accident no matter who in your household is driving—as long as you've told the insurance company about them. When you explicitly exclude someone from your auto insurance policy, the insurer likely won't pay for losses that occur if the excluded driver is behind the wheel.

There are times when you might not want a licensed family member covered on your policy due to the impact their status could have on your premium. For example, if a driver has multiple accidents or violations on their motor vehicle report that negatively impact the cost of your insurance, excluding them from your policy could lower your car insurance rate. However, some states prohibit excluding anyone in your household who is of driving age.

A household member shouldn't be excluded if they plan to drive your car, even occasionally, because any accident an excluded driver is involved in won't be covered by your insurer. If you give someone outside your household permission to drive and borrow your car (also referred to as "permissive use") and they aren't rated on your policy, any accident they're involved in may be covered by your insurer, depending on your state and insurer.

Rules about excluded drivers vary by state and insurance company. Some states don't allow excluded drivers. Some insurers may require excluded drivers to purchase a separate auto insurance policy before you can exclude them from yours. Other insurers may not allow excluded drivers at all.

To exclude a driver from your insurance policy, contact your auto insurance company. You may have to fill out and sign a driver exclusion form. However, be aware that the rules for excluding drivers vary by insurer, and not all states allow for excluded drivers.

Commercial use

Commercial auto insurance is a necessity for any business that uses vehicles, whether they are company-owned or employee-owned, for commercial purposes. This type of insurance provides protection in the event of accidents, natural disasters, theft, or vandalism.

Commercial auto insurance policies typically cover a range of vehicles, including cars, trucks, vans, and trailers. The policy can be tailored to the specific needs of the business, with different levels of coverage available depending on the size and nature of the business's operations.

It is important to note that commercial auto insurance does not usually cover incidents that occur during the use of a vehicle for non-commercial purposes, such as delivering pizzas or driving for a ride-sharing company. In these cases, a separate insurance policy or supplement is required to ensure adequate coverage.

When taking out commercial auto insurance, businesses should carefully review the terms and conditions to ensure that their specific needs are met. The policy should also comply with state laws and regulations regarding the minimum level of insurance required for commercial vehicles.

Additionally, businesses can consider bundling their commercial auto insurance with other types of insurance, such as commercial property insurance or workers' compensation insurance, to obtain potential discounts and simplify their insurance management. Shopping around for rates and comparing different insurance providers can also help businesses find the most cost-effective and comprehensive commercial auto insurance policy.

Frequently asked questions