The Insured: Whom Does My Policy Cover?

Of course, your auto insurance policy covers you and your primary vehicle, but most policyholders’ situations are not that simple. Policyholders frequently ask about exactly what their policies mean by “the insured”—a phrase carriers use to refer to the person or persons whom the policy covers. Figuring out how coverage applies and to whom can be especially difficult with unique types of drivers, such as high-risk drivers, and with drivers other than the primary policyholder, such as husbands, wives, and teens. Read on for a discussion on how coverage applies to various types of drivers.

High-Risk Drivers

High-risk drivers typically have one or more egregious traffic-law violations and are consequently viewed as elevated claims risks by auto insurers. We’ve explained how car insurance coverage applies to various types of high-risk drivers below.

SR-22 Car Insurance: The Basics

Technically, an SR-22 is not a type of auto insurance; rather, it is a document that demonstrates proof of financial responsibility. The courts can require you to file an SR-22 if you were caught driving uninsured by a law enforcement officer. Your insurance company typically handles the filing of an SR22 form with the DMV. The suspension on your driver’s license should be lifted when the DMV receives the SR-22 form. After the SR-22 is filed, you will have to carry it for a certain amount of time, which varies by state but averages about three years. Once that period ends, the SR-22 expires. SR-22 forms may also be associated with the following incidents:

DWI or DUI or any other serious moving violation
Recurring traffic offenses or receiving too many tickets within a certain amount of time
At-fault collisions while driving uninsured
Revoked driver’s license or suspended license

Remember that if you allow your auto insurance policy to lapse or get canceled, your carrier must notify the DMV immediately, and your license will be suspended once again. Also keep in mind that SR-22s are state-specific; that is, if you move to a different state, your insurer will need to re-file the form with the DMV of your new state.

License Status: Suspended or Revoked

It is illegal to drive with a suspended or revoked driver’s license, so you shouldn’t even be considering operating a motor vehicle, regardless of your auto insurance status. That said, whether you can obtain car insurance coverage on a suspended or revoked license will depend on where you live and the carrier you choose. In some states, carriers will provide insurance coverage to someone with a suspended license, provided the driver can show that he/she is actively working toward getting the license reinstated within a certain amount of time, typically 30-45 days.

Obtaining coverage with a revoked license is much more difficult. Usually, there are only two situations in which a car insurance carrier will offer coverage to someone with a revoked driver’s license. First, the insurer may extend coverage if the driver will have his/her license reinstated in the very near future, or in the next 30 days. Alternatively, some carriers may provide coverage if the driver has received a special restricted license permit to drive to and from work. This coverage will likely have many restrictions, however.

DUIs and DWIs: Single and Multiple Offenses

The insurance aftermath of a DUI is relatively uncertain save for one fact: you will pay more for coverage than you ever have. Once you receive a DUI conviction, it is possible that your carrier might not find out about it right away if you did not cause any accidents while driving impaired. In other words, most carriers only check driving records every three years or so, but they also sometimes check records randomly. When your DUI is discovered, your rates will go up or, even worse, your policy will be canceled or non-renewed. Your insurer will classify you as a high-risk driver, a costly designation that will stick with you for years.

In some states, DUI/DWI offenders must file an SR-22 form with the DMV. If you live in one of these states, your insurer will find out about your DUI conviction immediately, as the insurer is the party that must file the document. If your carrier drops you as a policyholder as a result of your DUI conviction, you can shop around for another carrier that will underwrite policies for riskier drivers, but don’t expect reasonable rates.

In the event that you have multiple DUI offenses, auto insurance coverage may be impossible to obtain until the most recent DUI is cleared from your driving record. You may be able to find a high-risk carrier that will cover you, but the cost will be prohibitive.

Multiple Incidents

Receiving a single moving violation, such as a speeding ticket, is usually not a big deal. Many car insurance providers forgive the first offense, so the financial consequences should not be all that severe. However, once you rack up multiple traffic violations, you can expect the incidents to take their toll on your pocketbook and your auto insurance coverage. Most moving violations stay on your driving record for three to five years, and that is the same period of time for which your auto insurance rates will remain elevated.

In most states, the more offenses you accumulate in a certain amount of time, the more points you will receive against your license. These points not only hike up your car insurance rates, but they also can result in the suspension or revocation of your driver’s license if you get too many. If your insurer examines your driving record and believes you have too many moving violations, the carrier may choose not to renew your policy or cancel your coverage altogether. In that case, you would have to find another insurer who would offer you a policy with multiple incidents on your driving record, and that is as expensive as it is challenging.

Students

Consumers can approach car insurance for students in one of two ways. First, if the student’s parents are willing, the student can remain on their policy while in school. For most students, this is the cheapest option. If parents choose to keep a student on their policy, they must specify which vehicles the student is authorized to drive. The more vehicles for which the student is insured, the higher the premiums will be.

Alternatively, the student can purchase his/her own auto insurance policy, which may be more affordable in some cases. The policy would then cover the student only and his/her vehicle. Most students don’t drive a large number of miles and thus often qualify for significant low mileage discounts.

Teens

Insuring young drivers is notoriously costly, particularly for teenage drivers. The smartest way to insure your teen is to put him/her on your existing auto policy so all of your discounts apply to the teen driver as well. Before you do so, however, find out how your insurer assigns drivers to the various vehicles you have. If you drive one or more fairly expensive vehicles, your rates might go through the roof if you add your teen to your policy.

A more sensible alternative is to buy the teen a safe, inexpensive car and add it to your policy as the only authorized vehicle for your teenager. Remember, if you want your teen covered regardless of which of your vehicles he/she is driving, you will need to add him/her as an authorized driver on all insured vehicles.

Seniors

When policyholders become senior citizens, they typically qualify for new discounts on their coverage. Of course, there is the obvious senior citizen discount that most providers offer, but there is also a low-mileage discount for seniors who don’t drive as much once they retire. Seniors may also not have as many assets to protect as they did during their working years, so they may want to revisit the liability coverage portion of their policies.

Husband/Wife

Most husbands and wives choose to consolidate their car insurance upon getting married in order to save money and qualify for valuable discounts like the multi-car discount and the multiline discount, also known as the multiple-policy discount. If a married couple has a single auto policy, both spouses should be covered in all insured vehicles as long as they are included as authorized drivers. If the couple maintains separate policies, however, coverage should still apply regardless of which spouse is driving, as car insurance follows the vehicle, not the driver. Couples who want to maintain separate auto policies should contact their carriers to ensure that their spouse would be covered in the event of a collision in the other spouse’s vehicle.

Parent/Child

For the most part, the coverage applications for parents and children are identical to those for teenage drivers. However, special circumstances may arise in the case of young drivers who have their own insured vehicle. Usually, on the child’s vehicle, one or both of the parents’ names is on the title. In this case, even if the child driver has his/her own vehicle and is fully insured, other parties can come after the other names on the vehicle’s title in the event of an at-fault accident. In other words, if your child has an accident for which he/she is at fault and the other party decides to sue, your assets are at risk if your name is on the title. The best way to insulate yourself from this risk is either to remove your names from the title to the child’s vehicle or purchase a large umbrella liability policy to safeguard your assets.

Foreign Drivers

If you are a foreign driver visiting the United States, you will need to obtain an International Driving Permit (IDP) and carry it with your existing driver’s license. If you plan to drive a rental car, purchase the insurance offered by the rental company. If you will be driving someone else’s vehicle, the owner’s coverage should still apply, but you should contact the carrier for more information.

On the other hand, if you are a foreign driver who plans to reside in the United States, you can apply for a United States driver’s license in your state. Obtaining a United States driver’s license may take up to several months for some foreign drivers. Once you have your license, you can apply for auto insurance in the U.S. Keep in mind that your rates will be very high at first because you do not have a verifiable driving record upon which the carrier can base your rates. Your rates will begin to drop as you establish a clean driving record in the United States.

Corporate/Business/Fleet Insurance

Commercial auto insurance, also known as fleet insurance or business insurance, is intended for businesses that own multiple vehicles that employees drive to complete errands, deliver goods, or make sales calls. Your business car insurance will primarily cover the vehicles themselves, but you will need to add the name of each employee who operates the vehicle as an authorized driver on your policy. To keep your premiums down, check the driving record of employees before you authorize them to drive company vehicles.

Even if your business does not own company cars, you might still want to purchase non-owned and hired auto insurance liability coverage. This coverage protects against claims that occur when an employee has an accident while driving a rental or personal vehicle on business. While the employee’s car insurance is the main source of coverage in these incidents, the other involved parties may come after your company if the employee’s liability protection is exhausted.

Guest Drivers

Guest drivers often result in the most complex and confusing car insurance scenarios. Although thousands of different situations can arise when driving someone else’s vehicle, the basic rule of thumb is this: auto insurance coverage follows the car, not the driver. In other words, as long as you gave the guest permission to drive your vehicle, your auto policy should cover the damage and injuries that ensue from a collision. However, not all policies will extend coverage to guest drivers, and these policies will have exclusions stipulating that fact. Review your policy or contact your agent before you allow someone else to drive your vehicle.