What is an Excluded Driver?

In the world of auto insurance, a "excluded driver" is exactly what it sounds like: a driver who has been "excluded" from driving an insured vehicle for a variety of reasons. When the primary auto insurance owner contacts the insurance company and informs them that the excluded driver should not be covered under the auto insurance policy, the driver is deemed excluded. The vehicle owner may wish to avoid any accidents or incidents caused by the excluded driver's use of the vehicle, or they may simply wish to avoid the higher premiums associated with excluded drivers.

In some cases, the auto insurer may require that a driver - typically a family member - be excluded from the auto insurance policy unless the policy holder agrees to pay a significantly higher auto insurance premium. "An excluded driver is someone who is explicitly excluded from coverage on a given auto insurance policy," explained Olivia Oksenhorn, an Insurify insurance specialist. "An excluded driver may live in the same house as the other policy member(s), but they must have their own vehicle and/or separate insurance coverage."

According to Oksenhorn, an insurance company will not pay claims for any damages caused by an excluded driver. "However, because excluded drivers are not covered by a policy, their driving history and personal information will have no impact on that policy's overall premium," she explained. "Rated drivers, on the other hand, are policy members who are covered to drive the vehicles covered by that policy." Their personal information and driving record have an impact on the policy's premium."

Vehicle owners should understand that their insurance policy covers the insured vehicle first and foremost. For example, if an excluded driver causes an accident in your vehicle, the auto insurance policy will cover any damage incurred, regardless of who is driving. This could result in higher auto insurance premiums in the future and should encourage all vehicle owners to keep unsafe drivers out of their vehicles.

Points of Focus

If you own an insured vehicle and want to designate a driver as "excluded," Julia Matseikovich, vice president of product at Excel Impact, which owns and operates AgileRates in Miami, Fla., has provided the following key points.

  • When you exclude a driver from your auto insurance policy, that individual is no longer covered to drive your vehicle. "If they drive your car and cause an accident, you'll be liable for any damages," Matseikovich said. "Rated drivers are any drivers who regularly drive your car." These drivers have an impact on your car insurance rates but are covered by your policy."
  • Rated drivers are simply household members who have access to your vehicle and influence your car insurance rates. "You can exclude a driver from your policy if you don't want them to affect your car insurance rates," Matseikovich explained. "However, if the person prohibited drives your car and causes an accident, you are liable for any damages."
  • Excluding a driver from your car insurance policy means that driver's rates will not be affected. "However, if an excluded driver drives your vehicle and causes an accident, your insurance company will not pay any damages," Matseikovich added. "Rated drivers have an impact on your rates, but they are covered in the event of an accident."

How “Excluding” a Driver from an Auto Policy Works

The procedure for declaring a driver to be excluded is fairly simple. "An insured will be asked to list family members and anyone else who may drive the vehicle when applying for a policy," said Thomas Simeone, a personal injury attorney at Simeone & Miller, LLP in Washington, D.C.

When providing a policy quote, the insurance company will indicate who they want to exclude from coverage. "If you accept that quote and policy," Simeone explained, "the excluded driver's name is listed on the policy as excluded from coverage and not covered if there is a claim."

When applying for insurance, the policyholder should tell the insurance company who will not be covered. Be prepared to provide the driver's name, as there's no guarantee the agent or broker will bring up the issue unless the name of the excluded driver was made available to the insurance company ahead of time. "After that, the insurance company will issue a policy excluding that person from coverage," Simeone explained.

If an insured vehicle owner hesitates to declare a relative or close friend an excluded driver, know that the process is legal. "It is legal to exclude drivers," Simeone said. "It's something insurance companies do all the time to reduce the risk of a claim by not insuring high-risk drivers."

"Excluded drivers are typically those who are under the age of 25, have a poor driving record, or have some other indication that they pose a higher risk of an accident or claim than a non-excluded driver," he added.

Action Steps When Seeing an Excluded Driver Provision

Vehicle owners who want to handle an excluded driver issue correctly can benefit from the following expert advice from insurance professionals.

Consider all of your options. Auto owners who want to remove a problematic driver from their insurance policy have a few options. "One option is to exclude the driver from your policy," André Disselkamp, CEO of Finsurancy, a fintech-based insurance services firm, said. "This means that if they have an accident, they will not be covered by your policy."

You can also request that the driver sign a liability waiver. "This will absolve you of any financial responsibility if they have an accident," Disselkamp explained. "Because major insurance carriers require all household drivers to be listed on a car insurance policy, having a problem driver excluded is the best way to remove them."

Check the status of excluded drivers in your state. Because auto insurance is handled differently in each state, excluded driver policies may be handled differently as well. "Not all states allow exclusive driver provisions on auto insurance policies," according to Geoff Cudd, consumer advocate and owner of FindTheBestCarPrice.com. "Many states expressly prohibit driver exclusions, stating that creating an uninsured driver is contrary to public policy."

If your state allows it, excluding the driver and having them obtain their own insurance is the best way to reduce your insurance rates if you currently have a problem driver on your policy. "If you live in a state where this is not permitted, you should be able to remove them from your policy," Cudd said.

Consider the costs as well. In most cases, the excluded driver option is the best way for car owners to avoid costs associated with bad drivers.

"In order to properly insure each and every member who previously had a bad/no driving record, auto owners will have to pay way too much for insuring family members who don't even drive a vehicle," said Johannes Larsson, founder and CEO of Financer.com. "In those cases, excluded drivers can help vehicle owners save hundreds or even thousands of dollars per year on insurance by covering only a household's legitimate drivers."