Car Insurance Policies for Multiple Drivers
Sharing a car among family members means that you will have several drivers on your car insurance policy. They say sharing is caring, but they also say no good deed goes unpunished. Chances are that your shared rate will be based on the driving record and risk profile of the worst driver in the group. It’s like basketball–you’re only as strong as your weakest link. Finding ways to strengthen that weak link is the key to bringing down your car insurance premiums.
Why You Must List Every Driver
It’s tempting to leave that premium-inflating driver off your car insurance policy, but it’s a very bad idea. Usually, when someone attempts to do this, it’s because they don’t have a lot of money to spend on car insurance. Well, imagine how tight money will be when your car is undriveable after an accident and the insurance doesn’t cover it because you did not list the driver who was involved in the accident. How are you going to make money when you can’t drive to work?
If you have a roommate who is not a blood relative, they don’t technically count as a ‘household member’ under standard policy definitions. You don’t have to add them unless they use your car more than ‘occasionally’. But that’s a pretty vague term, and I think you’d do better to add your roommate as a driver than to fight over semantics with a claims adjuster (who has more leverage) after an accident. As a rule, it may just be better to list every licensed driver living with you.
When It’s Better to Insure Separately
You could ask your premium-inflating driver to get his own non-owner’s car insurance policy covering his use of your car. He could buy a policy for just a few hundred dollars a year in most cases. It will cover him for liability and property damage, plus other state-mandated insurance. But it will not pay for any physical damage to your car. So, it’s only better to insure separately when you don’t need collision or comprehensive coverage for the car.
Another option is to have that expensive driver take a driving safety course. This can bring down the premium for up to three years following successful completion of the class.
There are cases where you can only exclude a ‘household member’ as a driver if you can show financial hardship or proof that the driver has state-mandated coverage elsewhere. But that still leaves you open to the risk of an unpaid collision claim.
Car Sharing Among Non-Relatives
It’s a green and trendy option to have a car you share with a group of people who don’t drive much and only need a car once in awhile. But some companies will not write car insurance for a group of unrelated people. That’s because they want everyone to have an insurable interest in the car. So, for example, if you all own equal shares in the car and are each listed on the car’s title, the insurance company won’t have any problem writing a policy for the lot of you.
What if a Shared Car is in an Accident?
Here’s where it can get sticky. If you are in an at-fault accident, your car-sharing friends may not take kindly to paying a higher premium because of your mistake. If you enter into a car sharing arrangement, you should have a written agreement in advance that spells out what happens if premiums go up due to the fault of a member of the group. Does everyone shrug their shoulders and start paying more, or do you force the culpable driver to absorb the higher premium? Trust me, it’s something you’ll want to work out before you turn that noble car sharing experiment into an ugly nightmare for everyone involved.
Whichever way you do it, it’s best to list every driver on the policy that covers the car. It’s simply the most effective way of preventing an non-covered loss.