Very few circumstances can cause greater damage to your auto insurance rates more than an unlisted driver.
It is a fact that car insurance policies cover the car, rather than actual driver. Simply put, if a person has your consent to operate your vehicle, in the event that driver is involved in an accident, you can expect your insurance company to pay for the loss. Clearly, your entitlement to coverage for damages is restricted only to the type of coverage you selected at the time you purchased your policy. Take collision insurance coverage, for example. In the event that a driver is involved in an at fault car accident, your auto insurance should pay for your vehicle damages, not including the amount of your deductible.
Let's clarify this a bit further. Consider that you loan your vehicle to a friend who does not live with you. Further, your friend is not a frequent driver of your car. You simply loaned it to that friend on a one time basis. If that friend is involved in an at fault accident, your insurance company, rather than the driver's policy, would be obligated to pay the damages
So how will this scenario impact your policy, and, more precisely, your auto insurance rate?
Although collision insurance coverage does provide benefits for at fault accidents, claiming for an at fault crash is almost certain to increase your auto insurance rate. Not to mention in this instance, the issue of the unlisted driver.
And what about the fact that you permitted a friend to drive? Can you expect to be charged an increased insurance rate? More often than not, yes. Insurance companies tend not to respond well to "unlisted" drivers. In fact, by having an unlisted driver behind the wheel, expect your insurance company to launch a claims investigation into the circumstances. More specifically, they will be looking into the prospect that the driver might actually live in your household. And, more than likely, they will also examine the driving history of the unlisted driver as well as whether or not that driver has insurance of his own.
How does all of this influence your auto insurance rate? Several ways - and none of them are very good.
If their investigation substantiates that the unlisted driver has an inferior driving record, you can be fairly sure that this will work to your disadvantage when your auto insurance rate is calculated at the end of your insurance policy period. By association, if you allow an irresponsible driver to operate your insured vehicle, your risk scoring increases. As your risk increases, so do your rates. And, if your insurance company cannot verify that the unlisted driver has his own policy, they will certainly want to know why. If there is no policy because the driver actually lives with you, you're going to have problems.
Applying for insurance without disclosing crucial risk information - including identification of all drivers in that residence - is what auto insurance policies call "misrepresentation". If a claims or underwriting investigation subsequently determines that you failed to disclose all drivers in your household, the likelihood is that your auto insurance policy will be cancelled for misrepresentation. Should that occur, there will be no coverage for that unlisted driver or for the accident.
Most importantly, be sensible when it comes to loaning your vehicle to another driver. Even though it is acknowledged that on occasion you could loan your car to another driver, make certain that the driver is a responsible driver, and that he does not use your vehicle on a consistent basis. In those circumstances, you will probably experience a lag time in settling your claim, but expect the claim to be honored. On the other hand, in the event the insurance company can confirm that the unlisted driver is someone who you simply failed to disclose, you can anticipate serious repercussions. Even if you can rationally explain why your friend was driving the car, at renewal time you can no doubt expect an increase in your auto insurance rate. Either way, the consequences are expensive.
