The Benefits and Risks of Policy Exclusions

Excluded pawn from circleAutomobile insurance is designed to cover specific people under very specific circumstances, and rates are based on the probability that an accident will take place under those circumstances. If a motorist is involved in an accident or files a claim, their rates will often go up because of the possibility that they may file another claim in the near future. However, if a policyholder lives with someone who has a poor driving record, it could also increase their perceived risk and end up costing them more for vehicle coverage. Luckily, drivers are capable of excluding individuals from their policy.

When someone excludes a motorist from their policy, it generally means that their insurer will provide absolutely no insurance for the specified person if they drive the policyholder’s automobile. As a result, any listed person no longer impacts the insured motorist’s rates. However, in many states there are specific rules and regulations that must be followed in order to exclude someone from an existing policy. In certain situations, insurers may be unable to entirely deny someone coverage if they are injured while operating an insured automobile.

In Arizona, insurers are permitted to include exclusions commonly referred to as household, family, or intra-family exclusions. When these exclusions are added to a policy, it generally means that the bodily injury liability coverage that is available to family members and others who are living in the same household will be limited to $15,000 per person and $30,000 per accident, which are the state-required minimums. That’s regardless of the level of insurance that the policyholder has purchased. Arizona policyholders excluding a driver should clarify whether they are doing it through a full exclusion that provides absolutely no coverage or through one of these limited exclusions that only limits coverage to the state-required minimums.

Although a purposefully omitted person is not typically covered by the policy provider in question, in some states a small amount of protection may still be in place. For example, although these practices are permitted in New Hampshire, coverage providers are still required to provide minimum financial responsibility limits to anyone operating a covered motor vehicle with permission, even if they have been excluded from an insurance policy.

These laws vary by state, though, making it important to check the nature of any exclusions you are adding to your own policy.

For people living with high-risk drivers, this can be an efficient way to cut coverage costs, and can be especially effective for parents wanting to save money when their children reach the legal driving age. Teens are automatically considered high-risk drivers because of their lack of experience behind the wheel, poor judgment, and unfortunate accident statistics. Often the only way to get cheap insurance for teenagers is to have them join the policy of a parent or guardian. If they manage to find their own affordable plan, however, parents may want to consider excluding them from their own protection to cut costs.

Source: http://www.onlineautoinsurance.com/teenagers/cheapest-young-drivers/