I Never Meet The People I Let Drive My Car

This may come as a shock to some of you, but every day tens-of-thousands of auto insurance policies are sold where drivers of the insured vehicle were not disclosed. I know, you think I’m crazy… this doesn’t happen in my agency, in my office, or with my team. But it does.

The source of the “un-disclosure” is debatable. Is it the producing agent or insured? What is not debatable is the impact. Undisclosed users of insured vehicles change results … for everyone.

• They increase loss ratios, which in return increase rates
• They decrease profits
• They keep agents from getting profit sharing
• Keep agents from getting increased commissions
• They may even result in E&O exposure
• Or, impact your insurance carrier or MGA appointments

Undisclosed drivers also violate state coverage requirements in places like California, where every listed driver must carry the minimum required limits. Review how that works in our California Auto Insurance Guide if you’re unsure what’s required.

It's simple, if they drive the car they need to be on the policy.

Most, if not all, insurance carriers provide a simple rule as it pertains to drivers. If a person uses the car they need to be on the policy, and if they are in the household, they need to be on the policy or excluded from coverage. It’s all very simple. This isn’t done to be difficult. And these rules apply even in states with relatively flexible insurance structures—like Arizona, where liability minimums still depend on accurate driver data. The reason for this is also very simple, it’s so the insurance company can appropriately underwrite the risk being insured. If the risk insured is not represented correctly, the premiums cannot be determined correctly, and … well … you get it, all the issues from above begin to happen. So remember, you ALWAYS need to:

• Rate or Exclude Household Members
• Drivers of the insured vehicles need to be added to a policy

This rule holds true across the board. Even in lower-traffic regions like Utah, the presence of an unlisted household driver can void parts of your policy.

Because the data tells us this is true.

It may seem innocent, “But they only drive the car every now-and-them.” This isn’t the case, they likely drive the car with more regularity than being disclosed. We are not smarter than the data. There is vast data that tells us that each additional driver increases the likelihood of an accident, and their needs to be a premium charged to balance the relationship of consumer-to-insurance company when transferring this risk. Consumers might assume occasional drivers don’t count—but that assumption often leads to denied claims. If you’re in California, you’ll want to know exactly what’s required in your policy. Our California Auto Insurance Guide explains it in plain terms. When we take it upon ourselves to avoid these rules we change the balance, and once again, we kick in the issues from above. This is a data-drive business, insurance companies are the best at using data to predict or forecast risk, so it’s imperative that the rules and rates are applied as prescribed or we all get harmed:

• Insurance Agents: in lower commissions or no bonus
• Customers: as their rates go up to subsidize those who aren’t being honest
• Insurance company: in lower profits

We understand, this is a conversion and service business. We are looking to increase our sales and win the confidence of our customers. But good customers will understand the rules, and are willing to work within the guidelines. And if you’re an agent looking to protect yourself from E&O exposure due to underwriting gaps, don’t forget to review your own protection. Our professional liability quote form makes it easy to check your risk level. And for those who don’t, there is always an insurance carrier or MGA willing to writes that risk … Sun Cost General unfortunately asks that we all rate or exclude drivers or household members.