5 Scenarios That Can Mess Up Your Auto Insurance

5 Scenarios That Can Mess Up Your Auto Insurance

| February 10, 2020
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Car owners can forget that their auto insurance policies are contracts. Besides paying your premium on time, in order to keep your car insurance rates down, you should follow your car insurance company’s rules.

But how can you abide by the rules when you don’t even know what they are? Here are 5 common scenarios that our clients often ask about their auto insurance:

  1. You haven’t added a newly licensed teen to your car insurance policy. No one wants to raise their hand and offer to pay more for car insurance. But insurers are permitted to consider all household residents when they price a policy, including a licensed teen. Withholding information about your teen driver from your car insurance company is a big no-no.
  2. You sold your car to your child, who doesn’t live in your house, but still carry the insurance on it. In general, you can’t carry insurance on a car in which you don’t have an “insurable interest.” Typically those with an insurable interest are the car’s owners, lien holders and co-signers – meaning those who would be affected financially if something happens to the car. There are some exceptions to this rule, but in general, since you are no longer the car’s owner, it’s time for the new owner -- your child -- to buy car insurance for the vehicle.
  3. You lend your car to a friend for a few months and don’t notify the insurance company. Your car insurance policy typically will cover a friend who drives your car occasionally, but it’s a different story when you loan your car out for a long period. The car is now housed someplace other than your residence, and someone else is acting as the primary driver of the car -- both circumstances your car insurance company wants to know about.
  4. You’re driving for Uber or Lyft. Most personal auto insurance policies exclude coverage for ridesharing activities. However, since ridesharing has become such a big business, many auto insurance providers now offer endorsements that rideshare drivers can purchase to add onto their normal policy that will cover them at least during Period 1 (driver is available for hire, but yet to accept a bid). If you don't have this special coverage in place and are in an accident, don't look for your insurer to cover any claims for an accident that takes place during your rideshare adventures.
  5. You let an "excluded driver" drive your car. Big mistake. When you put a named-driver exclusion on your policy it meant that the person listed is not covered under any circumstances and shouldn’t be driving your car. So if that person gets behind the wheel of your car, even in an emergency, and causes an accident, you and the driver will be the ones to pay for any resulting injuries or property damage. Hide your keys from any excluded driver in order to lower your risk of financial disaster.

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