What happens if an excluded driver on my car policy has an auto accident and my insurance has denied the claim?

If you give your car to someone who is specifically listed as an excluded driver on your auto policy, and she or he has an accident, your insurer does not have to pay the costs. What happens when an excluded driver has an accident and your insurance claim is denied is you are liable for the cost of repairs.

Get Legal Help Today

secured lock Secured with SHA-256 Encryption

Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

Full Bio →

Written by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: May 9, 2022

Advertiser Disclosure

It’s all about you. We want to help you make the right legal decisions.

We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes and legal advice should be easy. This doesn’t influence our content. Our opinions are our own.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about legal topics and insurance. Our goal is to be an objective, third-party resource for everything legal and insurance related. We update our site regularly, and all content is reviewed by experts.

If you give your car to someone who is specifically listed as an excluded driver on an insurance policy, and she or he is involved in a car accident, your insurer does not have to pay costs related to that accident. Since your insurer denied the claim, you are personally liable and responsible for repairs to the other car and any personal injury claims of the occupants of the other vehicle. That’s what “excluded” means, after all: that person is excluded from being covered on your insurance.

What is an excluded driver on a car insurance policy?

If one of the drivers listed on your policy shows risky driving behaviour, you’ll likely see your premiums increase. In this case, you may be wondering if you should exclude them from your policy. So, what does an excluded driver mean?

The excluded driver definition says that ‘an excluded driver is a person in your household who has been explicitly excluded from coverage under your car insurance policy’. Their name will appear as “excluded” on your auto policy, and they won’t be insured to drive any vehicles on your policy.

An excluded driver in insurance means that this driver on your policy can raise the cost of your premiums because of their poor driving record. So, if you list excluded drivers who insurance companies see as high-risk, you will certainly see an increase in the premiums you pay, regardless of your own record.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption

Why would I exclude a driver from my policy?

All licensed drivers in a household are usually insured on the same policy, which means that all members probably need to be listed. Every member of your household who’s driving your car creates a risk for the auto insurer. This is why insurance companies want to know who is licensed in the household.

The only members of your household who might not need to be listed on your policy are licensed drivers who don’t drive your car, drivers who have their own insurance policy and a household member who doesn’t have a driving license.

Not all states allow policyholders to exclude household members from their insurance. In most states, if a member of your household will no longer be driving your vehicle, you can exclude them from your policy.

Why would a household member’s driving record affect my car insurance premiums?

If you have a household member who needs to be listed on your policy, but you don’t want, you may have the option to exclude them. Usually, the main reason for excluding a driver from your policy is to save money or keep your policy with the same insurance company.

Sometimes, you might not want a family member covered on your policy because their status might impact your insurance premiums. For example, if a household member has a recent history of tickets or accidents, you have an option to include them at a higher premium or exclude them to keep your rates low.

You also may want to exclude them because they do not meet the insurer’s requirements. For example, a driver with multiple incidents on their driving record may not be eligible for coverage. In order to keep your coverage, you may have to exclude this driver.

What happens if an excluded driver causes a collision?

Based on the severity of your injuries, you might want to take legal action against the excluded driver and/or the vehicle owner. It’s best to have a qualified attorney by your side to review your situation and give you advice on whether you should file an insurance claim or an excluded driver lawsuit.

How does an excluded driver’s insurance work?

Remember, an insurance policy is a contract. As with any contract, the obligations of each party (e.g. your insurer) are those stated in the contract—no more and no less. If the contract by its terms specifically disclaims or denies certain obligations, then there is no need to do those things. So if the policy states that the insurer does not need to pay for accidents involving a certain person because they are excluded, the insurer does not need to pay.

This news will not make you happy. Not only is the named excluded driver not covered, but you also are not covered since the policy is in your name. You are liable to the extent the excluded driver was liable since a car’s owner is responsible for the actions (and accidents) of those whom he/she allows driving his/her car.

Therefore, you may have to pay out of your own pocket for the property damage to the other car and any bodily injuries suffered by the occupants. Assuming you do not voluntarily pay these amounts (or settle the case for some mutually agreeable amount), you can be taken to court and sued for the other party’s losses, injuries, and damage.

What happens when you exclude a driver?

When you buy car insurance, you have the option to add a named driver exclusion as an endorsement attached to the policy. It will specifically state that a named household member who uses your insured vehicle will not have insurance coverage while driving the car.

Such an exclusion applies generally in situations where the individual has less than a stellar driving record, is irresponsible, drives on a suspended license, has a plethora of speeding tickets, has a DUI or drug conviction, or has health conditions that impair driving. Underwriters view these drivers as adding additional risks, and hence capable of creating serious losses.

Excluding a driver can save you money by reducing your premium, but as the old saying goes, “there ain’t no free lunch”—you “pay” for your savings by accepting the risk that if the excluded driver has an accident in your vehicle, you will personally have to pay for it.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption

The Bottom Line

Now that you’ve learned the excluded driver’s meaning, you should know that the named driver exclusion is not the same as “permissive use.”

If offered by your insurer, permissive use provides coverage for those times you temporarily lend your car to someone who is not listed on your auto policy and he or she causes an accident. Permissive use coverage does not apply, however, if the driver has been explicitly excluded from your auto policy.

To repeat, if the driver who is specifically listed by name as excluded on your existing auto policy takes the car out for a spin, with or without your permission, there is no coverage whatsoever should an accident happen. Moreover, you as the policyholder are not covered and can be held personally responsible for any damages caused to others in the accident. This can be catastrophic financially, should the injury result in death or long-term disability.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption