What Happens if an Excluded Driver Gets in an Accident?

What Happens if an Excluded Driver Gets in an Accident?

Excluded drivers is a concept with enormous implications for auto insurance policies and coverage. Millions of drivers worldwide are considered excluded, meaning that they’ve been deliberately omitted from inclusion on an active insurance policy. If you’ve been excluded, it means you’re not covered by the auto insurer.

In short, if you’ve been excluded from a policy and decide to drive anyway, the insurer won’t take any financial responsibility if you get involved in an accident. And that can have a massive impact on what happens legally and financially.

In this guide, we’ll cover what it means to be excluded, why drivers might be excluded, and the legal implications of that.

Key Takeaways

• Excluded drivers are drivers that an auto insurer will no longer extend coverage as a named driver. This means that if they operate the policyholder’s motor vehicle, they’re driving uninsured.

• The reasons for excluding drivers vary, but the main ones include saving money on insurance premiums, avoiding a potential coverage denial in the future, and preventing teenage drivers from obtaining driving privileges.

• Excluded drivers are entitled to purchase their own policies under their name to obtain insurance coverage.

• Removing a driver means the driver no longer lives in the same household, meaning the insurer will no longer consider them a factor.

• There’s generally no legal recourse in Illinois for an excluded driver to challenge their exclusion, as the practice is legally permissible in the Land of Lincoln.

• Speak to an Austin car Accident lawyer if you were hit by an excluded driver, as this is essentially the same thing as being hit by an uninsured driver, meaning recovering damages is far more complex.

What is an Excluded Driver on a Car Insurance Policy?

Excluded drivers are drivers who aren’t covered by a car insurance policy, even if they live in the same house as the owner of the car. According to Bankrate, there are nearly 215 million drivers carrying car insurance in the U.S., but as many as 6% of people on the road aren’t insured at all.

For example, your brother might have been excluded from your father’s insurance policy because he had too many speeding tickets. Another family member might be excluded because they have problems with alcohol and are prone to drunk driving.

An excluded driver has no coverage, so if they choose to drive, they’re driving uninsured. This is the same principle as if someone decided not to take out insurance because they didn’t want to pay the premiums.

Excluding a driver is a conscious action. According to Direct Auto, your policy should list everyone 14 or older in your household, even if they don’t have a license. Regular vehicle operators, including children living away from home, should also be included.

What are the Reasons for Excluding Drivers?

Policyholders might exclude drivers to save money on their insurance premiums. High-risk drivers are a liability on any policy because insurers will raise your premiums to accommodate the extra risk.

Exclusions are particularly attractive in 2024 because auto insurance premiums have reached record highs. According to CNBC, full coverage auto insurance averages $2,543 per year nationwide, a 26% year-on-year increase.

Expect your premiums to be much higher if you have a high-risk driver on your policy. Let’s use Illinois as an example of the impact this could have. As an at-fault state, the at-fault party’s insurer must pay all damages sustained due to their driver’s negligence.

According to CarInsurance.com, your premiums could rise by up to 53% if a driver on your policy is found to be at fault for an accident in Illinois. By excluding risky drivers from your policy, you can cut your premiums.

Exclusions aren’t just designed to cut premiums. High-risk drivers risk your overall coverage. No auto insurer is required to provide coverage, so if you have a history of claims, they might cancel your policy. Excluding drivers with a history of speeding tickets and other traffic violations actually protects your coverage.

Finally, some parents simply don’t want their kids to drive at all. According to The Zebra, 60.9% of parents are scared for their teen daughters to drive, with 54% afraid of their teen sons driving. By excluding them from their policies, it essentially keeps them off the road because it’s unlikely they can pay for their policies out of their own pockets due to elevated premiums.

How Do I Exclude a Driver from My Car Insurance Policy?

Excluding a driver from your policy depends on the insurer’s own processes. Generally, you can initiate the process of excluding a driver by getting in touch with their customer service division and requesting an exclusion. You may be required to fill out some forms, but the process is generally fast and simple.

Illinois allows you to exclude drivers from your policy, but this doesn’t apply to every state. Some states won’t allow you to exclude drivers from your policy at all.

Driver exclusions remain in place until you say otherwise. The policyholder is entitled to remove the exclusion later, usually by contacting their insurer.

Can an Auto Insurance Company Force You to Exclude a Driver?

Auto insurance companies can insist on excluding a driver in your household from your policy as a condition of providing coverage. These scenarios are relatively rare, but if the insurer believes they can’t safely insure you, they may make such a demand. 

Situations where insurers can demand that a driver be excluded include if a driver has:

• DUIs

• A suspended license

• Previous driving felonies

There’s not much you can do if you find yourself in this situation. Leaving the driver on your policy means the auto insurer can deny coverage and cancel your policy entirely. This leaves everyone in your household uninsured and will force you to look elsewhere.

Can an Excluded Driver Buy Their Own Policy?

Excluded drivers are entitled to be insured, but you’ve chosen not to include them under your policy. However, they may still purchase auto insurance themselves. Since there’s likely a good reason why you excluded someone, there’s a good chance their premiums will be substantially higher than yours.

For example, one of the most common situations is when a parent doesn’t want to take the risk of their teen driving, and it would push up their premiums, so they exclude them. The teen may then decide to purchase a policy in their name, which they’re entitled to, but they would pay higher premiums because teen drivers are universally considered much higher risk.

Excluding vs. Removing Drivers from Car Insurance

Excluding a driver means they continue to live in your house, but you want to kick them off your policy. Removing a driver means the person has switched their permanent residence and is not considered by your insurance company.

Although the terms are often used interchangeably, they’re conceptually different, so it’s vital to avoid confusing them.

Let’s use a couple of examples:

Excluding a Driver

Your father has an auto insurance policy that covers every driving license holder in your household. However, your cousin has come to live with you. The problem is that your cousin has a mountain of speeding tickets and regularly gets into trouble.

Your father recognizes that this could cause his premiums to rise and risk his coverage. He applies to exclude your cousin from the policy, meaning he is now uninsured. He can no longer drive legally without obtaining his own policy under his name.

Removing a Driver

Removing a driver from your policy often happens when someone in your house moves out for good. For example, perhaps your son is getting married and moving to another city with his new spouse. In this case, he will be removed from your policy and must obtain a policy of his own.

However, there’s an exception for avoiding a driver being removed from a policy. Take the typical scenario whereby one of your kids moves to college. Are they automatically removed from your policy?

According to Progressive, kids can continue to be protected under their parent’s policy as long as they maintain their official permanent residence. If they fully move out and switch permanent residence, they must take out their own policies.

What is the Legal Implication of an Excluded Driver’s Accident?

Excluded drivers who use your insured vehicle anyway could face significant legal and financial consequences if they get into an accident. They could have to pay substantial financial costs and face charges, especially if they were committing a traffic violation at the time of the accident. You could also get into trouble with your insurer as the policyholder.

The main point is that an excluded driver isn’t insured to drive your vehicle. Even if you, as the vehicle owner, have taken out insurance, a non-named or excluded driver isn’t covered under your policy.

Assuming they got into an accident, the consequences include:

• Coverage – The excluded driver isn’t covered under any circumstances. That means the coverage within your policy won’t apply to them.

• Damages – Traditional losses your insurer would pay for, such as the other party’s medical bills and auto repair costs, will now have to be paid out of your own pocket.

• Personal Injury Lawsuits – Since you don’t have protection through your insurer, accident victims are free to file personal injury claims against the excluded driver directly. Moreover, they may be able to include you in the suit if it can be proven that you knowingly allowed them to drive your car even though they were excluded.

• Premium Rises – The excluded driver could cause your premiums to rise because the insurer now considers you a higher risk. How much your premiums rise depends on the insurer, but it could be worth hundreds of dollars per year.

• Coverage Denial – Your insurer may consider an excluded driver’s car accident a violation of your policy terms. Some insurers may then choose to invalidate your coverage, thus forcing you to look elsewhere for coverage.

As you can see, the consequences extend not only to the excluded driver but to you as well. Simply excluding a driver isn’t a get-out-of-jail-free card. It’s your responsibility to ensure an excluded driver doesn’t operate your vehicle, including in an emergency. If you find yourself in this situation, contact a Chicago car accident lawyer to see what your options are.

What if an Excluded Driver Drove My Car Without Permission?

An excluded driver who drove your car without your permission may save the policyholder from the usual consequences of an excluded driver auto accident. If you can prove the car was stolen, your insurer may still cover the damage.

However, you must prove that you didn’t provide permission to the excluded driver. Plus, this will likely result in the excluded driver being charged with the theft of a motor vehicle. Reporting your car as stolen will mean far more dire consequences for the excluded driver because they will be criminally charged.

Do Excluded Drivers Face Penalties Beyond Denied Coverage?

Excluded drivers can face penalties beyond being denied coverage in the future. These can result in financial penalties, court fees, license suspensions, and even jail time. The penalties can extend even further if the owner reports that the excluded driver stole their vehicle.

Remember, an excluded driver operating a motor vehicle owned by the policyholder is the same as driving uninsured. Although the Insurance Information Institute reports as many as 16.3% of Illinois drivers are on the roads without insurance, excluded drivers may well add to the total.

Here’s a rundown of the penalties excluded drivers could face if they get into an accident:

• Fines

• Court fees

• Suspended license

• Cancelled license

• Having your car impounded

• SR-22 filing requirements

• Jail time

The consequences the excluded driver faces depend on the circumstances of the situation. For example, a teen with a clean driving record who gets into a minor fender-bender with no injuries may get away with a fine and a suspended license.

On the other hand, a relative living in your household with a history of DUIs who gets into a high-speed crash, leading to the serious injury or wrongful death of another party, may face extensive jail time.

Can Exclusions Be Challenged in Court?

In Illinois, it’s perfectly legal for auto insurance policyholders to exclude drivers from their policies. Generally, no legal grounds exist for an excluded driver to sue over their exclusion. After all, nothing is preventing an excluded driver from taking out their own insurance policies.

The only real grounds for taking an auto insurance company or the policyholder to court is if the exclusion was implemented incorrectly or without their knowledge. The only rules are that the policyholder must fill in the appropriate forms, and the excluded driver must be notified of the decision.

However, these cases are generally uncommon. In the past, Illinois courts have upheld the rights of policyholders and insurance companies to exclude drivers from policies.

For example, in the case Safeway Insurance Co v. Al-Rifaei, the court ruled that the named driver exclusion prevented uninsured motorist coverage for the policyholder when the excluded driver was operating the vehicle.

It demonstrates that the courts are more than willing to uphold driver exclusions and that there’s little recourse for excluded drivers to sue if they disagree with the decision to exclude them.

Can an Excluded Driver Affect the Overall Cost of My Insurance Premiums?

Excluding a driver from your policy can reduce your insurance premiums, but that’s not the case for everyone. Sometimes, you won’t see your premiums decrease as much as you think.

Applying for a driver exclusion doesn’t alter the fact that the excluded driver still lives with you. It only means they’re no longer covered to drive the car named in the policy. The auto insurer knows this, and they’ve agreed not to cover that person.

It’s this fact that can result in your premiums not going down. Auto insurers often worry that the excluded driver will continue to use the vehicle regardless. The risk is compounded if you live in a household with only a single vehicle and the excluded driver doesn’t have their own car. The act of excluding them can seem suspicious by itself.

Naturally, it depends on the circumstances. For example, excluding a teen who’s old enough to drive and has just obtained their license doesn’t carry the same risk as excluding someone who already has multiple driving-related misdemeanors and felonies.

Will a Removed Driver Affect the Overall Cost of My Insurance Premiums?

Removing a driver may or may not reduce your overall premiums. A removal means the person no longer lives with you, so the insurer won’t factor them into their calculations at all. Again, what happens to your premiums depends on the circumstances.

Let’s say one of your kids has permanently flown the nest, so they’re removed from your policy. Younger drivers are naturally riskier to have on a policy, so removing them might make your premiums go down.

On the other hand, sometimes removing drivers from your policy could increase your premiums. The reasoning is that fewer drivers on your policy concentrate the risk on fewer people.

For example, if your two kids have gone to college and have been removed from your policy, this concentrates the risk on mom and dad. If another relative comes to live with you and they’re excluded from your policy due to a bad driving record, insurers may see this as a riskier situation, meaning higher premiums.

Can Excluded Drivers Take Action If They Feel Their Exclusion from a Policy Was Unjust?

Excluded drivers have little recourse if they disagree with the decision from a legal standpoint. Instead, most actions involve trying to find out why they were excluded and acting on those reasons.

If you’re the excluded driver, here’s what you can do:

• Speak to the Policyholder – Talk to the person who excluded you and ask why they excluded you. In some cases, you might be able to convince them to change their decision.

• Ask the Insurance Company – If talking to the policyholder is getting you nowhere, consider asking the insurance company why you were excluded. This could provide insights into what you can do to have your exclusion lifted in the future.

• Buy Your Own Insurance – Getting excluded doesn’t ban you from having auto insurance. You can still take out your own policy.

• Improve Your Driving Record – If your reason for exclusion has something to do with your driving record, work on improving it. It could be a matter of waiting, or you could be proactive and opt for things like taking an approved defensive driving course.

• File a Complaint – You may be able to file a complaint with Illinois’s state insurance department if you believe your exclusion was done improperly. However, this won’t necessarily mean the policyholder won’t exclude you again.

Even though none of this may sound encouraging, these strategies can work. It has happened in the past whereby young drivers were excluded from their parent’s policy by mistake. Alternatively, if you’ve had a clean driving record for the last few years, you could ask to have your exclusion lifted.

What to Do If You’re Hit By an Excluded Driver in Illinois?

Getting hit by an excluded driver in Illinois complicates matters because the driver is effectively uninsured. That means the policyholder’s insurance company will refuse to cover the damages because their coverage didn’t extend to them in the first place.

So, what are your steps if you’re hit by an excluded driver?

Follow the usual steps you would take in an accident with any driver:

• Seek medical attention.

• Report the accident to the police by calling 911.

• Gather evidence from the scene by taking photos and videos, including asking eyewitnesses to provide a statement.

• Report the incident to your insurer within 24-72 hours.

• Consult a personal injury attorney.

Car accidents with excluded drivers gives you several options. Unfortunately, recovering your losses in these scenarios is far more complex. Two options to explore include:

1. Using Uninsured Motorist Coverage – Illinois requires all drivers to have uninsured motorist coverage of $25,000 per person, $50,000 per accident, and $25,000 for property damage. Since you were hit by someone who was technically uninsured, you may be able to call upon this cover from your own insurer.

2. File a Personal Injury Lawsuit Against the Excluded Driver – If the excluded driver has any personal assets, you might be able to file a claim against them to recover damages from them personally. In some cases, it may even be worth exploring the potential for suing the holder of the policy they were excluded from.

In all cases, you should consult an experienced car accident attorney to learn about your next steps. They’ll analyze the situation, advise you on your case, and help you determine your next steps.

Excluded Driver FAQs

What is a named driver exclusion?

A named driver exclusion is the formal term for a driver exclusion. This means the policyholder has willingly asked for a named driver to be removed from their car insurance policy. The excluded driver no longer has any coverage, and your insurer won’t extend their coverage to them.

Is it legal to exclude a driver in my household from my policy?

Illinois is a state that allows any policyholder to exclude a named driver from their policy. Nothing stops you from applying for an exclusion for practically any reason if you believe it will reduce your premiums and protect your coverage. Note that this doesn’t apply to all states, where some actively prohibit the practice.

Can an excluded driver be reinstated as a named driver?

Excluded drivers can be reinstated at any time by the policyholder. Each insurer will have its own process and forms to fill out if you want to place an excluded driver back on your policy. The only exception is if the exclusion was put in place at the request of the insurer themselves.

Reinstating a driver who was excluded via an insurer’s request will require talking to the insurer and proving why an excluded driver no longer presents the same risk.