Hidden dangers of "acceptable use" restrictions in your car insurance policy

One of the most frequent questions I receive as a car insurance agent is "Who is in insurance to drive my car?"

Sometimes, the answer to this question is more annoying than most people notice. If you are not lending your car to others, you never have any of the restrictions I will discuss here, you can stop reading now.

Short answer:

People listed in your policy will enjoy the full benefit of your policy coverage without limitation. For those who borrow your car not listed, they are generally covered as long as they give you permission to use your car. This is called "acceptable use", and all policies are in some form or interpretation of acceptable use. Excluded drivers are never covered. It is also an unnamed driver who "uses the vehicle without reasonable belief that the person is qualified to do" (sometimes called "theft").

Depending on the company you are insured, the interpretation of acceptable usage may change dramatically. It is very tough In implementing rules

By reducing or limiting coverage by different tolerance applications, carriers can reduce risk (and billing costs), reduce policy costs, and make them more affordable for policy owners.

Three examples of "allowable use" limits used by carriers are "drop-down limit". "Double deduction amount". "There is no physical damage range."

Drop-down limit:

Even if permissible users accident, the insurance amount of the insurance contract often decreases sharply. One such reduction is called "drop-down limit". "Drop-down limit" means that if an accident occurs when you borrow a car, the liability limit will be reduced to the state's minimum amount. For example, in California there is a minimum limit of only $ 15,000 per person for disability (BI), up to $ 30,000 for physical injury (BI) / $ 5,000 for physical damage (PD) .

Example: Driver 'A' has a fully usable insurance policy and the compensation amount of liability is 100 thousand dollar (for BI) / 300 thousand dollars (in the case of BI maximum) / 50 thousand dollars (for PD If). His policy has a "drop-down limit" clause. He lends his car to a friend (Driver "B") and the friend caused a serious accident that the physical injury to others would be $ 65,000 and he bought another car worth $ 28,000 We will total. In this scenario "drop-down limit" is effective, most driver A's policy is obviously insufficient for $ 15,000 for other people's injuries and $ 5,000 for vehicles. In this case, since driver A is the owner of the vehicle, we assume the legal responsibility for the balance of compensation for damages. 50,000 dollars for injured people and $ 23,000 for vehicles. If there is coverage in Driver B, its coverage will be secondary and will be applied until these limits run out. Otherwise, the driver 'A' is most likely to be accused from the other party.

Double deduction amount:

The insurance available in your car insurance is called collision insurance. Collision insurance protects vehicles against damage caused by collision with other objects. In other words, it is another vehicle, building etc. Collision compensation is the deductible amount of "out of bag" that the insurer needs to pay first before repairing or replacing the car. Usually, the deductible amount ranges from $ 100 to $ 2500, but in most cases it is $ 500 or $ 1,000.

They will double the collision deduction if an unnamed driver accident while driving a car with your permission. His $ 500 deduction is currently $ 1,000. Or, your $ 1000 is currently $ 2,000. Hopefully your friend who borrowed your car wants to chip in and pay extra deduction.

In some cases, the limitation of "double deduction" is based on the age of the driver who rents the car. For example, if the driver is under 25 years of age, the collision deduction is only double.

No coverage of physical damage:

This restriction functions in the same way as the above "double deduction". But this limit has been punitive all the time.

Simply put, if an unknown driver borrowed your car and caused an accident, the insurance company will be liable for the damages of the third party, but damages to the vehicle will not be covered by compensation Hmm.

All of these "permissible use" restrictions are listed first in your policy and are also described in detail at the time of renewal. These restrictions should also be disclosed by your agent when you purchase your policy. Because the reason why a specialized insurance agency / broker who truly understands these insurance is necessary,

Accepted usage restrictions are also very common and are adopted by some of the premier major insurance companies, so please review the policy carefully.

Not all automobile insurance policies are standardized. They vary from carrier to carrier. In addition, there are several coverage merits, restrictions, and exclusion matters specific to each company. To check the mechanism of a specific policy, please consult your distributor.

Food - Food for Thinking - When you are thinking about purchasing an "online" policy without helping people, or from "800 #" of "order acceptor", these details are in some form Thinking that it may be lost in - to have an agent that really looks for you.