As discussed in When Your Family Member is a Terrible Driver – Named Driver Exclusions, there are plenty of not-so-good drivers around, and their family members don't want to pay the premium to provide them with auto insurance. Driver exclusions allow an insured to exclude a given driver to keep the family policy rates low. The excluded driver would then need to be insured separately, likely in an assigned risk market.
Driver exclusions tend to be state and company specific. This article looks at the ISO PP 13 81 Named Driver Exclusion Endorsement – Pennsylvania as a representative sample of such an exclusion. If an insured has a household member they want to exclude, then the insurer's forms should be reviewed.
With respect to the coverage(s) for which the Schedule or Declarations indicates that the Named Driver Exclusion applies, the provisions of the Policy apply unless modified by the endorsement.
Analysis
The form begins with a statement that the policy coverages apply other than what is modified by the exclusionary endorsement. A schedule listing the name of the excluded driver, as well as the coverages to which the endorsement applies, is then required to be filled out. The exclusion applies to all coverages unless otherwise indicated in the schedule. Again, it states that all policy provisions apply unless modified by the endorsement.
In practice, if an insured selects this endorsement, the intent is to remove coverage when a named individual is driving the vehicle. All other provisions apply as normal. The schedule also has a check box area where the insured can eliminate only certain coverages for the named driver. For example, Susan wants to exclude her husband Joe from collision and other than collision coverage. Joe has a tendence to run into stationary objects such as light posts, a parking garage pillar, and other objects. The insurer has threatened nonrenewal of the policy. Since Joe's accident history has involved no other parties, the insurer is ok with only excluding collision and other than collision, and allowing Joe to remain on the liability coverages of the policy.
I. Definitions
The following definition is added:
"Named excluded driver" means a person who is shown in the Schedule or in the Declarations as a named excluded driver who is excluded from one or more coverages under the Policy.
II. Named Driver Exclusion
With respect to the coverages to which this endorsement applies, as indicated in the Schedule or in the Declarations, we will not pay damages, expenses, benefits or loss arising out of the maintenance or use of any auto or trailer by the "named excluded driver".
Analysis
First, the form defines "named excluded driver", which is the person listed in the schedule or declarations as the person excluded from one or more coverages on the policy.
Then the exclusion is explained. There is no coverage for damages, expenses, benefits or loss arising out of the maintenance or use of any auto or trailer by the "named excluded driver". For example, Joe is an excluded driver on Mabel's auto policy, even though he is her brother and resides with Mabel and her husband Terry. Joe is an expert mechanic and as a favor is working on Mabel's car when it slips out of gear and rolls into a neighbor's vehicle. Since Joe, the excluded driver, was maintaining Mabel's vehicle at the time, there will be no coverage for the damage to the neighbor's vehicle.
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Christine G. Barlow, CPCU
Christine G. Barlow, CPCU, is Executive Editor of FC&S Expert Coverage Interpretation, a division of National Underwriter Company and Arc Network. Christine has over thirty years’ experience in the insurance industry, beginning as a claims adjuster then working as an underwriter and underwriting supervisor handling personal lines. Christine regularly presents and moderates webinars on a variety of topics and is an experienced presenter.