coverage under an auto policy it's very common to hear someone say, "Just
list them as a driver and that way they are always covered." Considering
the number of times this statement is made, perhaps it's warranted to look at
what listing someone as a driver does do, and more importantly what it does not
When someone is listed as a driver on an auto policy it's done purely as an
underwriting tool to allow the company to obtain the motor vehicle report (MVR)
of the person listed. For example, on a personal auto policy (PAP), most
companies want to list all household residents and any other regular operators
of the vehicle. On a business auto policy (BAP), most companies want to list
all employees who regularly drive the insured vehicles. Listing the drivers
allows the company to properly underwrite the risk, surcharge for violations or
accidents, and where warranted cancel or non-renew the risk.
To determine coverage under an auto policy, the "who is an insured"
section of the policy must be examined. With an ISO PAP, "who is an
insured" includes the person named, resident spouse, family members who
reside in the household, and anyone using the covered auto with permission.
Note that nowhere does the "who is an insured" section state "those
listed as a driver are also insured." For example, Henry's PAP names him
as named insured and his daughter Samantha as a driver. Henry loans the car to
his friend Mary, who is in an at-fault accident. Since Mary is a permissive
user she is "an insured" under Henry's PAP even though she is not
(and does not need to be) listed as a driver. As another example, Samantha goes
out of town and borrows a friend's car, is negligent, and injures a pedestrian.
Samantha is "an insured" under Henry's PAP, not because she is listed
as a driver, but because she is a "family member." Thus Samantha is
covered by the Henry's PAP.
As an example of how listing someone as a driver does not provide
coverage, consider the situation where Henry and Mary are not married and living
together with Henry owning the only car in the household and having a PAP in
his name. Since Mary would regularly drive Henry's car, his PAP carrier should
be notified since they will want to list her as a driver. When Mary is driving
Henry's car she is "an insured" because she is a permissive user. The
fact that she happens to be a listed driver does not affect coverage. However,
have Mary go out of town, rent or borrow a car and have an at-fault accident
she will not be covered by Henry's PAP, even though she is listed a driver. She
is not covered because she is not the named insured, the spouse, a family
member, or driving Henry's auto. The only time Mary is "an insured"
under Henry's PAP for liability, med-pay, PIP, UM, and physical damage is when
she is occupying Henry's auto. This presents a significant gap for Mary and she
is a candidate for the Named Non-Owner policy under which she can purchase
liability, med-pay, and uninsured motorist coverage.
A recent court case in Louisiana illustrates this point very well. The
insurance company issued a PAP to Robert, who was the only named insured. His
fiancée, Jennifer, lived with him and was listed as a driver on the
declarations page. Jennifer was driving a non-owned auto owned by her
sister-in-law and caused bodily injury to a third party who brought suit
against Jennifer and others. Jennifer sought coverage under Robert's PAP,
claiming that she was covered by virtue of being listed as a driver. The
Louisiana Supreme Court found no coverage under the policy stating,
"...being listed as a driver on the declarations page does not transform
that person into a named insured." The court also found that Jennifer was
not a "family member" as defined by the policy. (Lemoine v.
Illinois National Insurance Company, March, 2004)
The same principles apply to the business auto policy. Employees listed as
drivers would have coverage while driving an auto covered under the BAP, but
not while borrowing or renting another vehicle for pleasure use. They would
find coverage for those situations under their own PAP or Named Non-Owner
policy should they have one, or possibly by adding the Drive Other Car
endorsement to the BAP.
Remember, "Listing as a driver does not affect coverage."
Note: This analysis
is based on ISO forms and rules. There are carriers that might condition
coverage on being listed as a driver, further proof that auto insurance is not
a commodity. Other carriers may exclude household residents who moved in after
policy inception, but the carrier was never notified. Please be aware that
there are auto policies in the marketplace with serious deficiencies compared
to “ISO standard” auto policies. Heed the words of John Ruskin:
hardly anything in the world that some man cannot make a little worse and sell
a little cheaper, and the people who consider price only are this man’s lawful
Last Updated: July 27, 2016