Named driver car insurance policies are specialized policies that list specific drivers. Only the drivers listed on the policy are covered. Also known as named operator policies, these plans often have to be specifically requested from auto insurers as they aren’t commonly available in the marketplace. These car insurance policies can be valuable in the right situations, but they include some risks as well.

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Like standard auto policies, named driver policies usually include numerous different auto coverage types. The key difference is in how the policy determines which drivers are covered. Bankrate can help you understand this policy type and help you decide if it is right for you.

What is a named driver policy?

On a standard auto insurance policy, coverage is usually extended to any legal driver who has the owner’s permission to operate the vehicle, barring specific exclusions. Named driver policies flip this around. On named driver policies, there is only coverage for those people who are specifically included within the document. These names must be provided to the insurer by the applicant when the policy is first requested, but can typically be modified if needed. Anyone else driving the vehicle, even if they have permission, is not covered. So if you let your friend or relative not listed on the policy drive your vehicle and they get into an accident, there would be no coverage for the damage.

When a policyholder chooses a named driver plan, they can sometimes reduce their rates by limiting the number of people the policy covers. The fewer additional drivers to cover, the less risk to insurance providers. For instance, some families may not want their newly licensed teenagers on the policy for every vehicle. Or perhaps one spouse has a poor driving record and doesn’t want that to affect their partner’s rates. Below are some of the common categories of people that policyholders choose to include for coverage on named driver policies.

  • Spouses
  • Parents
  • Children
  • Siblings
  • Roommates

Named driver policy vs. permissive use policy

Standard auto policies are considered “permissive use.” These auto policies generally extend coverage to any legal driver that you give permission to use your vehicle. A permissive use policy may have a list of drivers that are expressly excluded. The policy will not cover anyone on that driver exclusion list. This is the inverse of a named driver policy, which has a list of drivers that are covered.

Permissive use policies, although more common, are often more expensive to maintain than a named driver plan. As indicated above, this is because the two policy types have vastly different scopes regarding how many people coverage could extend to.

Term Meaning
Named driver policy Only specifically named drivers are covered.
Permissive use policy Legal drivers whom the policyholder gives permission to are covered.

Should everyone who drives your car be added to your policy?

Shared coverage can be a helpful feature, but the benefits need to outweigh the costs and risks. If someone else will be driving your car frequently or for a long duration, like on a road trip, it may be wise to add them to your named driver policy. If you let other people drive your car frequently, a standard permissive use policy may be a better choice. If you prefer a named driver policy, it’s essential to be careful whom you add to your coverage. Adding a high-risk driver can potentially increase your rates significantly.

Who should consider a named driver policy?

Named driver policies are not common and aren’t offered by many insurance companies, so they may not be an option for you.

People who don’t often share their vehicles with others may benefit from named driver policies. Similarly, households of only a few people who don’t let others outside the family drive their vehicles may benefit from a named driver policy. For some, the savings can outweigh the heightened restrictions.

Of course, there are downsides to named driver policies, and they aren’t a great fit for everyone. For example, in case of emergency, the restrictions on these policies can create an element of risk that might not be there otherwise. Imagine that you are injured or otherwise unable to drive. If you are the only named driver on your policy, asking someone to drive your vehicle to take you to a medical facility could mean they are driving uninsured.

Before finalizing any insurance decision, it’s always best to speak to a qualified insurance professional. If you’re undecided on which provider to use, consider shopping around among some of the best car insurance companies.

Pros Cons
Save money on premiums Requires greater attention, planning and upkeep
Precise control over who has coverage If you need someone else to drive your car in an emergency, there may not be time to add them to the policy

Frequently asked questions

What’s the difference between a policyholder and a named driver?

The policyholder is the person who owns an insurance policy. Generally, policyholders will also be named drivers, but named drivers do not have to be policyholders. For example, you could take out a policy and be both the policyholder and a named driver. If you list a friend or relative on your policy, they would be a named driver, but they are not the policyholder. They don’t own the policy, aren’t responsible for paying it and have no right to make changes or cancel the account.

Where can I buy a named driver policy?

Named driver policies are not commonly available through national and regional auto insurers, so if you are looking for one, you may need to do a bit of research. Different companies have different underwriting regulations, and different states have different laws. That means that a company might offer named driver policies in one state but not in another. If you are looking for a named driver policy, talking with an independent agent — an insurance professional who is affiliated with multiple insurance companies — might be beneficial.

What happens if someone else drives my car and gets into an accident?

If you have a named driver policy, only the drivers who are specifically listed on your policy are covered. That means that if anyone not listed on the policy drives your car — even if you give them permission — they are not covered. If they get into an accident, your insurer will reject the claim; the damage to your car, the damage that the driver causes to others and any injuries won’t be paid by insurance. In contrast, if you have a standard permissive use policy and you give someone permission to drive your vehicle, they should be covered, as long as they are a legal driver and they are not specifically excluded from the policy.