One of the most common questions I get as an auto insurance agent is “Who is insured to drive my car?”
Sometimes the answer to this question can be more complex than most people realize. If you never and never will lend your car to others, none of the restrictions I discuss here will matter to you and you can stop reading now.
The persons included in your policy enjoy the full benefits of your policy coverages without restrictions. For those who borrow your vehicle that is not listed, it is generally covered as long as you have given them permission to use your vehicle; This is called “permitted use” and all policies have some form of permitted use or interpretation. Excluded drivers are never covered, nor are unknown drivers who “use the vehicle without reasonable belief that the person is authorized to do so” (sometimes referred to as “theft”).
Depending on the company you are insured with, interpretations of permitted use can vary widely and some insurers very strict in their enforcement of the rules.
By reducing or limiting coverage by various applications of permitted use, carriers can reduce their risk (and claims costs) and thus reduce the cost of their policies to make them more accessible to their policyholders.
Three examples of “allowed use” restrictions used by carriers include: “dropdown limits”; “Double deductions”; and “Does not cover physical damage”.