What is a named insured driver?

As you might guess, the named insured on an auto insurance policy is the individual who actually purchases coverage and has their name listed on the policy’s Declarations page.

The named insured is responsible for paying premiums on the policy as well as filing claims. They are the only ones authorized to make changes to the policy, such as adjusting coverage, adding authorized drivers or canceling the policy. In some cases, the named insured might be more than one person, such as spouses or joint owners of a vehicle.

More responsibilities of the named insured

As the owner of the auto insurance policy, the named insured is presumed to be the primary driver on that policy. This means that their driving record, credit history and more are taken into account when the carrier calculates premiums.

The named insured also decides who the policy covers, and because the terms used to identify those drivers can sound very similar — like named insured, named driver, non-rated driver and excluded driver — it’s important to understand the differences. Ultimately they affect your premium and, in some cases, determine who is covered and for how much.

What is a named driver?

Additional drivers — also known as named drivers — are individuals who aren’t primary policyholders and can’t manage the coverage, but are added to the policy with permission to drive the covered vehicles. These additional drivers could include teenagers or adult children living in the home, unmarried partners, or even spouses who have their own auto insurance policy elsewhere (but have access to your vehicle). You can add named drivers who don’t live in your home but regularly drive your vehicle, such as a good friend or the nanny.

An authorized or named driver on an auto policy is considered a rated driver, which means that their actions can affect your premium for coverage. Just adding another driver is likely to raise your rates. But if they get into an accident, get a speeding ticket or have their license suspended for moving violations, you may see an additional increase in your cost of coverage.

Some insurance policies offer cheaper premiums by limiting coverage only to drivers named on a policy. These have been banned in some states.

What is a non-rated driver?

A non-rated driver is an individual who lives in your home or may occasionally drive your vehicle, but won’t affect your policy’s premiums. Also known as a listed or list-only driver, these individuals may have regular access to your vehicle but either don’t drive it or have their own insurance coverage.

This may be the case with unmarried partners, roommates, deployed military family members, or even your adult child who is living with you temporarily. When someone is added as a non-rated, listed driver, they may be allowed to borrow your vehicle in a pinch, but aren’t expected to drive your car regularly. Your insurance company will likely only allow listed drivers who have their own vehicle and/or valid insurance coverage.

Since these drivers have their own valid coverage, they won’t be taken into consideration when calculating the premiums for your policy.

What is a permissive driver?

Most traditional auto insurance policies extend coverage to permissive drivers, the occasional drivers who you might lend your vehicle to, like your best friend. These are non-rated drivers; that is, their driving history and other rating factors are not included in your rate calculations. But if your friend borrows your car and gets into an accident, as long as they had your permission to use the car your insurance should cover the damage.

In some states, insurers can offer cheaper premiums by reducing coverage for permissive drivers through provisions known as step-down clauses. The coverage limits enjoyed by named drivers don’t apply; instead, coverage is limited to the state minimum.

What is an excluded driver?

In some cases, you may want to explicitly name someone on your policy who should not be covered. Once named as an excluded driver, this person’s rating factors (such as their driving history) won’t be factored into your rate. This may be beneficial if you have roommates who aren’t allowed to use your car, for example, or live with a sibling who has a poor driving record.

The caveat here is that once a driver is excluded from coverage, they are expected not to have access to your vehicle. If they drive your vehicle and get into an accident, your insurance coverage will not apply. You could also be held liable for any damages or injuries that occur.

How named drivers, non-rated drivers and excluded drivers affect your claims and premiums

If you’re not the only person who ever drives your car, though, or if other adults have access to your vehicle, you may need to add other individuals to your policy in some capacity.

Not all added drivers fall into the same category, though. Some drivers are added because they share full coverage and control of the policy. Others have permission to drive your vehicle on occasion and will affect your premiums, depending on factors like their personal coverage limits, but can’t make changes to your policy. And other drivers are excluded from your coverage.

• Rated drivers are those who actively drive vehicles on the policy, and whose driving records and personal factors can affect your rates.

• Non-rated drivers are those who have their own separate coverage and even their own vehicle, but may have access to or occasionally drive vehicles you own. Their driving history and personal factors won’t affect your premiums, but they’ll be covered if they get behind the wheel of your car.

• Excluded drivers are those who may live in your home but aren’t given permission to drive your vehicles. Their factors won’t affect your premiums, but they also won’t be covered if they drive your car and get in an accident.

Rated drivers are those who actively drive vehicles on the policy, and whose driving records and personal factors can affect your rates.

Non-rated drivers are those who have their own separate coverage and even their own vehicle, but may have access to or occasionally drive vehicles you own. Their driving history and personal factors won’t affect your premiums, but they’ll be covered if they get behind the wheel of your car.

Excluded drivers are those who may live in your home but aren’t given permission to drive your vehicles. Their factors won’t affect your premiums, but they also won’t be covered if they drive your car and get in an accident.

Determining which drivers should be named, added to, or excluded from your auto insurance policy will depend on how your vehicles are used, who lives with you, and what you can afford to spend on your premiums.