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Insurance implications to be aware of when someone else drives your car

25 March 2024 PSG Insure
Karen Rimmer

Karen Rimmer

In most cases, the regular driver of a vehicle is also the holder of the car insurance policy and the person who will be covered in the event of a claim.

There are, however, instances where a friend or family member may be the one taking it for a spin. In these cases, it’s important for the policyholder to understand which factors are considered by insurers when someone other than the regular driver is involved in an accident.

Regular driver status
Shedding light on this topic is Karen Rimmer, Head of Distribution at PSG Insure who explains that naming the correct person as the regular driver when taking our car insurance cover, has several key implications. “Firstly, it’s important to understand that the regular driver is defined as the person who makes use of the vehicle most often, when compared to any other nominated or secondary drivers.

The cost of the premium as well as certain clauses and exclusions will be based on the unique risk profile of the regular driver. Some of the factors that constitute this risk profile include their age, their claims history, as well as their driving experience. For this reason, it’s important that the information provided is accurate and truthful,” she says.

Additional drivers need to be declared
Most insurers, however, extend their cover to additional nominated drivers who are listed on the policy. Typically, if the nominated driver is involved in a car accident, the insurer will honour the claim, although depending on the insurer, certain provisions, excesses and exclusions may apply.

There are certain insurers who require policyholders to declare all the nominated drivers who may make use of the vehicle on an ad hoc or temporary basis. Failure to do so could result in the policyholder’s claim being rejected. This is why it’s vital that insured parties work through their policy documents thoroughly and receive guidance from their insurer or adviser on what unfamiliar terms and clauses mean.

Conditions for a valid claim
Drivers also need to be aware that in most cases, although additional drivers who are not nominated as the regular drivers do enjoy the same cover if the unexpected occurs, there are several conditions that need to be met. For example, the person driving needs to have a valid driver’s license and obey the rules of the road.

As Rimmer advises, “The same applies to parents who allow their children, who are learner drivers, to borrow their vehicles. Most of the time, if the child were to be involved in an accident, the insurer would deem the claim to be valid, but would require proof that a licensed driver was travelling in the passenger seat at the time of the incident.

In general, for any claim to be deemed valid, it needs to be clear that the regular driver – or the temporary driver, was fully compliant with traffic rules and regulations at all times.”

As is the case with any insurance matter, honesty and full disclosure are always the best policy. Should it come to light during a claim investigation that the driver involved in the accident, who has not been identified as a regular driver, is actually the individual who frequently utilises the vehicle, this could result in the repudiation of the claim or partial payment. Such outcomes stem from potential premium prejudice, as the insurer wasn't afforded the chance to properly assess the risk associated with the frequent driver.

As Rimmer concludes: “In light of the way that car insurance works, as well as the relatively large degree of flexibility that insurers offer motorists, policyholders need to regularly review their policies to ensure that driver details are kept up to date. In the event of a claim, these details can go a long way in streamlining the claims and payout process.”

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