(Part 6 of 6) Mastering California Insurance: Insights, Tips & Listener Q&A

Published Date: 07/02/2024

Family Drivers and Auto Insurance: Why Failing to Add a Household Driver Can Cost You Everything

When it comes to auto insurance, one of the most common — and dangerous — mistakes drivers make is failing to add all household members to their policy.

It might seem like a harmless oversight. Maybe you’ve heard from a friend that your teenage son or daughter is automatically covered, or that your insurance company doesn’t need to know who’s driving as long as they live under your roof.

But as insurance expert and Insurance Hour host Karl Susman explained in a recent listener Q&A episode, that kind of advice can cost you dearly.

In this insightful segment, Susman answered a caller’s question about whether her son needed to be added to her policy. Her friends had advised against it, assuring her that he would be “covered anyway.” Susman’s response was firm — and enlightening.

“You never want to give an insurance company a great excuse to deny a claim,” he said. “If something feels wrong, it probably is.”

The Question: “Do I Really Need to Add My Teen Driver?”

The caller’s question is one that many parents can relate to. Adding a teenage driver to an auto insurance policy can be expensive — sometimes dramatically so.

So, it’s tempting to avoid disclosing that new driver, especially if they only drive occasionally. After all, friends may insist, “He’s covered if something happens, right?”

But as Susman explained, that’s not how insurance works — and it’s a mistake that could leave you financially exposed.

“If your son is going to be driving your car with any regularity,” Susman said, “you need to add him or exclude him. Because what you’re doing otherwise is setting yourself up for the insurance carrier to deny your claim.”

How Auto Insurance Coverage Actually Works

Auto insurance policies are contracts — detailed agreements between you and your insurance company. Every contract clearly outlines who is insured, what vehicles are covered, and under what conditions coverage applies.

When you apply for a policy, you’re asked to list:

• All regular drivers of the insured vehicles.
• All household members, even if they don’t currently drive.

That second point often surprises people. But insurers require it for good reason:

1. It ensures transparency about potential drivers.
2. It allows insurers to assess risk accurately.
3. It prevents “surprise drivers” from showing up after a loss.

Susman noted that some carriers have even begun asking for the names of all household members — including young children.

“There’s actually an insurance carrier I know of that asks for all household members — even the three-year-olds and four-year-olds,” he said. “They want to keep track as those kids get closer to age 16, so they can find out if they’ve started driving.”

This may sound excessive, but it reflects how seriously insurers take undisclosed drivers.

The Myth of “Automatic Coverage”

Many people misunderstand how coverage works when someone not listed on the policy drives the vehicle.

Most standard auto policies include a provision called “permissive use.” This allows a friend or guest to drive your car occasionally — with your permission — and still be covered.

“You and I are friends,” Susman explained. “You’ve had a couple drinks at dinner, and you say, ‘Karl, can you drive my car home?’ I’m not listed on your policy, but I’m not excluded either. Under permissive use, I should be covered.”

However, that’s where the misunderstanding often begins.

Permissive use does not apply to household members or regular drivers.

If your child, spouse, or roommate lives with you and regularly drives your car, the insurance company expects them to be listed on the policy — or explicitly excluded.

“When it’s a family member or someone living in the household, that’s different,” Susman explained. “Those people must be added or excluded. Period.”

Why Failing to Add a Driver Is Risky

Failing to disclose a driver — especially a family member — can have serious consequences.

1. Claim Denial

If your undisclosed household member gets into an accident, the insurer can deny coverage entirely. You could be personally responsible for:

• Property damage.
• Bodily injury claims.
• Medical expenses.
• Legal defense costs.

2. Policy Cancellation or Rescission

If the insurer determines you intentionally misrepresented who drives your car, it can cancel or rescind your policy — meaning it’s void from the start.

3. Financial Liability

Without coverage, you could face tens or even hundreds of thousands of dollars in liability — far exceeding the savings you thought you’d get by not listing your teenager.

4. Future Insurability Problems

Being caught for non-disclosure can make it harder to find coverage later. Other insurers will see the cancellation or claim denial on your record and charge higher premiums.

The Real Test: “Regular Use”

The key phrase in determining whether a driver must be added is “regular use.”

If your child only drives your car once or twice a year — say, in an emergency — permissive use might apply. But if they drive even semi-regularly — to school, to work, or on errands — that’s considered regular use.

“Any regularity,” Susman said, “is the key there. If your son is driving the car with any regularity, you must add him or exclude him.”

Regular use is interpreted broadly by insurers, so it’s always safer to over-disclose rather than under-disclose.

Why Insurance Companies “Don’t Like Surprises”

Insurers don’t mind risk — they’re in the business of managing it. But they do mind unknown risk.

“The industry in general frowns on surprises,” Susman said. “They don’t like surprises.”

When you fail to disclose a driver, you’re changing the risk profile of your policy without the insurer’s knowledge. That undermines the fundamental principle of insurance — good faith disclosure.

It also shifts risk unfairly onto other policyholders. If undisclosed drivers cause accidents that insurers didn’t price for, everyone’s premiums rise.

The Ethical Dimension: Honesty in Applications

Insurance is built on utmost good faith — a legal and ethical standard requiring full disclosure by both parties.

That means you, as the policyholder, must be transparent about all relevant information, including household members who may drive.

“If you’re being asked on the renewal form whether there are new drivers in the household, and you ignore that question, that’s a problem,” Susman said.

In other words, silence can be interpreted as misrepresentation.

What to Do If Adding a Driver Is Too Expensive

It’s true — adding a teen or inexperienced driver can raise premiums significantly. But Susman advises against trying to “hide” the driver.

Instead, he suggests exploring legitimate options to manage the cost:

• Good student discounts. Many insurers offer price reductions for students with strong grades.
• Driver training discounts. Completing an accredited driver education course can lower premiums.
• Higher deductibles. Increasing your deductible can reduce your premium, though it raises out-of-pocket risk.
• Usage-based insurance. Some insurers offer programs that track driving habits via an app or device, rewarding safe driving with discounts.
• Separate policies. In some cases, putting the young driver on a separate policy may be cheaper than adding them to yours.

But under no circumstance should you simply leave them off.

“Do not go under the assumption that there’s just magical coverage that will be there,” Susman warned. “Because the chances are, it will not.”

The “Primary Policy” Rule

Susman also offered a helpful reminder about how liability coverage works across policies.

In most states, the insurance that’s on the registered owner’s vehicle is primary.

That means if your son drives your car and crashes, your policy pays first — not his, and not a friend’s.

This is why it’s critical that your policy accurately reflects who is driving your car.

Key Takeaways for Drivers and Parents

1. Always disclose all household members. Even if they don’t currently drive, insurers need that information.
2. Add or exclude household drivers. Don’t assume they’re automatically covered under “permissive use.”
3. Be proactive about renewals. Review your policy each year and update driver lists promptly.
4. Don’t risk claim denial. Saving a few hundred dollars in premiums isn’t worth thousands in uncovered liability.
5. Ask your agent for help. A trusted insurance professional can guide you through options for affordability and compliance.

Final Thoughts: Transparency Protects You

In the end, Karl Susman’s advice boils down to one principle — honesty is your best protection.

Insurance companies aren’t out to punish you for having a teenage driver. But they expect full transparency so they can assess and price risk fairly.

“If you think something isn’t right,” Susman said, “you’re probably on the right track. Always err on the side of disclosure.”

By being honest, proactive, and informed, you not only keep your coverage intact — you keep your peace of mind intact, too.

Because when it comes to auto insurance, the one thing worse than paying a higher premium is finding out, too late, that your claim isn’t covered at all.