I Was Hit By An Uninsured Driver.
Back in early July, I was involved in a fender bender. A red pickup making an egregiously wide turn at a four way intersection barreled into my little Corolla as it sat motionless. After rolling through their own stop sign, the other driver proceeded to make a turn so wide, that upon colliding with my car, nearly half of their truck was in my lane. I can explain it only by assuming that they were distracted by their phone, radio, etc. Fortunately, I have a dashcam which was recording at the time of the incident. Armed with this evidence, I have yet to find anyone who contests that the other driver was 100% at fault.
After the impact, both the other driver and I pulled off to the side and exchanged information. The other driver was quick to explain that the vehicle belonged to their older brother. “Mmmkay” I thought. Soon after, Arnulfo, the other driver, explained that they didn’t have insurance. Again, “Alright…” was my reaction. His brother’s insurance would take care of it.
I have heard anecdotes of the dreaded type where an individual lets a friend borrow their car, and the friend ends up getting into an accident. In these instances, the owner of the vehicle’s insurance covers the incident under a condition called “permissive use.” In short, permissive use allows you to enjoy the same peace of mind, regarding coverage from liability, while someone else drives your car, that you have while driving it yourself. If your friend gets into an accident with your vehicle, your auto insurance will assume liability for whatever damages your friend is at fault for. This is a great idea! Imagine if this feature was not typical of auto insurance policies. I’d be rather uneasy, if not completely against, letting someone else drive my car. It’s bad enough that with permissive use, I would have to pay the applicable deductible and suffer any premium increases for my friend’s mistake. Having no coverage whatsoever could be financially catastrophic if my friend was to seriously damage property, or worse, injure others.
With peace of mind that I would be compensated by Arnuflo’s brother’s insurance under permissive use, I went to empathizing with how irritated Arnulfo’s brother was going to be. I imagined how frustrated I would be if I lent my car to a friend only to have it returned cracked up. Was I foolish for trusting my friend? Could I forgive them? Will they pay for my deductible and premium hikes, or am I going to be stuck with the consequences?
Upon arriving home, I went to work contacting my own insurance company to report the incident. At their behest, I also contacted the other party’s insurance as, after all, they would be footing the bill. This is where an annoying misfortune turned into a frustrating injustice.
The other party’s insurance explained that Arnuflo was an “excluded driver” on the policy. They went on to explain that an excluded driver is an individual who the policy owner has formally documented as someone who will not be permitted to drive the vehicle. Importantly, excluded drivers are excepted from the permissive use coverage described above. In other words, even though Arnulfo was completely responsible for the incident, and under typical circumstances Arnuflo’s brother’s insurance would cover the damages under permissive use, because Arnuflo was excluded, they would not. Neither Arnuflo’s brother nor I would see any compensation for Arnuflo’s mistake.
WHAT. THE. HECK. So now what? Fortunately, I elected to carry uninsured motorist coverage on my own auto policy, so my insurance would assume the financial burden of the incident. Of course, I was still required to pay my collision deductible. Thus, despite bearing no fault in the incident, I ended up having to pay money directly from my own pocket to have my vehicle repaired.
I contend that this is wrong. I suspect many of you will agree. When someone is wronged by another party, society generally agrees that the victim should be compensated by the wrongdoers. Why, then, does a feature exist within auto insurance such as the excluded driver?
The benefit of an excluded driver obviously lies with the insurance company issuing the policy, and to a smaller extent, the individual insured by the policy. When a policy owner excludes someone, they generally do so because the driver they’re excluding is an unacceptable risk. Said driver might be young and inexperienced. Perhaps instead the driver has a demonstrated history of causing accidents. Either way, the effect is the same. To have an auto policy which includes such a driver, there will be a significant increase to the cost, all other things equal. Since auto insurance policies generally take into consideration all driving age members of a household in the underwriting process, it is clear to see how risky individuals regularly become unwanted financial burdens for others when they go shopping for auto insurance. Should your spouse, child, housemate, etc. be a risky driver, you can expect to pay a price for their association with you.
The savings one should expect by excluding a driver is proportional to the risk the other driver presents, based on the auto insurance company’s assessment. Given a sufficiently risky individual, the amount could be hundreds of dollars per month. It is no surprise that some individuals elect to exclude members of their household from their own auto insurance policies.
With the excluded driver in effect, the auto insurance company is happy to offer a policy; they are free from any liability should the excluded driver get into an accident. In fact, they’re probably thrilled. They might not have been able to work out a policy at all without excluding a driver, as the policyholder could not have afforded it. They see profits where there almost were none. The insured is pleased, too. They now have an auto policy to protect themselves should an accident happen.
But what’s actually stopping the excluded driver from driving the vehicle? As far as I can tell, nothing.
Auto insurance companies, therefore, must consider the reality that an excluded driver can and may end up behind the wheel. In that case, can someone who cannot afford the expense of insuring the risky driver be reasonably expected to pay directly for any damages incurred by said driver if they are excluded? Probably not. Of course, this would be a non-issue provided the excluded driver was actually prohibited from driving the vehicle. Obviously in my case, that was not accomplished. I wonder, how many excluded drivers are on the roads right now, one distracted moment away from causing another circumstance like mine? Or worse.
Fundamentally, the problem with excluded drivers is that the burden of these accidents falls to the victims. Victims must carry uninsured motorist coverage to protect themselves from the careless actions of excluded drivers. They must fork up money to cover their deductible when an incident occurs. They must brace for an increase to their own premiums.
Is this just? Of course not. Why are there not, then, systems in place to prevent individuals from being wronged by excluded drivers?
I suspect that as a result of this incident, Arnulfo and his brother will both see significant increases to their auto insurance premiums, further exacerbating their financial hardship, and doing nothing for me. My insurance company will seek to recover the cost of my repairs directly from them. I will again ask, though, is it reasonable to expect they will be able to pay?
I appreciate that there may be circumstances where the concept of an excluded driver may be both valid and beneficial. If a household gains a driving age teenager who will legitimately not be driving any of the household’s vehicles–perhaps instead relying on ridesharing–then they should be able to enjoy a savings for their reduction in risk. In such cases, though, there should be enforceable controls in place to prevent the excluded driver from driving the vehicle. How an insurance company could meaningfully discern between legitimate and illegitimate use of the excluded drivers feature, or how a household could actually guarantee to withhold access to the vehicle from the excluded driver, though, are both questionable.
It appears some states’ legislators have wrestled with this conundrum and concluded there is no legitimate way to regulate the use of excluded drivers, as a handful of them prohibit the practice outright. Included in the list are Michigan, New York, Kansas, Wisconsin, and Virginia. I wonder what arguments the other states use for allowing the practice to continue. Is there a valid argument, or has the problem merely failed to garner enough public attention to make it to legislator’s ears? I intend to find out.