ANSWERS TO YOUR E & O QUESTIONS
Adding Young Drivers
BY MARY LAPORTE , CPCU , CIC , LIC , CPIA
Q
Carriers want to know about young drivers as soon as possible , and often track younger members of the household so they can be added to the policy as they approach driving age . Carriers will sometimes add a driver to the policy even before they have a license , simply because they begin driving with a parent on a permit . We think that exposure is minimal , and if the carrier is not aware of a young driver , we don ’ t add them until they are actually licensed . We see that adding a young driver is more of a rating issue rather than a coverage issue , and we want to minimize that expense for our customers . From an E & O standpoint , do you see any problems with this ?
a
why .
Bill , unfortunately , you may be on shaky ground here . Let me explain
First , let me defend the right of the carrier to get premium for the exposure of the young driver . Even if they are only driving on a permit , they are still behind the wheel and may pose a greater risk of loss than an experienced operator .
But even more important , is the coverage
E O &
Q A issue . Traditionally , the personal auto policy would include all “ family members ” as an “ insured ” – for both liability and physical damage . However , in recent years , there is less standardization in the personal auto policies being sold . Some policies include “ drop-down ” (“ step-down ”) limits or even exclusions for :
• Drivers without a license
• Drivers not declared on the application .
• Drivers under a certain age ( 16 or 18 ) That is one reason you should familiarize yourself with the limitations or exclusions within the personal auto policies you sell . Be careful not to make generalized statements about what the policy will or will not do , since there are too many differences between coverage forms .
One last point I should mention . Remember your responsibilities to your carriers . If you are aware of any information that they would want to know , contractually you may be required to notify them of material facts . The best solution is to disclose new drivers when you become aware of them .
Mary LaPorte is a consultant and educator with a strong background in Errors & Omissions loss prevention . Forward your E & O questions to her at marylp @ lpinsuranceconsult . com .
28 KANSAS INSURANCE AGENT & BROKER | July - August 2017 |