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 |