Many California auto insurance policies offer permissive use coverage that generally extends coverage to operators that are not specifically named as drivers on the policy. There are many general misconceptions with regards to this coverage, as well as, many restrictions that not all consumers are aware of. The broad basis of permissive use coverage does extend coverage to all drivers not listed on the policy that use the vehicles that are specifically insured but industry standards have changed significantly to eliminate fraud and ensure that the appropriate premiums are assigned per risk.
One restriction that many insurers in California have adopted is the exclusion of additional household residents from the extension of coverage. Additional residents have regular access to the vehicles, and insurers now require that all residents are declared and named specifically as rated drivers or excluded drivers from coverage. These principals have been adopted to ensure that premiums loss ratios remain and company profitability remain protected. Without these stipulations within the insuring agreement, there would be no need for parents of youthful operators to pay additional premium to have their children covered by the policy itself. Without the appropriate premiums being assigned to the risk, all insurance premiums would be impacted to ensure profitable premium loss ratios.
Another restriction that California auto insurance companies have put into place for permissive use is to lower the limits and limit the coverage that extends to drivers that are not listed as rated on the insurance policies. Often times, the liability limits are reduced to the state minimum coverage. This means that in the event that the consumer carriers bodily injury protection of $100,000 per person with a $300,000 per occurrence limit and $50,000 for property damage and a permissive use driver is involved in an accident with the vehicle that the coverage limits would automatically be reduced to $15,000 per person and $30,000 per occurrence for injury and $5,000 for property damage. Other insurance carriers have also gone as far to eliminate some of the coverage that transfers over. The primarily impacts policies that have collision coverage. This means that if a consumer has collision coverage on their vehicle and a permissive use driver is involved in an accident that the collision coverage may not apply and the insured would be responsible for the damage to the vehicle. Many companies with these restrictions will provide age based requirements. An example of this would be eliminating collision coverage from extending to permissive use drivers under the age of 25 years old.
It is important for consumers to review their declarations and policy jacket to find out all of the details of their permissive use coverage and any restrictions that may apply.
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