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Can You Exclude a Vehicle Owner from an Insurance Policy?

Written by Michele Wilmonen. Posted in Ask An Insurance Question Last Updated: 07/21/2012

Being able to exclude a vehicle owner from the insurance policy depends highly on the insurance company and the state.

The person that takes out a loan for a vehicle or owns a vehicle is generally expected to be one the insurance policy. In most cases, the person purchased the vehicle to be able to drive it themselves.

However, there are cases where someone helps another person by taking out a car loan for them, but the person that has the car loan never drives the vehicle. In this situation, it may be possible for the driver of the vehicle to take out an insurance policy in their own name. On this insurance policy the lienholder would of course be listed, but so would the owner of the vehicle. The owner of the vehicle would be listed as having an additional interest in the car and would possibly have to be listed as an excluded driver.

This also means that the excluded driver can never drive the vehicle and if they were to be in a car accident it would not be covered under the insurance policy. This is where the states and the insurance companies get nervous. How can you trust that the person that is the registered owner of the vehicle and holds the loan on it will never drive that vehicle? This also does not satisfy the requirements set forth by the lienholder.

In a good number of states, they do not allow the person that holds the loan or the registered owner to be excluded. In states that do, it is really a company by company decision as to whether they want to take on that type of risk to exclude a vehicle owner.

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Michele Wilmonen

Michele’s first introduction to insurance was working for a major insurance company as a file clerk and a mailroom supervisor in a regional office. She learned insurance directly from underwriters and claims adjusters from questions and also watching them do their job. Since then, she’s earned a number of insurance certifications from the Insurance Institute of America and also a Bachelor’s degree from the University of Idaho. She blogs at Car Insurance Guidebook.

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