In the past, some Texas insurance companies have been allowed to incorporate driver exclusions in their liability policies. That means that the insurance policy could exclude any driver from coverage and basically render the insurance policy inapplicable when the insurance policy did not specifically name the driver involved in the automobile wreck. We’ve never issued these types of policies in our office. They were certainly cheaper and many drivers weren’t aware that they were purchasing this kind of policy.
Also, many agents weren’t taking the time to explain in detail the terms of the policy. So the policy holders were letting household members drive their vehicles without being listed as a driver on the policy. These unlisted/unnamed drivers inevitably would be involved in accidents. Claims were being repeatedly denied and many drivers became frustrated at the terms of these policies. Many drivers who thought that their vehicle was always insured when another driver was driving with the owner’s permission would often be unpleasantly surprised that their insurance carrier would deny coverage.
In 2015, the State of Texas passed a law that required agents to read the following statement to individuals who purchased this type of policy at each renewal:
“A NAMED DRIVER POLICY DOES NOT PROVIDE COVERAGE FOR INDIVIDUALS RESIDING IN THE INSURED’S HOUSEHOLD WHO ARE NOT NAMED ON THE POLICY.”
While this statement did ensure the drivers understood the terms of their policy, it had little impact on allowing their unlisted household drivers from operating their vehicles.
What’s different now? A new law will go into effect as of January 1, 2020. The type of policy referred to above will no longer be a legal form of auto insurance. House Bill 259, passed during the 2019 legislative session, prohibits insurers from delivering, issuing for delivery, or renewing Named Driver policies on or after January 1, 2020.
Drivers or passengers who are injured by another’s negligence are better protected because of this law. Injured victims in automobile collisions can and should make a liability claim against a faulty driver. All too often in the past, the insurance company would deny coverage because the driver was not mentioned or was “excluded” under the policy. It is very important to check with your agent to ensure your insurance policy complies with the new laws.