I’m a CA attorney who represents car insurance companies.
I get so many cases called the “hidden driver” case. Basically, mom and dad gets car insurance but won’t mention their son with a license because the premiums would go up. Lo and behold the son gets into an accident and causes injuries to someone else.
Special Investigations Unit and I get involved that ultimately leads to coverage getting denied due to misrepresentation. We’ll just use the recorded statement from years ago and listen to the part about who lives with you or who else drives the car and listen to you not mention your son.
Now that family will not have any coverage. They’ll have to pay completely out of pocket to fix not only their car but the other person’s car. If they get sued, then they’ll have to represent themselves or hire an attorney, which would all have been free if they just listed their son on the policy and paid the extra few hundred dollars a month in premiums.
Edit 1. Like others are saying, this is only for CA. I don’t know if there are different rules for other states.
In CA, if the son lives with you and has a license but he is not listed on the policy then he will not be covered. We call that a material misrepresentation as to the application of the policy and we will rescind the policy back to the date of the material misrepresentation, which is typically the date you originally got the policy or when you removed/replaced/added a vehicle. You’ll get your premiums refunded but your claim will be denied because it’s as if you never had a policy.
The denial includes first party claims like collision/comprehension/rental/towing/uninsured and underinsured AND third party claims for property damage and bodily injury AND the carrier’s duty to defend the insurers from third party lawsuits.
BUT if your son does not live with you and has his own address, then he is treated as a permissive user. A permissive user is essentially anyone driving your car with your permission who is not a regular driver. This includes friends and family.
I had someone call and ask why we were investigating his claim – another hidden driver issue. The adjuster had already told him it’s because the son was driving who was not listed on the policy. He couldn’t understand because his nephew had borrowed the car before and got into an accident but that was covered. What he did not understand was the nephew was covered as a permissive driver since the nephew did not live with him but the son was not going to be covered because the son was a hidden driver who lived with him but was not disclosed to the carrier.
Ultimately, it comes down to just being honest with your carrier when they ask you about anything.
Disclaimer: This is a guest post and it doesn’t necessarily represent the views of IWB.