UNNAMED DRIVERS IN A MOTOR INSURANCE POLICY

Q: Should I add someone, eg my spouse, as a named driver? What are the pros & cons?
A: It depends on whether these is additional cost to you to add this named driver and if so, how much. Also, it depends on what is the difference between that person driving as a named driver versus as an unnamed driver. In most cases, as a named driver, the excess is lower while for an unnamed driver, the excess is higher, eg for the insured and the named driver, the excess may be $500 but for unnamed driver, it may be $1000, provided the unnamed driver does not fall into the category of a young and/or inexperienced (YIE) driver*.

Q: What is a Young and/or Inexperienced (YIE) driver?
A: * most insurers charge a much higher excess (if not excluding such YIE drivers altogether) for such drivers. Depending on different insurers, the definition for such YIE drivers various but a typical one is less than 26 years old and/or less than 2 years’ driving experience. The policy would specify that the additional excess for such drivers may be $2500 or even higher, eg if the insured’s excess is $500, then if a YIE driver drove the vehicle and got into an accident, then the total excess would be $500 + $2500 = $3000! For details on excess, please click here.

Q: Do I pay additional or higher premium by adding on a named driver?
A: When you request to add an unnamed driver, the insurer would normally compute the premium based on the HIGHER of these two premiums: the premium if you are driving and the premium if the named driver is driving, eg if you are driving and the premium is $1000 but if the named driver is driving and the premium is $1100, then you will be charged $1100. Basically, it is the worse-case scenario method.

So if you want to have 3 named drivers, then the insurer would compute the individual premiums based on yourself and the 3 named drivers and finally it would take the highest of the 4 premiums!

Because of the above, you will find that if you add named drivers, premium may go up but will NOT go down!

Q: In general, what factors of the driver determine the motor insurance premium, for a given vehicle?
A: In general and for a certain vehicle, the driving’s age, driving experience, occupation and claims history (in some other cases, the gender and marital status may also matter) would determine the premium. Normally, the younger drivers or drivers with less driving experience would be charged a higher premium.

Q: Does the above apply to all policies, in particular to my own motor insurance policy?
A: Do note that the above is a generic illustration. Do refer to your specific policy terms & conditions to get the details on what exactly applies in your case.