Practical reasons for excluding drivers from your car insurance

When purchasing a motor insurance plan, you can name other drivers on the policy that will use the insured car. These so-called “named drivers” are people whom you can lend your car to, and have the same level of cover as you - the policyholder. This protects you from the high costs of unnamed driver excess/deductibles.

However, if you add your 20 year old daughter or son to your policy, who just recently got their driving license, you will see your premiums increase. Also, adding high-risk named drivers - such as young/inexperienced drivers or those with an accident record - can be quite costly. As such, sometimes excluding drivers from your car insurance plan can be the answer if you’re looking for premium savings.

What is an excluded driver?

An excluded driver is someone you deliberately exclude from your motor policy. While excluding drivers can save you money on premiums, you may end up losing more money should an excluded person drive your vehicle and get into an accident. If the excluded person uses your car, either with or without your permission and gets into an accident, your car insurance will not provide coverage. This person will fall into the unnamed driver excess/deductible category according to Hong Kong regulations.

Reason(s) for excluding drivers from car insurance

Excluding drivers from car insurance can save you money by reducing your premiums, but only if the said driver falls into the category of so-called "increased risk persons". You can think of excluding a driver from your policy if he or she:

• Has accrued a high number of speeding tickets;
• Has a record of driving under the influence of alcohol or drugs;
• Drives on a suspended license;
• Has a medical condition that impairs driving (e.g., weak eyesight, mental illness);
• Is under the age of 25, and has less than two years of driving experience, i.e., a young driver;
• Has issued too many claims on your policy.

All of these points affect how insurers calculate your premiums. In short, you should only opt to exclude drivers from car insurance if they are indeed toxic, irresponsible drivers. Having such a driver under your policy will most likely increase your premiums because you won’t qualify for NCDs and the risk of him or her causing an accident is high. In some cases, insurers knowing the history of the driver may even ban or exclude the “bad” driver from the policy.  

When should I not exclude a driver?

For most of the time, excluding a driver or a family member who has a safe driving record, will increase not only yours but also their insurance costs in the long term. This is because an excluded driver will have no coverage for liability or physical damage when driving vehicles listed under the car insurance policy they are banned from.

In particular, young drivers purchasing their first car insurance plan will face higher premiums. However, if your NCDs are not at risk, and the other named drivers are not "roadhogs", keeping them on your policy can save you a lot of money should an accident occur.

What happens when an excluded driver is involved in a car accident?

The short answer is - you are most likely going to have to pay for your liability to third parties out of pocket. Since the third party policy is allocated to the car, not the driver, this means that regardless of who causes the accident in your vehicle, compensation costs should be paid to the third party.

Moreover, since the driver is excluded from your policy, your insurance company doesn’t have to pay out for costs related to that particular accident. That leaves you - the car owner - responsible for paying for the third party damage and/or medical bills of the victims.

The excluded driver who caused the accident has no additional consequences other than, for example, a mandate, leaving you responsible for settling the damage costs. Another consequence for the car owner is the loss of No Claim Discount in the situation where the damage was caused by another driver whom you lent the vehicle.

To exclude or not to exclude? Talk to an expert!

You can’t predict whether an excluded driver will ever cause an accident, or have to use your car (e.g., in an emergency). While excluding drivers from your car insurance plan is in some cases considered a smart move, it can also be disadvantageous for you as the primary policyholder.

It’s also important to remember that an insurance policy is a contract between the insurer and yourself, and knowing exactly what you are signing and paying for is crucial. Our team at Kwiksure have been helping drivers in Hong Kong choose motor policies and explain the risks of excluding drivers from car insurance, among other subjects for almost 20 years.

Reach out to us, and we promise we’ll try to answer all of your insurance questions.