When purchasing car insurance, your insurer will often ask if you want to add a named driver (also known as a secondary driver or occasional driver) to your policy. This is ideal for anyone who lends their car out regularly to a friend or family members, like their spouse or child. If you plan to loan your car out often to the same people, you will need to have secondary driver insurance (also known as occasional driver insurance). So, does adding a named driver increase insurance?
Secondary driver insurance is additional coverage you add to your car insurance policy. It extends your insurance to any named drivers on your policy. But who do you need to add as a named driver? And does adding a named driver increase your insurance rates? Here’s what you need to know.
Does Adding a Named Driver Increase Your Insurance: Frequently Asked Questions
Is it expensive to add a secondary driver to your car insurance?
Contrary to what you might think, it only sometimes costs you more when adding a secondary driver to your car insurance policy. In fact, it may even lower your premiums. It all depends on your policy and the drivers.
Insurance companies calculate your premiums based on the likelihood that your vehicle will be involved in an accident. Statistically, the older you are, the less likely you are to get into an accident because you have more driving experience behind you. Of course, it’s important to take into account the individual’s driving history, the more experience they have without incidents the less they will have to pay for insurance.
Generally, teenagers pay the most for car insurance because they are statistically more likely to be involved in an accident. So if you are a parent adding a young driver to your policy, you should expect your premiums to go up quite a bit. But if a teenager or a young driver adds an older friend or parent to their policy, their premiums are likely to drop significantly.
When should you add a driver to your car insurance policy?
If you live in a house with any other licenced drivers, you must add them to your insurance policy right away. This is because they could borrow your car at any point. Chances are good that your insurance company will require you to make anyone in your household who is a licensed driver an additional driver on your policy, including roommates, if there is a chance they will drive your car. Then again, if your insurer does not make that a requirement, it would still be wise to add any licenced roommates to your policy if they borrow your car occasionally. Should they be in an accident and you didn’t name them on your policy, chances are good your insurer would not pay for the damage.
In addition, if you have anyone else who will be borrowing your car occasionally, you should add them to your policy even if they do not live with you. For example, it could be a friend or a neighbour whom you let use your vehicle once or twice a week.
On the other hand, if you lend your car out to someone for just the day, you do not need to add them as a named driver. Because it’s a one-time situation, your insurance would be extended to them for that day.
Does adding a named driver increase insurance: How much does adding a named driver with a G2 in Ontario cost?
Most insurance companies will allow you to add a named driver with their G1 at no cost. However, once they have their G2, you must add them as a driver on your policy if they live in the same house as you, even if they won’t be driving your vehicle.
Every insurance policy will vary per company, but on average, you can expect to pay an additional $2,400 annually for your G2 licenced secondary. That’s a whopping $200 a month! It’s because new drivers are at the highest risk of being in an accident. After all, they are still learning and gaining road experience, and your insurance company knows this.
However, that cost is nothing compared to what many young drivers have to pay when they have their own insurance. Generally, teen drivers face the highest auto insurance rates out of any group. Not long ago, G2 licenced drivers paid roughly 25% to 50% more in car insurance. Now, young drivers under 25 can see rates as high as four to five times higher than standard car insurance rates. Many young drivers with their G2 or even G can expect to pay between $6,000 and $8,000 annually for car insurance. Depending on the company and driving record, it could be even more than $10,000. According to Transport Canada, drivers aged 16 and 24 represent 24% of fatalities and 26% of severe injuries, even though they only represent 13% of licenced drivers.
What happens if the named driver has an accident?
When a named driver is involved in an accident while driving your vehicle, they are fully covered by your car insurance policy, including your mandatory coverages, as well as any optional insurance coverages you have added to your policy. The exception is if the named driver was illegally driving at the time of the accident. Examples include driving without a valid licence or being impaired by alcohol or drugs.
In the event of a collision, your limits and deductibles will apply to the claim, and any payment will be made to the named insured listed on the policy.
It should be noted that if a named driver is in an accident or submits a claim for your vehicle, it may affect your insurance premiums, including the loss of any claims-free discounts or credits.
What is “fronting” with car insurance?
Fronting is a term used to describe when someone lets their named driver use their car for the majority of the time. A common situation for fronting is when a parent names a child as a secondary on a vehicle when, in reality, they are the primary driver. This is often because the parent hopes they can help their child save money.
However, insurance fronting is a form of insurance fraud, and it is illegal. You risk invalidating your insurance and receiving points on your license. Remember, if someone is caught lying or deceiving their car insurance provider in Canada, they can also face criminal charges. These charges can include serving between 2 to 14 years in prison.
Do all drivers in a household have to be insured in Ontario?
No. Generally, only those who can legally drive your vehicle need to be insured. Therefore, if your household has other licenced drivers who may drive your vehicle, you must add them to your insurance policy, or they must have their own.
Your insurer wants to know about anyone who could potentially drive your car. As such, you should inform them of all household members of driving age, even those unlicenced. Your insurer will likely list them on your insurance but not rate them until they are licenced.
There is, however, a partial exception to this rule. In Ontario, parents only need to add their children to their insurance policy once they have their G2.
Do you have to be a relative in order to be a named driver on someone’s insurance?
Friends, neighbours, coworkers, employees — anyone who drives your car regularly but less than 50% of the time should be a named driver on your insurance. Just make sure you are not guilty of fronting.