TIADA Fights for Named Driver Insurance Reform
On Tuesday, TIADA was on hand at the Texas Legislature's Insurance Committee meeting to provide support for HB 259 sponsored by Rep. Ed Thompson (R - Pearland). This legislation would amend and repeal sections of Texas Insurance Code 1952 relating to named driver policies.
While TIADA was advocating on behalf of independent dealers in support of the bill, insurance lobbyists were in attendance to oppose this legislation. To be clear, TIADA supports common-sense revisions to the Texas Insurance Code that would provide lienholders and other third parties with constructive notice about the narrow scope of insurance coverage provided by a named driver policy.
As many dealers are aware, named driver policies only provide coverage for a driver or drivers specifically named on the policy. These policies can often exclude people that reside in the insured driver's household such as family members. This creates problems as typically they provide little or no notice to consumer or lienholders regarding limited insurance coverage. Many consumers do not understand how the limited coverage works and are only shopping for the lowest price insurance. They, and sometimes the dealers themselves, only become aware of the limited coverage after an accident where a claim was denied.
This particular bill would add common-sense disclosures on which household members are excluded under such policies. The bill would help dealers better identify risks and allocate proper vehicle coverage before the vehicle leaves the lot.
How can a dealer currently tell if an insurance policy is a named driver policy? One must carefully examine the fine print of the insurance documents. Please review each insurance document closely that is provided by your customers. By law, a named driver policy must include the following warning:
For a named driver policy under Insurance Code §1952.0545, the following statement, which must comply with the Business and Commerce Code §1.201(b)(10)(B) definition of conspicuous, "WARNING: A NAMED DRIVER POLICY DOES NOT PROVIDE COVERAGE FOR INDIVIDUALS RESIDING IN THE INSURED'S HOUSEHOLD THAT ARE NOT NAMED ON THE POLICY." If Side A contains Spanish, the warning in Spanish should read, "ADVERTENCIA: ESTA PÓLIZA NO PROVEE COBERTURA A LAS PERSONAS QUE RESIDEN EN EL HOGAR DEL ASEGURADO QUE NO SON MENCIONADAS EN LA PÓLIZA DE SEGUROS.
Please take a moment to review your compliance efforts regarding insurance coverage for your customers.