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Old 03-29-2011, 07:51 AM
pullin pullin is offline
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Car Insurance question -- Unlicensed Driver?

How does an insurance company react when an unlicensed driver is in an accident (in an insured car)? I just discovered one of my kid's classmates has been supplied with a car, but has no driver's license (no permit, no hardship license, no training at all). I'm pretty sure the car itself is insured for the mom and dad to operate.

Would the insurance company deny a claim if an unlicensed teen is using the car (with parental permission)? Would liability coverage still apply?

Just curious, I guess.
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Old 03-29-2011, 08:20 AM
md2000 md2000 is offline
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Rules may vary from state and country. In Canada, I've never had the need to answer this question, but this is what I've heard -
- the person(s) holding the insurance policy and owning the car put in a claim.
-if those people (owners) knew it was an unlicensed driver, they allowed a violation of the law, no payout.
(Similarly - drunk driver - no payout; if you lend a car without knowing if the driver has a valid license, no payout)
-if the car was taken without their permission, then it was car theft; if they want to swear to that. However, some provinces will not lay car theft charges if the "thief" lives in the same dwelling.

- I believe (not sure) that the insurance still pays injured third parties, but can then sue the policy holder and driver to recover their money. If not, then the injured party's insurance pays, and can sue the driver and owner.

the creme de la creme comes when the idiot totals the car, the insurance refuses to pay, and the owners have to keep paying the car loan for a few more years...
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Old 03-29-2011, 09:57 AM
Qwakkeddup Qwakkeddup is offline
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My .02 cents, no pay out here, Drunk was a passenger, and had his 17 yo girlfriend driving with her learners permit. Drunk had a DL, but was drunk of course.
She pulled out in front of my wife from a stop sign. We had to pay a $500.00 deductible and our comprehensive kicked in when drunk's insurance refused to pay.
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Old 03-29-2011, 11:32 AM
Fir na tine Fir na tine is online now
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In most states (underline most) insurance follows the vehicle. As long as the person operating had the permission of the owner, the insurance company is on the hook for any damage caused. If for some reason that insurance company doesn't pay, your insurance company should cover any damages under your Uninsured Motorist/Underinsured Motorist portion of your policy.
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Old 03-29-2011, 01:08 PM
Keeve Keeve is offline
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[QUOTE=Fir na tine;13627362]As long as the person operating had the permission of the owner, the insurance company is on the hook for any damage caused./QUOTE]Even if the owner permitted the operator to do an illegal act with that vehicle? That would surprise me.
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Old 03-29-2011, 01:33 PM
md2000 md2000 is offline
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Quote:
Originally Posted by Qwakkeddup View Post
My .02 cents, no pay out here, Drunk was a passenger, and had his 17 yo girlfriend driving with her learners permit. Drunk had a DL, but was drunk of course.
She pulled out in front of my wife from a stop sign. We had to pay a $500.00 deductible and our comprehensive kicked in when drunk's insurance refused to pay.
Never really thought about it, but I assume this means the DL passenger supervising someone with a learners permit has to also be sober? Makes sense, but is it explicit in law?

Some provinces (and I assume some states) have graduated drivers licenses; learners, first year drivers, etc. are sometimes not allowed on high-speed expresways, not allowed to drive after dark, not allowed passengers, zero-tolerance on alcohol, etc. I wonder if the insurance company would refuse to pay in these situations.
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Old 03-29-2011, 01:37 PM
md2000 md2000 is offline
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[QUOTE=Keeve;13627863]
Quote:
Originally Posted by Fir na tine View Post
As long as the person operating had the permission of the owner, the insurance company is on the hook for any damage caused./QUOTE]Even if the owner permitted the operator to do an illegal act with that vehicle? That would surprise me.
Provincial government insurance (mandatory, and MUCH cheaper than free market) will NOT pay repairs if the owner knowingly allowed an unlicensed driver to use their car. But, if an unlicensed or drunk driver causes a wreck, they will pay 3rd party and retreive the cost from the owner/driver; it's your car, if someone breaks the law in it, that's your problem, not the insurance company's.

Last edited by md2000; 03-29-2011 at 01:38 PM..
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Old 03-29-2011, 01:40 PM
Voyager Voyager is online now
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Quote:
Originally Posted by md2000 View Post
- I believe (not sure) that the insurance still pays injured third parties, but can then sue the policy holder and driver to recover their money. If not, then the injured party's insurance pays, and can sue the driver and owner.
Not sure if you mean third parties in the car or third parties in other cars. I can testify that in the US (two states at least) uninsured motorist coverage does pay. My car, parked off the street, was damaged by a car reported stolen when I was 850 miles away, and it got paid. 15 years ago, in California, I hit a car pulling out from the driveway driven by an unlicensed and I believe uninsured driver, who had his license revoked. My insurance also paid, no problem.
It was satisfying to hear the cop yelling at this clown.
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  #9  
Old 03-29-2011, 01:42 PM
Freddy the Pig Freddy the Pig is offline
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The standard Personal Auto Policy, common I believe to all at-fault states, excludes liability coverage when the vehicle is being driven by an unrelated person "without a reasonable belief" that he or she is entitled to do so.

In Illinois at least, the state Supreme Court has construed this exclusion to apply to unlicensed motorists; see here:
Quote:
(T)he Supreme Court issued an opinion in Founders Insurance Company v. Munoz, which addressed the frequently recurring question of whether an unlicensed driver is covered under an auto liability insurance policy which excludes coverage for "use by any person of a vehicle without a reasonable belief that the person is entitled to do so".

Holding that the exclusion was not ambiguous and was not in violation of public policy, the Supreme Court in Munoz stated that a person who does not have a valid license cannot have a "reasonable belief" that he is entitled to drive, and this exclusion applies even if the person owns the vehicle or is permitted to use it. The Munoz opinion supports the position that auto liability insurers may limit their risk by excluding insureds and permissive users who do not have a valid driverís license.
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