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Restricting the Named Driver Auto Insurance Policies in Texas

An auto insurance law that the then Governor Rick Perry signed into existence in 2013 has just come into effect this year for 2015. The named driver junk insurance policies law is so important because it affects over one million drivers in Texas who carry a limited and ineffective auto insurance in Texas coverage. The noise arose over policies whose coverage only protects the one driver and not all the occupants of the driver’s vehicle.

Named Driver Auto Insurance Law

The measure that became law this year stipulates that insurance companies who sell these named driver policies must reveal the actual limitations of the policies’ coverage to the insured drivers. Beyond this, the insurance companies have to disclose the names of all covered drivers on the ID cards that they give to their auto insurance customers.

These so called junk auto insurance policies restrict coverage to only the person who is detailed as the vehicle’s driver. This means that they do not extend coverage to other household dwelling family members. The end result is that if a family member besides the named driver on the policy drives the family vehicle, then he or she does so without any auto insurance coverage or protection.

The upside is that these policies are generally much cheaper. On the other hand, the holders of such policies are often not aware of the limitations of their coverage. This means that motorists who they may hit would be in a wreck with a driver who is uninsured.

This problem turns out to be more widespread than many people and lawmakers might at first guess. The Texas Department of Insurance estimates that over 1.2 million named driver insurance policies exist in Texas.

Problems for Accident Victims

The insurance department of Texas has received numerous complaints against insurance companies who regularly sell these deceptive and misleading auto insurance policies. Most of the complains surround the insurer’s unwillingness to cover damages that are caused by the driver who the insurance company does not claim. This named driver policy is one of the last legal loopholes in the Texas state insurance laws.

The Auto Insurance Law’s Solution

The newly effective law actually toughens up the state’s regulations of the insurance policies, though it does not eliminate them. It mandates that insurance companies alert their policyholders in writing and verbally that their policy does not cover any of their other family members in the house. More than this, the lesser protection has to be directly and clearly specified on the form of insurance ID so that policyholders will see and be aware of the dangers that exist in their policy. The same law makes it illegal for auto insurance companies to sell policies that do not come with the minimum coverage required by the state of Texas.

The problem mostly lies in the differences between the typical insurance policy and the junk policies. The majority of insurance policies that Texans purchase include a standard liability coverage that goes with the vehicle that is insured. As a result of this, the car, truck, or SUV is protected against damages inflicted on other vehicles and drivers, regardless of which person is behind the wheel of the car when the accident occurs.

Naturally, the major insurance companies typically will not sell these tricky named driver insurance policies to their policyholders. The smaller operators that do vend them gain a significant market advantage as they are able to massively undercut the policy premiums that the larger insurance outfits charge, like with State Farm and All State Auto Insurance companies. Some of the customers are simply attempting to meet the Texas state insurance law requirements without having to break the bank. Still others do not comprehend that their personal insurance policies are far too limited.