Insurers must offer excluded driver endorsements (August 23, 2005)

The Ontario government recently implemented measures so that insurers must offer policies that allow good drivers to sever their records from bad drivers in the same household. Insurers traditionally look at all licensed drivers in the same household when setting a premium rate. As a result “clean” drivers had to pay higher rates if another driver in the same house had a bad record. On June 1, new rules were initiated forcing insurers to offer “an excluded driver endorsement on new or renewal policies,” according to media reports. The excluded driver endorsement is a written agreement that the bad driver won’t use the good driver’s car. Both drivers must sign the endorsement form for the bad driver’s record not to affect the rates of the good driver. The endorsements were already available in Ontario but most insurer’s did not offer them as the risk exists that bad drivers will still get behind the wheel creating circumstances for a high risk situation. If an accident were to ensue a resulting lawsuit would target the insurer as well as the owner of the vehicle. Insurers would also still be responsible for $200,000 worth of compulsory injury coverage even with the endorsements, but an insurer is able to sue a policyholder for redress. The updated endorsement however states that the driver and the owner of the vehicle may be personally responsible for any damage or injuries caused by the excluded driver. The rules state that even if the banned driver does not cause a collision, the policy can be cancelled and the good driver will face blackballing for breach of contract and must pay high-risk premium rates.