A rated resident refers to a member of your household who drives an insured car, and whose driving record is used to determine your insurance premiums.
What is a rated resident?
Insurance companies determine the rates they charge based on several factors, including the driving record of the insured driver. That’s pretty obvious. But every person on your policy contributes to the riskiness of insuring you and your car. Most insurance companies allow you to lend out your car, but if you live with the person who uses it, the rules can be different.
If you have a roommate or a friend who shares your address, some insurers may require them to be listed as a driver, or excluded from the policy entirely. For instance, if you split your Brooklyn apartment with five random people you met from Craigslist, you’d have to exclude them from your policy, rather than being penalized for their driving records. This is fairly uncommon though, and the industry standard is that the policyholder can choose who they want to add to their policy. If those roommates don’t drive your car, most insurers—including Lemonade—wouldn’t make you bother listing them on your policy.
Most insurance companies will ask if the rated resident has their own car and insurance policy, and they’ll take that information into consideration when calculating your own rate. The resident’s driving record may be considered to determine overall insurability, and monthly premiums.
Who should be listed on an insurance policy?
If someone lives in your home and has regular access to your vehicles they must be listed, in some way, on your insurance policy. If they aren’t, and are involved in an accident in your vehicle, your insurance company may deny your claim.
Drivers in your household will be listed in the following ways:
A Rated Resident: Someone that lives with you, and actively drives your car. This could be a friend, roommate, or anyone else you might live with. If they get into an accident, your insurance company will cover the claim.
List Only Driver: A person that you have on your policy but who doesn’t actively drive your car. This person might be listed as living in your home, but deployed overseas in the military. They might be a roommate who has their own car and their own insurance policy; you want them covered when they are around or need to drive your car in a pinch, but they spend the majority of their time away from home or driving their own vehicle.
Excluded Drivers: If you live with someone who you do not allow to drive your car, you can exclude them from your policy. This can also be done if someone in the household has a bad driving record, which would impact your insurance premiums. By explicitly excluding someone, their record is not considered for the calculation of insurance premiums.
However, the downside is that if an excluded driver does drive your car, and gets into an accident, your insurance provided won’t payout on the policy. So if you don’t trust your pal Bill, who has been crashing on the couch for the past two years while he “works on his novel”—maybe don’t leave your car keys lying on the kitchen counter.
Policyholders: Family members including siblings, spouses, and children who live in your household are generally listed as policyholders on your insurance policy. They may also be listed as excluded, or list only drivers.
Some insurance companies may consider exceptions. If a family member or an unrelated resident has their own car insurance policy, they may not have to be listed on your insurance policy. That’s because their insurance policy covers their driving.
Does a teen with a permit have to be listed?
If you have a roommate or other rated resident that has a teenage son or daughter, and that teen gets their permit, they may also have to be listed on the policy.
It’s important to reach out to your insurance provider for more information on whether teens are excluded from being listed, or required to be.
If they are required to be listed but don’t drive your car, they can be explicitly excluded, and not covered by the insurance.
What happens if a driver is not listed, but should be?
Not listing a driver in your household on your car insurance policy can be a real mess. If an unlisted person is driving your car and gets into an accident, your insurance company can refuse to pay for any damages.
Most insurers will not have any issues with you lending your car to someone who doesn’t typically drive it, like an out of town friend or visiting family member.
Insurers will normally conduct investigations when the driver involved in the accident wasn’t listed on the policy. This is done to protect you and to make sure that you’d actually granted permission to borrow your car. As a rule of thumb, it’s always a good idea to check your policy first to make sure you are covered if you plan to let someone who’s not listed drive your car.