The Pro’s and Cons of Assigning or Excluding

There it is, the perfect risk.  They’ve purchased everything from you – life, auto, home, boat, and umbrella – a smorgasbord of insurance.  And, not one claim in those 20 years you’ve insured them.

excluded

If they call, it’s to pay.  There are no notes of complaints about rates or coverages.  At renewal, they welcome every retention call with kindness.  Boy does time fly.

Today they have come in to add their twin 17-year old boys.  In your mind, you see your commission statement burst into flames.  Those boys are trouble – the one already has points on his license and the other one looks like he’s hiding something.

Currently, your insured is looking at $1600 a year for just them; however adding these two plus the one car they share (an older car with liability only) onto the policy, if the carrier accepts them, will cause the premium to jump to $5000 a year.  Looking to really shock them?  Try a higher deductible – now its $4950.

Here are two options you might be thinking about.

Excluding

Pro: You could exclude these two.  That would definitely be good for the rates, not so good for the kids.  You’re next assignment is finding insurance either in a state program or with a liberal carrier.   If the parents are paying their premiums, have you really saved them money?

Con: The exclusion form is not accepted in all the states.  For instance, New York does not allow carriers to exclude drivers.  Further, the form needs to be signed by both the parents and the excluded person.  That means they will never be able to drive mom and dad’s cars.  Is that feasible?

In some states, they allow a partial exclusion – meaning only certain coverages will be excluded. For instance, in the event of an accident, bodily injury may be available, but property damage may be excluded.  Do you want those good customers paying out of pocket for a damaged 2013 Ferrari?

If they have that umbrella in place the carrier may not continue without an exclusion form.  Therefore, you might have to move the whole book of business if the insured refuses.

Assigning

Pro: So, you’ve gotten the carrier to accept even the worse of the two.  Not all companies require assigning a driver to a vehicle.  I know a good majority have tried to back away from this practice.   However, some do allow it.  The best bet is to try to assign to the lowest cost vehicle.  Maybe it is the shared liability only vehicle on the policy – maybe not.

Con: In states like California, companies have to assign a driver.  If that is the case, they may be assign to the highest rated vehicle on the policy.  For instance, if the insured has an 2016 Audi, an 2010 Ford and an 1998 Mitsubishi – those gets are getting assigned to the Audi.  Unfortunately, that will drive the premium even higher.  You may have to dig around for a carrier that allow you to choose the vehicle assignments.

We all know kids make mistakes when they start driving.  Unfortunately, that drives a higher rate.  I would provide quotes from several different carriers to the insured to review with their children.  It’s always good to have options.  It’s always good to have these two options in your arsenal.

Have a good idea – leave a comment below.

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