The principle operator listed on the policy should be the person who drives the vehicle the most (especially if that is on a daily basis) whether the vehicle is registered in their name or someone else's.
Most times the principle operator is also the registered owner, but this is certainly not a requirement nor a determining factor as to who the principle operator is.
The insurance company wants to charge a premium based on the highest rated driver while you want them to charge a premium based on the lowest rated driver. This is certainly a conflict.The insurance industry in Alberta has established a set of rules they apply in order to establish who the principal driver is for each vehicle. These rules are are not written in stone and can be altered in specific circumstances. Please note, the insurance company has to agree to the change in how the rules are applied but in most cases they are reasonable.
Rule #1 - Every vehicle must have a principle operator assigned to it in order to rate and determine a premium.
Rule #2 - When there are the same number of drivers as vehicles in the household, each driver will be assigned as the principal operator of a vehicle.
Example 1 - A couple owning two cars would each be assigned as principal operator of the vehicle they actually use on a daily basis. Pretty straight forward. When young drivers are living in the household they are to be added as young drivers. One young driver - one young driver surcharge. Two young drivers - two young driver surcharges. If there was a third young driver there would not be an additional surcharge because there are only two vehicles insured in the household. At no time can there be more young driver surcharges than vehicles.
Example 2 - Suppose spouses owned three vehicles. Each spouse would be the principal operator of one of the vehicles. The principal driver of the third vehicle is determined by ownership and usage. If there were young drivers living in the household one of them would be assigned as principal operator of the third vehicle. If there were a second young driver they would pay a surcharge to drive the parents vehicles.
Rule #3 - When there are more drivers than vehicles the person with the highest rating will be assigned as principle operator to one of the vehicles.
Example 1 - Spouses who own only one car. The spouse with the highest rating will be assigned as the principle operator of the vehicle. Suppose there are young drivers living in the household. Because there is only one vehicle insured there can only be one young driver surcharge on the policy. If there is more than one young driver the surcharge will apply to the young driver with the highest rating.
Special Circumstances Exist
Here are three examples of situations that I have encountered where these rules were altered.
Example 1 - Four drivers (Mom, Dad, and two teens) with three vehicles. Mom and dad owned their own vehicles and insured them. Dad had a special sports car that he drove only on occasion and forbid anyone else to drive it. If the rules were applied then one of the teens would have to be listed as a principal operator on the third vehicle and that would mean a substantially higher premium. We went to the insurance company and detailed the situation and they agreed the sports car would only be rated on the fathers record since no one else was allowed to drive it. This resulted in the two family vehicles having Mom and Dad as principal operators and the two teens being surcharged as young drivers. A fair solution.
Example 2 - Husband and wife owned one vehicle which was registered under her name. She drove it to work. He had a company vehicle which he was able to use personally. He never drove her vehicle. His rating was much higher than hers and she did not want to pay the premium since it was her car and she insisted she would never let him drive it. We gave the details to the insurance company and they agreed to insure the vehicle with her being the principal operator 100% or the time. Another fair solution.
Example 3 - A couple purchased a vehicle for their teens to drive. The teens shared this vehicle and were not allowed to drive the parents vehicles. The insurance company agreed to rate the teen car accordingly and no surcharge was applied to the parents vehicles for the second teen.
You need to use caution when making these statements in order to get a rate concession. These statements become part of the application for insurance. Let's say an accident occurs to Dad's sports car (in Example 1) and his son was driving, or the husband (in example 2) is driving and the vehicle is in an accident? Is there insurance? One thing we know, the insurance company is in the drivers seat. They could deny the claim, especially if they found you his Son was driving the car to school every day or using it every weekend, or that the husband no longer had a company vehicle that he could use personally. Yes they can find out. If one of those teens was driving the parents car and an accident occurred there is no surcharge being applied. I let your imagination give you the answer in that example.
If you do get a rate concession by making statements such as those in the above examples, please remember it is your responsibility to make sure you update your policy by immediately reporting any changes that would make these statements incorrect. Waiting until your adviser asks doesn't cut it.
My job is to help you get the right policy at a good premium and we do that by taking the time to understand your situation and then going to the insurance company to request fair consideration. I don't want anyone to pay more than they should but I also do not want to see them have an uninsured loss. Peace of mind is only achieved by having the right policy.
Young Drivers - Some things to consider.
1. Young drivers who complete a drivers training course start out paying a much lower premium for insurance.
2. Many times we have seen parents insuring vehicles their children own or have exclusive use of. We have also seen parents get wiped out financially because they insured these vehicles under their name when they should not have. If you insure a vehicle you are ultimately responsible for the financial ramification that results whenever that vehicle is an accident regardless of who is driving it. If you have a financial interest in the vehicle, and want to maintain that interest, you can set up a demand loan which gives you the right take possession of the vehicle if your child refuses to pay you back. You can be named on the policy as a loss payable so if money is paid when the vehicle is damaged the check has your name on it.
3. Everyone in the same household should buy insurance from the same insurance company. Even if your teen wants to deal with someone besides your agent, they can still purchase insurance from the same company through someone else. You will have far less problems with the principal driver assignments and young driver surcharges.
4. If a teen is the principal operator of a vehicle it can be quite expensive to insure. The type and age of the vehicle are key factors. Collision premiums can lower and if the vehicle is of low enough value you may even be able to eliminate collision coverage entirely.Other Drivers
Who can drive your vehicle? We have dealt with how the rules apply to those living in the same household. What if uncle Bill comes to visit and he borrows your car. That is fine but please remember that you are responsible to make sure he is qualified to drive. You are ultimately responsible should he get in an accident with your car and the claim will be against your auto policy.
Now what about employees such as a health provider who may drive your vehicle? Do they have to be listed on the policy? In many cases you may be required to do so depending on how often they drive and for what reason. It is best to leave that up the insurance company to decide. However, if you let them take the vehicle home or give them access to the car whenever they choose to use it they would likely be required to be listed as the principal operator.
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