Starting next year, a new law will take effect aimed at protecting Texas drivers from injuries and accidents caused by uninsured and underinsured motorists. The law, recently enacted by the Legislature and signed off by Gov. Rick Perry, is intended to clarify the rules, and frequent misuse, surrounding named driver policies. Unlike standard liability car insurance that covers the vehicle and any driver operating it, named driver policies – or “junk” policies as they’re often called – cover only one specified driver. As a result, when any family member or uninsured person uses a named driver’s vehicle, they do so without insurance protection for themselves or other motorists on the road.
These policies, of which there’s an estimated 1.2 million currently issued in Texas, are often cheaper than insurance policies that follow the vehicle, instead of an individual driver. Too often, however, these policies fail to specify how, and by how much, liability is limited or even identify who the named driver under the policy is. Under the new laws expected to take effect January 1 of next year, named driver policies must clearly state coverage limits and list any individual named under the policy on insurance ID cards. The new measure will also prohibit insurance companies from selling such policies whose coverage amounts do not exceed state-required minimum coverage.
One of the big advantages of the new law is that police officers stopping a motorist or responding to an accident will be able to quickly and accurately identify whether drivers properly meet state-required minimum coverage limits. John Smithee, chairman for the House Insurance Committee and supporter of the new law, reports that he’s “heard of many cases of drivers involved in horrific accidents who later discover that there is no insurance coverage because of one of these policies.”