What happens if an excluded driver is in a car accident but not at fault?

This blog explains how insurers treat excluded drivers, what happens in at-fault and not-at-fault accidents, and the steps you can take to protect yourself.

What is an excluded driver in car insurance?

An excluded driver is someone your car insurance policy says explicitly is not covered to drive your car. If that person drives and has an accident, your insurer can refuse to pay for repairs or any insurance claims linked to the incident. This applies whether the excluded driver is at fault or not.

Insurance companies usually exclude a driver to reduce their risk and lower premiums. Common reasons include a poor driving record, the driver’s age, or a history of frequent accidents. By excluding high-risk drivers, insurers protect themselves, but it also means those drivers won’t be covered if they’re involved in an accident.

It’s crucial to read your Product Disclosure Statement (PDS) and check your insurance certificate to see who is covered. Suppose a named driver has an accident in another car. In that case, coverage depends on the type of policy. For example, some comprehensive car insurance policies extend to occasional use, while others do not.

What happens if an excluded driver causes an accident?

If an excluded driver causes an accident while driving your car, your insurer will almost always reject the claim. Because that driver is listed as excluded on your car insurance policy, the insurer has no obligation to pay for repairs, medical bills, or third-party property damage.

As the policyholder, this means you may have to cover the damage to your car and could also be responsible for compensation if the excluded driver injures someone or damages another vehicle. In serious cases, you might face legal action from other drivers or passengers.

ASIC’s Moneysmart guide to car insurance explains that exclusions are legally binding parts of your policy. Allowing an excluded person to drive the car is considered a breach of your insurance requirements. This could affect your ability to renew your cover, increase your premiums, or even cause your insurer to cancel the policy.

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What happens if an excluded driver is not at fault in an accident?

If an excluded driver is in an accident but not at fault, your car insurance policy still won’t cover the damage, since that person is specifically excluded. However, the at-fault driver’s insurance company is generally responsible for paying repair costs and compensation.

In these cases, you may be able to make a car insurance claim directly against the at-fault driver’s insurer. If successful, their insurer should cover the cost of repairs to your car and medical expenses for passengers. This is sometimes called a “third-party recovery claim.”

That said, the excluded driver’s status can still complicate things. Your insurer may review the incident and decide to adjust your insurance premiums or add extra conditions to your policy. According to the General Insurance Code of Practice, insurers must assess claims fairly and transparently, but exclusions are still enforceable.

Excluded driver accident scenarios and insurance coverage

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Can you exclude a driver from your car insurance policy?

Yes. Many insurers allow you to exclude a driver from your car insurance policies to help reduce risk and keep costs down. This is often done when a household member has a poor driving record, is considered high risk, or when listing them on your policy would result in a higher premium.

By choosing to exclude a driver, you’re agreeing that they are not covered by the policy. If the excluded driver gets in an accident while driving your car, your insurance coverage will not apply, and the insurer can deny any insurance claims. In this situation, you would be left to pay repair costs or recover them directly from the at-fault driver’s insurance provider.

What to do if you believe you were unfairly excluded

Sometimes, a driver may believe they were unfairly excluded from a car insurance policy. This could happen due to assumptions about their driving record, age, or household circumstances. If you believe the exclusion is unjustified, you have options.

Start by contacting your insurer and asking for an explanation. They are required to outline the reasons for exclusions in your insurance policies and provide details in the Product Disclosure Statement (PDS). If you still disagree, you can request that the insurer review their decision.

Our team offers no-obligation, independent repair quotes and can step in to negotiate directly with your insurer, helping you avoid the stress of handling disputes on your own.

If the issue isn’t resolved, you may be able to escalate your complaint to the Australian Financial Complaints Authority (AFCA). AFCA helps consumers challenge insurance decisions they feel are unfair, including disputes about driver exclusions and whether someone should remain listed on their policy.

Get help after a car accident by an excluded driver

Repairing your vehicle after a car accident with an excluded driver can be challenging. Because the policy does not cover them, your own car insurance claim will almost always be rejected. This means the at-fault driver’s insurance (if another person caused the crash) may need to pay, or you might have to cover repairs yourself.

If the excluded driver gets in an accident and is entirely at fault, the costs can quickly add up. Not only could you lose your insurance coverage, but your insurer might also consider cancelling or adjusting your car insurance policies, which may result in a higher future premium.

As one of Melbourne’s top-rated smash repairers, Sheen provides expert towing, panel beating, and guidance for well-known car brands including Toyota, Mazda, and Hyundai. At Sheen, we work with all major insurers, including Budget Direct, to manage the car insurance claim process and deliver high-quality repairs. If your car can’t be driven, we can also organise towing and provide a replacement vehicle while repairs are underway.

Sheen is a proud VACC-accredited repairer, which means every repair meets strict safety, quality, and service standards recognised across Victoria. With over 50 years of experience in Melbourne and a network of workshops across Victoria, Sheen has built a legacy of trusted repairs and reliable customer care for generations of drivers.

Don’t let a policy exclusion or dispute with an insurer keep you off the road. Call Sheen first for expert guidance, quick smash repairs, and help navigating your claim from start to finish.

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Frequently asked questions about excluded drivers and car insurance

What happens if an excluded driver gets in a car accident?

If an excluded driver is involved in a car accident, your car insurance usually won’t provide coverage. The insurer may deny any claim, leaving you responsible for costs unless the at-fault driver’s insurance pays.

Can an excluded or unlisted driver make a claim?

No. If an excluded driver or unlisted driver gets into an accident, they cannot directly make a claim on your policy. Whether costs are covered depends on the type of insurance and whether another at-fault driver has coverage.

Who is considered a listed driver on car insurance policies?

A listed driver is someone shown on your insurance certificate and officially covered by the policy. If a driver from your policy is not listed and gets in an accident, they may face an unlisted driver excess or be excluded altogether.

Do all insurers exclude drivers in the same way?

No. Exclusions vary across insurance policies. For example, Budget Direct car insurance policies may outline exclusions differently from other insurers. Always check your PDS and certificate of insurance for details.

What if I believe I was unfairly excluded?

Ask your insurance provider for clarification if you believe you were unfairly excluded from a policy. If unresolved, you can escalate the issue to the Australian Financial Complaints Authority (AFCA) for review.