Understanding Ohio Financial Responsibility Bonds, Named Operator & Broadform Named Driver Policies

​There are three types of non-regular auto insurance policies in Ohio: A Financial Responsibility Bond, a Broadform Named Driver policy and a Named Operator policy. Most states have a Named Operator policy. A few states have the Broadform Named Driver policy. But only Ohio has a Financial Responsibility Bond. And only Ohio has all three options available. All other states only have one or two options.


      All three policies are intended for those who need auto insurance liability coverage but don't own a vehicle. People need these type of policies for various reasons. But the problem many face is knowing which type of policy is right for them. While all three types of policies are very similar in many ways, they are also very different in other very important ways. This article will help you understand what you need to know to make sure you're buying the right type of policy.


     I have summarized the key similarities and differences between the three. I also created a chart which helps you compare the three side by side. I used 12 key factors and how the three types of policies measure up. It's important that you understand these 12 factors. So let's start with the factors in which all three are similar.......


Similarities

• All three are secondary policies. This applies if you borrow a friend or neighbor's vehicle, and you cause a wreck. The vehicle owner's auto insurance policy is the one that pays any damages. A vehicle owner's policy is thus considered the primary insurance (meaning one who pays first). It's only when the vehicle owner either doesn't have auto insurance, or does have insurance but not enough to cover all the damages, that these secondary policies kick in.

• All three policies offer state minimum liability coverage. While state minimum liability coverage is lousy, it is the bare minimum that will allow you to drive legally.

• None of the three policies cover any other driver besides the one listed on the policy. Regular auto insurance allows your vehicle to be covered when you loan someone your vehicle. Not these three policies!

• All three will satisfy an SR22 state filing requirement.  If you've had your license suspended and need an SR22 to get your license reinstated, all three of these will work for you.

• None of the three policies offer comprehensive or collision coverage. Comprehensive and Collision are the coverages you need to be insured for physical damage done to the vehicle you're driving. Only a regular auto insurance policy offers Comprehensive and Collision coverage. Financial Responsibility Bonds, Broadform Named Driver and Named Operator policies do not offer either coverage.

Differences

• Limits above state minimum liability coverage. State minimum liability coverage is very limited, and only adequate for minor accidents. It will most likely not be nearly enough coverage if you were to cause a major accident involving serious injuries. Most Broadform Named Driver and Named Operator policies offer higher levels of liability coverage but the Financial Responsibility Bond does not.

• Uninsured Motorist Coverage. This is important coverage to have. But the Financial Responsibility Bond doesn't offer it. Most Broadform Named Driver and Named Operator policies do.

• Medical Payments Coverage. Again, the Financial Responsibility bond falls short. Only the Broadform and Named Operator policies offer it.

• Policy applying to vehicles you own. If you're driving a vehicle that you own, there is absolutely no coverage offered whatsoever with a Named Operator policy. A Financial Responsibility Bond and Broadform policy offer coverage on owned vehicles. This is the absolute minimal coverage you can carry on a vehicle you own and still be legal to drive. Although I highly discourage settling for anything less than a regular auto insurance policy for vehicles you own, many people go this route because of the cost savings.

• Policy applying to vehicles owned by a member of your household. Again, there is absolutely no coverage offered whatsoever with a Named Operator policy. Both the Financial Responsibility Bond and the Broadform policy do offer coverage. But again, I'd highly advise you to stay away from doing that.

• Running credit as a rating factor. 92% of all auto insurance companies use your credit record as a factor in calculating your auto insurance score. How much of a factor varies greatly from company to company. The Financial Responsibility Bond is the only policy of the three that does NOT run credit as a rating factor.

• Converting to a regular auto policy. This applies to those who do not currently own a vehicle, but plan on buying a vehicle in the very near future. Both a Broadform and Named Operator policy can easily convert to a regular auto policy by simply adding a vehicle to a policy. This only takes a five minute cold call to your agent. A Financial Responsibility Bond can NOT convert to a regular auto insurance policy. So you will need to cancel your bond and write a new regular auto insurance policy...... It's not that big of a deal. Just a little bit more of a hassle and less convenient. Especially if you are at a car dealership, waiting to drive off the lot.

    Here is a chart to help you compare the three types of policies and decide what's best for you.

Get a Financial Responsibility Bond Quote with Lyles Insurance


Get a Broadform Named Driver Quote with Lyles Insurance


Get a Named Operator Quote with Lyles Insurance



Related Blog Articles:

SR22 Auto Insurance in the Portsmouth Ohio Area: Are you setting up your policy correctly?

Differences Between an Ohio Financial Responsibility Bond and a Named Operator Auto Insurance Policy

Understanding named operator (non-owner) auto insurance policies and how to get the best rate