Very few circumstances can cause your auto insurance rates to rise the way an unlisted driver can.
First, the basics. Auto insurance policies are written to cover your car, not necessarily the operator. What this means on the surface is that as long as you have given an individual "permissive use" of your vehicle, should that person become involved in an automobile accident, there should be coverage. The type of coverage that can be applied, of course, would depend on the type of car insurance you originally purchased. For instance, in the event your "permissive driver" is involved in an at fault accident, and you have purchased collision insurance coverage, collision would pay for the damages to your car, minus your deductible. But conversely, even if that driver was involved in a not at fault accident, you can expect your insurance company to take a closer look at your policy come renewal time.
As an example, assume that you loan your car to a friend on a one time basis for whatever reason. You can establish that this friend is not a consistent driver of your car, and you can verify that your friend does not live with you. What happens if your friend, the unlisted driver, becomes involved in an at fault car accident? Under the circumstances, your insurance policy would pay for the damages to your vehicle. Even if your friend has his own policy, that policy is not responsible to pay for your damages.
Will this create problems for you with the insurance company? Probably.
Normally, when insurance companies pay for an at fault accident, you can expect to suffer the consequences. Even though you are making payment on the relevant premiums, your insurance company will "penalize" you if you are involved in at fault accident. How is the penalty imposed? By way of a higher auto insurance rate.
And what about the fact that you permitted a friend to drive? Will that also boost your chances for a higher auto insurance rate? Probably so. Insurance companies tend not to respond well to "unlisted" drivers, at fault or not. In fact, with an unlisted driver in the driver's seat, count on your insurance company to launch a claims investigation into the circumstances. More specifically, they will be looking into the possibility that the driver could live in your home. And, more than likely, they will also examine the driving history of the unlisted driver as well as whether or not that driver has insurance of his own.
Should you expect an increase in your auto insurance rates? Most definitely if the investigation divulges factors that increase your risk rating.
If the insurance company investigation reveals that the unlisted driver has a poor driving record, you can be fairly sure that this will be used against you when your auto insurance rate is calculated at the end of your insurance policy period. By association, if you allow an irresponsible driver to operate your insured vehicle, your risk scoring increases. The higher the risk, the higher the rates. And, if the insurance company can determine that the unlisted driver does not have his own insurance, your insurance company will certainly want to know why? Is it because that driver lives with you?
Applying for insurance without disclosing relevant and applicable risk data – such as the identity of all drivers in that residence – is what auto insurance policies define as "misrepresentation". If a subsequent claims or underwriting investigation determines that you failed to reveal all drivers in the household, it is likely that the auto insurance policy will be cancelled for misrepresentation. In the event that happens, there will be no coverage for that at fault-unlisted driver accident.
Behave responsibly if you must loan your car to other drivers. Should it be revealed that those drivers are unlisted members of your household, you're in for some major problems. If the unlisted driver is simply a one-time, responsible driver you can expect to be questioned, but you can also expect to be covered. In the long run, however, once your auto insurance policy is up for renewal, you can expect to face either a non-renewal, or a higher auto insurance rate. Unlisted drivers can be "expensive".