Class 1 Insurance

What Is Class 1 Insurance?

Class 1 insurance covers an individual occupying an owned vehicle, an individual occupying a vehicle owned by a resident relative, a pedestrian, or a bicyclist. Class 1 insurance, also written as Class I insurance, provides benefits to qualifying parties for any insurance policy in which premiums are paid.

Key Takeaways

  • Class 1 Insurance is a type of coverage offered in the auto industry to protect the policyholder and select others in the event of an accident that occurs when driving for personal, domestic, or social purposes.
  • Class 1 Insurance also covers the policyholder when they are driving for business purposes, excluding carrying goods or samples; Class 2 Insurance expands on this by covering the policyholder when they are carrying goods and samples.
  • Class 1 Insurance covers the spouse and relatives the policyholder shares a home with, as well as bicyclists and pedestrians.
  • Class 2 Insurance covers the same group, as well as people who aren't relatives of the policyholder, but who are allowed to use the car.
  • Class 1 Insurance with uninsured motorist coverage protects the policyholder, spouse, and other relatives from accidents caused by drivers who lack insurance.

Understanding Class 1 Insurance

Class 1 insurance covers a narrow group of people. In addition to covering the named insured, the policy will also cover spouses and relatives sharing a residence with the policyholder.

The difference between Class 1 insurance and Class 2 insurance is that Class 2 insurance extends coverage to individuals who may not be resident relatives of the policyholder, but who may have permission to use or occupy the insured vehicle. Class 1 insurance is thus a more narrow coverage because it applies to a smaller subset of people.

Class 1 Insurance and Uninsured Motorist Coverage

This class of auto insurance coverage has the largest impact on uninsured motorist coverage. Uninsured motorist coverage does not attach to the vehicle; instead, it attaches to the individual that is injured in an accident. This means that an individual that is protected by Class 1 insurance is covered in all locations at all times.

Insurance companies may limit the amount of uninsured motorist coverage in some cases—specifically, if an individual covered by a Class 1 insurance policy is injured in a vehicle that they own, or if the vehicle is owned by a spouse or resident relative but does not have its own uninsured motorist coverage purchased for it.

In some states, class 1 insured individuals may stack uninsured or underinsured motorist coverage up to the limits on the vehicle involved in the accident.

Class 1 Insurance Example

For example, an individual purchases Class 1 insurance for a car sedan, and the policy provides uninsured motorist coverage. This person also owns a truck that does not have uninsured motorist coverage. If injured in the truck the insurer may limit the coverage, depending on the wording of the policy language.

Special Considerations

It's a good idea to review your auto policy annually to make sure you've got all the coverage you need. The state-required minimums are insufficient for people with substantial assets including homes. For a relatively low cost, you can add umbrella liability coverage that is over and above your home and auto policies that would kick in to protect your assets in the event of a substantial court judgment against you or a family member living in your home.

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