In the future, you may loan your car to a friend, family member, or roommate and then get a call that an accident has happened in your vehicle. Knowing what happens next doesn’t have to be a mystery; we’ll help you understand the different scenarios.
Who is covered when driving your car?
The general rule is that anyone living in your house is typically covered when driving your car, unless expressly excluded on the policy. In many cases, everyone in the same household is required to be included on the vehicle’s insurance policy.
For those family members or friends who don’t live with you but use your car every once in a while, you can typically loan them your vehicle and they’ll be covered by Permissive use.
Car Insurance follows the vehicle
Car insurance follows the vehicle, not the driver. This means that if you lend your car to a driver who is not excluded on your policy, your car insurance is the primary coverage that would apply if a crash occurred. The driver’s insurance would act as secondary or excess insurance.
Take a look at this example:
Let’s say you loan your car to your roommate, Nick, for the day. Nick hits another driver in the parking lot at the store. The primary coverage that would pay for damages to the other driver is your liability coverage. This means that you’d have to:
-File the claim with your company -Pay the deductible -Accept any resulting rate hikes.
If the damages exceed your limits, Nick’s coverage will step in as secondary coverage. However, if the accident was not Nick’s fault, the claim would be paid by the other driver’s coverage and your insurance would be unaffected.
Exceptions:
Excluded drivers: If you’ve excluded a driver from your auto insurance policy because their driving record is bad and it could save you money to exclude them, your coverage will not pay for damages incurred if they take your car and get into a crash.
Non-Permissive Use: If your car is taken without your permissions, it can be difficult to prove you didn’t give permission. You’ll general end up paying. However, if it’s obvious you did not allow someone else to drive your car and an accident occurs, a few scenarios could unfold.
Theft: If someone steals your car and causes an accident, you won’t be liable for damages or injuries to the other vehicle or driver. However, damages to your own vehicle would likely be covered under your own coverage.
Use of vehicle by a friend or family member: If your friend takes your car without permission, their coverage would likely pay first and yours would step in to fill any gaps.
Use of your vehicle by an uninsured friend: If your friend takes your car without permission and is uninsured, you can expect your own car insurance coverage to pay.
You could also be liable if you let an intoxicated or unlicensed driver operate your vehicle.
A Word of Caution: Purposely hiding household drivers because they are young or have a bad driving record is not a good idea. If there’s a claim, it’s unlikely that it will be covered.
Understanding your car insurance coverage and what your current policy states about these scenarios is important. Be sure to talk to your agent before letting someone drive your car, to make sure you understand the risks.
AZ Insurance Team
480-535-5709
*All policies are a little different and this may not be applicable to your insurance policy, talk to your agent to see what your policy covers.*
*This post was originally published in May, 2017 and has been updated for freshness, accuracy, and comprehensiveness*