This is a very common question due to how frequently we let other people drive our vehicles. It might just be a relative taking your car to the store quick, or it might be an extended cross-country excursion.
If they have an accident or your car gets damaged in other ways, do you have coverage when someone else is driving?
Generally speaking, auto insurance follows the car, not the driver.
This concept is known as “permissive use.”
For example, if you lend your car to a friend for the weekend and they get into an accident, your insurance would usually cover the costs, just as it would if you were driving.
In most cases, your insurance will cover your vehicle even when someone else is behind the wheel. However, as with many aspects of insurance, it’s not always that simple.
What Does the Policy Say?
The ISO Personal Auto Policy form, which serves as a standard for many insurance companies, addresses this issue directly.
Under Part A – Liability Coverage, the policy states:
“We will pay damages for ‘bodily injury’ or ‘property damage’ for which any ‘insured’ becomes legally responsible because of an auto accident.”
It then defines an insured as:
“1. You or any ‘family member’ for the ownership, maintenance or use of any auto or ‘trailer’.
2. Any person using ‘your covered auto’.”
This language is crucial. It explicitly includes anyone using your covered auto as an insured under your policy. But what does this mean in practical terms?
A Real-World Scenario
Imagine you’ve lent your car to your cousin for a quick grocery run. Halfway there, they rear-end another vehicle. In this situation, your insurance would typically step in to cover the damages, just as if you had been driving.
Exceptions and Limitations
But hold on—there are exceptions and limitations to be aware of.
What if your cousin doesn’t have a valid driver’s license? Or what if they took your car without permission? In such cases, your insurance company might deny coverage.
Moreover, some policies have restrictions on who can drive the insured vehicle. For instance, if you have a named driver policy, only those specifically listed on the policy are covered.
Additionally, if the person you lend your car to lives with you but is not listed on your policy, the insurance might not cover an accident they cause.
Impact on Your Insurance
It’s also worth noting that while your insurance may cover the damages, your premiums could still increase following an accident—even if you weren’t the one driving. Unfair? Perhaps, but that’s how insurance often works.
The Driver’s Own Insurance
In some cases, the driver’s own insurance might come into play as secondary coverage.
For example, if the damages exceed your policy’s limits, the driver’s insurance could potentially cover the remaining costs. This scenario is more complex and can vary widely depending on the policies involved.
Other Scenarios to Consider
Here are a few other situations to think about that can cause issues if your car gets damaged and you’re not driving.
Your child’s friend borrows your car
You let your teenage son’s friend drive your car to run an errand. Unfortunately, they get into a fender-bender.
Since you gave them permission, your insurance should cover the damages. However, if your insurance policy has a high deductible, you’ll still be responsible for paying that amount out of pocket before your coverage kicks in.
Your roommate borrows your car without permission
Imagine you go on vacation and leave your car keys at home. Your roommate takes your car without asking and gets into an accident.
Since you did not give explicit permission, your insurance may not cover the damages. In a case like this, your roommate could be held personally liable for the costs.
Business use of your vehicle
If someone uses your car for business purposes or if you rent it out, the situation changes significantly.
Many personal auto insurance policies do not cover business use or rental use.
For example, if you let a coworker use your car for a business trip and they have an accident, your personal insurance might not cover it. In these cases, you would need to look into a commercial auto insurance policy or specific rental coverage.
Regular Borrowers Can Cause Issues
Lending your car regularly to someone who doesn’t live with you could be problematic.
While it’s common to lend your car to friends or family members occasionally, issues can arise when you have “regular borrowers” who do not live with you.
These are individuals who frequently drive your car, such as a close friend or a relative who doesn’t reside at your address but uses your vehicle on a regular basis.
Why is this a problem?
Insurance companies expect to be informed about regular drivers of the insured vehicle.
If someone drives your car frequently, your insurance company might consider them a regular user and expect them to be listed on your policy.
Failing to (or forgetting to) list a regular borrower can lead to complications. In the event of an accident, the insurance company may look into the driver’s relationship to you and how often they actually drive your vehicle.
If they determine that this person should have been listed as a regular driver due to how often they actually drive your car, they could potentially deny coverage for the claim.
This means you could be personally responsible for any damages or liabilities, and that is not a situation you want to be in.
Conclusion
Insurance is all about managing risk. When you hand over your keys, you’re also handing over a portion of that risk.
Is the person you’re lending to a safe driver? Do they understand the responsibility they’re taking on?
While your car is typically covered when someone else is driving, it’s crucial to understand the specifics of your policy. If you have a situation where someone frequently borrows your car, it’s a good idea to talk to your agent or company just to make sure you have the right coverage in place to cover any potential claims that could arise.
During his career as an independent insurance agent, Ryan Grabenstein was appointed with Progressive, Allstate, Nationwide, Travelers, and many smaller regional and mutual companies. He has a Bachelor's degree in Finance from the University of Nebraska at Lincoln and Certified Insurance Counselor (CIC) personal and commercial lines training.