Insurance Typically Travels with the Vehicle
Typically, car insurance travels with the vehicle – not the driver. That means your own insurance policy will cover any insurance claim involving your vehicle – regardless of who was driving.
In other words, if someone borrows your car (with your permission) and wrecks it, then your insurance is responsible.
However, if the accident was so severe that the damages exceeded your policy limits, then your friend’s insurance policy may kick into effect. Typically, the vehicle owner’s car insurance will be used until the policy is exhausted, at which point the insurance company of the person who borrowed the vehicle may kick into effect (assuming the person who borrowed your car is insured).
Generally speaking, anyone living in your house will be covered when driving your vehicle unless they’re expressly excluded on your policy.
In addition, most insurance policies cover anyone who has permission to drive your vehicle. This is called permissive use: you can typically loan your vehicle to other people and they will still be covered by your car’s insurance policy.
What Happens If You Borrow an Uninsured Car?
Sometimes, you borrow an uninsured car. Maybe your friend didn’t know the vehicle’s insurance had lapsed. Or, maybe you borrowed an uninsured car intentionally and took the risk.
If you borrow a car without checking for insurance and proper registration, then you’re liable for any damages that occur. The owner of the vehicle is not liable.
Will My Rates Go Up?
If a friend borrows your car and gets into an at-fault collision, then it’s likely that your insurance rates will increase.
When you lend a car to a friend, you’re agreeing to take responsibility for the driver of your car and his or her actions. Most insurance companies will increase your premium after a single at-fault accident. In some states, your insurance rates will rise by about 30% after a collision. In other states, your rates might rise as much as 80% after a single at-fault claim.
This can be frustrating for good drivers. You have a perfectly good driving record and you have never been in an accident. You lend your car to a friend and he gets into an accident, and now you’re forced to pay higher insurance rates.
How is this fair?
Well, in the eyes of the insurance company, you’re considered a risky person to insure because you have a history of lending your vehicle to friends who are bad drivers. Even if you’re a good driver with a clean history, your clean history matters little if you lend your vehicle to people with bad driving records.
Insurance Doesn’t Always Travel with the Vehicle
There are certain situations where your insurance policy will not travel with your vehicle. In certain situations, someone driving your vehicle can get into an accident and it won’t affect your clean driving record – say, if it was an excluded driver or if someone stole your vehicle.
You might exclude someone from your household because they have a poor driving record or a DUI. In this situation, everyone in your household is allowed to use your vehicle except for that excluded driver. If that excluded driver gets into a collision, then your insurance policy will not pay for any damages incurred in that collision.
In some states, even if you do give permission to the excluded driver, you may not be held liable for damages. In other states, however, you will be held liable after giving permission to an excluded driver.
Up above, we mentioned “permissive use”, which is where you give permission to a friend, relative, or other person to drive your vehicle. Your insurance policy will typically cover any permissive use accidents.
However, there are situations involving non-permissive use of your vehicle, including:
- Theft: If someone steals your vehicle and gets involved in an accident, then you won’t be held liable for any damages or injuries. However, if you have comprehensive or collision coverage, then you may be able to file a claim and receive compensation (without your rates increasing).
- Use of Vehicle by a Friend or Family Member Without Permission: A friend or family member might use your vehicle without your permission. If your friend takes your vehicle without permission and gets involved in an accident, then their insurance policy will pay first, and your insurance policy will fill in the gaps (if necessary).
- Use of Vehicle by an Uninsured Friend: What happens if your friend takes your vehicle without permission and they don’t have insurance? In this case, your own car insurance policy will pay.
Conclusion: Be Careful About Who Drives Your Vehicle and Consider Contacting an Attorney
If someone gets into an accident while driving your vehicle, then things can quickly get messy. Be careful about who you allow to drive your vehicle.
If your car has been involved in an accident after you lent it to a friend or family member, and there’s a dispute over who should pay, then consider hiring an attorney. An attorney can help you avoid personal liability – particularly if your friend was unlicensed, uninsured, or impaired.