What does "Permissive Use" mean in car insurance?
In car insurance terms, “permissive use” is the allowance a car insurance policy makes for someone not listed on the policy when driving the insured vehicle with their permission.
Most car policies allow occasional permissive use but check with your insurance company to confirm. If your insurance does not allow permissive use, they may deny your claim if someone else driving is involved in an accident.
Does car insurance cover the car or the driver?
Typically, car insurance follows the car and not the driver for most coverages, other than Personal Injury Protection (PIP) / Medical coverage, meaning if someone else drives your vehicle and gets into an accident your auto insurance provides the primary coverage. This falls under the “permissive use” clause, if your policy has this.
If your insurance policy is insufficient to cover all the expenses in a covered accident, the driver’s own policy may serve as secondary insurance if they are not the owner.
Do you need auto insurance to drive someone else’s car?
Depending on the situation, drivers do not need to be insured to drive someone else’s car. An accident caused by an uninsured driver may be covered under the vehicle’s insurance.
Drivers do need to be legally licensed and depending on the severity of the accident, they may be liable for damages if they exceed the limits of the policy.
Situations where insurance covers other drivers
Household members
Temporary drivers
If you let someone borrow your vehicle, your insurance will cover them if your policy has a permissive use clause. Permission is the key factor here; your insurance will not apply if the driver did not have permission to drive your car.
Situations where insurance does not cover other drivers
However, there are situations where your insurance will not cover other drivers. Keep the following in mind before you let someone borrow your car.
Business
Personal auto policies will not cover anything that happens while the insured car is being used for business.
If your friend borrows your car for commercial purposes like ridesharing, for example, your standard personal auto insurance will not cover it. In this case, the vehicle must be covered under a commercial auto policy or ridesharing endorsement.
Unlicensed drivers
Inexperienced drivers
Impact on insurance premiums
Letting someone else drive your car occasionally will not typically affect your premiums. However, if they regularly use the vehicle they should be listed on your policy as a rated driver.
There is always a risk when you let someone else drive your car. If your friend gets into an accident while driving your car and the claim is filed under your insurance, it could increase your premiums.
Insurance companies consider your claims history when pricing your premium. An at-fault accident involving someone else driving your car will stay on your insurance record, even though you were not driving.
It’s important to understand the terms of your insurance policy and to discuss concerns with your carrier. Being transparent with your insurance company about who drives your car can help you make informed decisions and avoid any potential consequences.
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This page is for informational purposes only. Actual coverage may vary and is subject to the policy issued by your insurer. Restrictions and limitations may apply. Review your policy and consult a licensed insurance professional to learn more about your coverage.