If you need to let someone borrow your car, you might be wondering if your car insurance will cover them. We’ll go over the basics of car insurance policies, who they cover and situations where your insurance will cover someone else driving your car.
Overview of Car Insurance Policies
Your car insurance policy is a contract between you and your insurance company. It provides financial protection in the event of certain unforeseen situations involving you or your vehicle. The exact terms vary by state, company and the specific policy.
A typical car insurance policy covers medical expenses and liability protection for you. Each state has their own minimum insurance coverage requirements, and may contain the following coverages:
Medical benefits coverage can help pay medical expenses for you or your passengers after an accident.
Bodily injury liability coverage protects you if you’re held responsible for injuring someone in a car accident.
Property damage liability coverage helps reimburse another person for their damaged property (such as a car, fence, or a building) if you are held responsible for damaging someone else’s property in a car accident.
Uninsured and underinsured motorist liability coverage helps pay medical costs and other related expenses when you or one of your passengers is injured in an accident caused by a driver who doesn’t have enough car insurance (is underinsured) or who doesn’t have any coverage (is uninsured). This coverage may also pay for injuries sustained in a hit-and-run accident.
Full coverage helps pay for damage to your vehicles. This typically includes comprehensive and collision coverage.
Collision coverage helps pay for the cost to repair or replace your car if it hits another car or an object, is hit by another car or if it rolls over while driving.
Comprehensive coverage protects your car from damage NOT related to a collision with another vehicle. This includes things like fire, theft, vandalism or fallen trees.
What Does “Permissive Use” Mean in Car Insurance?
In car insurance terms, “permissive use” is the allowance a car insurance policy makes for someone other than the named insured when driving the insured vehicle with their permission.
Most policies will cover you (the named insured) and your immediate family members. If your policy has a permissive use clause, it will also cover anyone you let drive your car. Most car policies allow 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.
Situations Where Insurance Covers Other Drivers
Your car insurance policy may cover other drivers. Check with your carrier or agent for the exact terms of your policy. Here are some situations where your car insurance will cover other drivers:
Household Members
Most policies automatically cover all household members, even if they’re not named on your policy. However, it’s common for insurers to require you to list all licensed drivers in your household on your policy.
Temporary Drivers
If you let someone borrow your vehicle, your insurance will cover them if your policy has a permissive use clause if they don’t already have their own policy. Permission is the key factor here- your insurance will not apply if the driver did not have your permission to drive your car.
Limitations and Exclusions
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
Your car insurance will not cover unlicensed drivers who drive your car, even with your permission. Do not allow someone with a learner’s permit to drive your car without your direct supervision.
Inexperienced Drivers
If your car is being used by a newly licensed driver, you must have them covered on your policy as a rated driver. This may be the case if your child just got their driver’s license.
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 record, even though you were not driving.
Read More: How to Lower Car Insurance Premiums
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.
Primary vs. Secondary Insurance
If someone not on your policy drives your car and gets into an accident, there could be multiple insurance policies in play. Primary and secondary insurance refers to the order in which insurance policies will pay for expenses in a covered claim.
The primary insurance policy is the first to pay for a covered expense. In most cases, this is the vehicle owner’s policy. This is the main source of coverage in the event of a claim. If the primary policy’s coverage limits are met and there are still outstanding expenses, a claim may be made to the secondary insurance policy.
While the terms may vary depending on the insurance carrier, your policy as the vehicle owner typically provides the primary coverage. If this 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.
FAQ
Your insurance company needs to know who regularly drives your car and all drivers in your household. Your insurance company may deny coverage if you fail to disclose who regularly drives your car.
If someone else is driving your car and gets into an accident, your car insurance will cover them if your policy allows permissive use.
New, unlicensed drivers with a learner’s permit are covered by your policy. Once they obtain their probationary driver’s license, they must be covered as a rated driver. They can be on either their own or their parents’ policy. You won’t be required to add your teen as a driver to your policy until they get their probationary license.
