Key takeaways
- Your car insurance policy will cover the listed vehicles on it, even if you let someone else drive one of those cars.
- You might be responsible for covering damages caused by someone else driving your car.
- If someone drivers your car often, you might want to add them to your policy.
Car insurance follows the vehicle, not the driver. And if you lend your car to someone else and they cause an accident, that means you're responsible for covering any resulting damage or medical bills.
Your friend's auto insurance might kick in eventually, but your policy is primary — which means filing a claim could increase your rates. So before you decide to let someone drive off in your car, consider what that could mean to your financial security.
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Friends causing car accidents
Generally speaking, your auto insurance policy applies to all drivers listed on your policy. It may also apply to drivers living in your household — spouse, partner, roommates or relatives — who have permission to use your car. Non-household members will generally also be covered by your policy if you give them permission to use your car. Drivers with permission to use your vehicle are called “permissive” drivers.
Suppose you lend the car to a friend, who causes an accident. Your liability insurance would pay to repair damage to the other vehicle and any medical bills, up to your policy limits. Once those limits are reached, your friend would be responsible for what’s left over. Still, the incident goes down as a liability claim against you and could cause your rate to go up at renewal time.
If your friend doesn’t have auto insurance, then he could be sued for whatever your policy doesn’t cover. You might be sued too, since your car was involved. According to Jury Verdict Research, the median jury award for vehicular liability was $50,062 in 2020, the most recent year for which data was available.
Then there’s the damage to your own car. For that, you’ll need to tap your own collision coverage — if you have it — and that will be another claim on your record that could lead to a rate increase. If you don’t have collision coverage, you’ll have to find the money to pay for repairs.
Listing car borrowers on your policy
People who often borrow your car might not be covered, because a regular driver of your car should be listed on your policy. It’s best to add frequent borrowers to your policy, like roommates, to make sure your insurance will pay for accidents.
Adding drivers can affect your rate. A younger person or someone with a spotty driving record could cause your rate to go up, but adding an excellent driver could actually lower it.
If friends don’t have their own insurance, they could buy non-owner auto insurance. If they cause an accident in your car, your liability insurance would still be primary and their non-owner insurance would pick up any remainder. Non-owner insurance doesn’t include collision or comprehensive coverage, so you’d still have to use your own collision insurance for damage to your car.
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Driving your car without permission
Suppose a friend or relative takes your car without permission and causes an accident. In that case, his insurance could be primary and yours secondary. But if that person is uninsured, you and your insurance will likely be responsible. Your insurance company will likely assume the relative or friend had permission unless you can make it clear that he didn’t.
It can be hard to say no to someone who asks to use your car. But before saying yes, decide whether you trust the borrower to drive safely, since a single accident could have a lasting impact on your finances.
