Allowing a friend to borrow your car can potentially result in unforeseen outcomes, particularly if an accident takes place. Therefore, understanding how car insurance coverage works in such scenarios and knowing which policy covers potential injuries and damages becomes essential. Generally, standard car insurance policies extend coverage to occasional drivers, given they have the owner’s permission to operate the vehicle. However, it remains important to exercise caution when deciding whom to lend your car to.
Primary coverage and permissive use: Permissive use provisions are commonly included in standard car insurance policies. These provisions allow for coverage of occasional drivers or individuals to whom you give permission to use your vehicle. Under permissive use, your insurance covers the friend driving your car, provided there are no specific exclusions or limitations. Typically, a permissive driver is someone who doesn’t have a regular access to your car and doesn’t live with you but wants to drive your auto on the off chance. However, the permissive use and driver description may vary depending on the company and state.
In most cases, when your vehicle is involved in an accident, your auto insurance policy acts as the primary coverage. This means that if you lend your car to a friend and they cause an accident, your policy would typically pay for liability claims and damages to your vehicle. However, this coverage is contingent upon having sufficient vehicle insurance coverage for all third-party injuries and damages, as well as collision coverage for your own vehicle.
Secondary coverage and policy limitations: If the friend driving your car has their own insurance, their policy may provide secondary liability coverage. This means that if your policy’s liability limits are exhausted, their liability vehicle insurance would come into play to cover remaining third party injuries and damages. Typically, your friend’s auto insurance doesn’t pay for damages to your own vehicle, even though they may have caused it. So, it’s important to note that the primary responsibility for coverage typically lies with the vehicle owner’s insurance.
To ensure you have appropriate coverage, it’s essential to review your policy for any driver exclusions and limitations. Certain policies may have specific restrictions on coverage for occasional drivers. If you have doubts, consult your insurer or agent to clarify the extent of the provisions of your policy.
Regular use and household members: Normally, auto insurance companies may require individuals who regularly drive your car or live in your household to be added to your policy. By including them on your policy, you ensure that they are properly rated for insurance purposes. Failure to disclose regular drivers or household members could lead to claim denials based on material misrepresentation.
Lending your car to an unfit driver can have severe consequences. In some states, vehicle owners who lend their cars to unlicensed drivers may face the same legal consequences as the unlicensed driver. Also, be extra cautious when you are lending your vehicle to a young driver, especially if you have a car with a powerful engine since some companies are known to exclude inexperienced or young drivers from permissive use, especially when they insure a high risk car.
Premium impact: If your friend is at fault in the accident, making liability and collision claims on your insurance policy will likely result in an increase in premiums for the next few years. These claims will be recorded on your policy and can impact your insurance rates. In case of collision claims, you will need to pay a deductible too.
However, if a third party driver involved in the accident is found at-fault for the accident while your friend is driving, the at-fault driver’s insurance should cover the damages to your vehicle. Provided the third party insurer agrees to pay for your damages, you may not need to file a claim on your own policy and don’t need to pay a deductible.
Lending your car to a friend may appear to be a small favor but you should be aware of the above outcomes and accept it because accidents do happen. Ensure your policy includes permissive use provisions and review it for any limitations or exclusions. Also check the definition of a permissive driver to make sure they fit the description. By understanding the nuances of insurance coverage, you can make informed decisions and mitigate potential risks and consequences associated with lending your car to others.