Borrowed Cars: Am I Covered?

If you're borrowing a vehicle, you're likely covered by the owner's insurance policy, but only if you have the owner's permission. This is known as permissive use. However, this typically only applies to irregular and infrequent borrowing. If you're borrowing a car regularly, you may need to be added to the owner's insurance policy. It's important to check with the insurance provider to see what and who is covered.

Permission: Verbal consent is usually needed for coverage

When it comes to borrowing a vehicle, it's important to understand the insurance implications, specifically whether verbal consent is sufficient for coverage. Here are some key points to consider:

Permission and Verbal Consent

Verbal consent is typically required for insurance coverage when borrowing a vehicle. This is known as "permissive use," where the vehicle owner grants permission to someone who is not listed on their car insurance policy to operate the vehicle. This permission is usually granted verbally and ensures that the borrower is covered by the owner's insurance policy in the event of an accident.

Occasional Use

It's important to note that permissive use typically applies to occasional borrowing. If the borrower is a frequent driver of the vehicle, they should be added to the insurance policy as an authorized driver. This is particularly relevant if the borrower is a family member or household member who has regular access to the vehicle.

Insurance Coverage

When you lend your vehicle to someone with your permission, your insurance becomes the primary coverage. This means that in the event of an accident, your insurance will likely cover the damages and injuries, up to your policy limits. However, if the borrower also has their own insurance, their policy may provide secondary coverage or backup coverage, depending on their policy details and the specifics of the accident.

Excluded Drivers

It's important to be mindful of excluded drivers on your policy. If you lend your vehicle to someone who is specifically excluded from your policy, your insurance will likely not cover them in the event of an accident. Excluded drivers are usually high-risk drivers with a history of accidents or driving under the influence.

Legal Requirements

Before lending your vehicle, it's crucial to understand your state's requirements and insurance company's guidelines. In some states, you may be required to list all drivers residing at your permanent residence on your policy, regardless of how often they drive your car. Additionally, if a borrower is unlicensed, has a suspended license, or is under the influence of drugs or alcohol, your insurance policy may not cover them in the event of an accident.

In summary, verbal consent is typically necessary for insurance coverage when borrowing a vehicle. However, it's important to review your insurance policy and understand the specific requirements and limitations to ensure proper coverage.

Occasional use: Infrequent borrowing is typically covered

If you're borrowing a vehicle from a friend or family member, you're likely covered by their insurance policy, assuming you have their permission and are driving the car occasionally. This is known as "permissive use", where the car owner gives someone who isn't listed on their policy permission to drive their vehicle. In the event of an accident, the car owner's insurance will likely cover any potential damages, but the driver's insurance may also be liable, depending on their policy and the specifics of the incident.

Permissive use typically applies to occasional borrowing. If you're regularly driving someone else's car, you should be added to their policy as an additional driver. Insurance companies have different definitions of "frequent" or "regular" driving, so it's important to check with the insurance provider to ensure proper coverage. For example, some companies require listing any drivers living at the same permanent residence, regardless of how often they drive the car.

When borrowing a car, it's essential to understand the owner's insurance policy and its limitations. While the owner's insurance is the primary coverage, the borrower's insurance may provide additional protection if the owner's insurance is insufficient to cover all damages. It's also worth noting that while insurance follows the car, any illegal acts, such as speeding or traffic violations, follow the driver and may result in increased insurance premiums.

Before lending your car to someone, ensure they have a valid driver's license and a clean driving record. As the owner, you are responsible for any accidents or claims resulting from their driving. Additionally, if the borrower is a frequent driver or a member of your household, consider adding them to your policy to ensure adequate coverage.

Liability: The owner's insurance covers damage to others

If you borrow a vehicle and cause damage to another vehicle or person, the owner's insurance will likely cover the damage to the other party. This is because car insurance generally follows the car and not the driver. This means that when you lend your car to someone, you also lend them your car insurance.

In the case of an accident, the owner's insurance becomes the primary coverage. If the driver is also insured, their auto insurance could also pay out, depending on their policy and the details of the accident. However, this only applies when the owner gives permission for the car to be borrowed and the driver is not excluded from the owner's policy. Excluded drivers are usually family or household members who are proven high-risk drivers, often with a history of accidents or DUIs.

In the event of an accident, the owner's liability coverage will pay for repairs to the other vehicle and any injuries to the other driver, as long as the driver of the borrowed car is not at fault. If the driver of the borrowed car is at fault, the owner's liability coverage will still pay for the damage to the other driver's car and any injuries to the other driver, but damages to the owner's car will only be covered if the owner has collision coverage. In this case, the owner will probably need to pay their deductible.

If the owner's insurance coverage limits are not high enough to cover the damages, the driver's insurance may have to be involved to cover the remaining costs. It is important to check both the owner's and the driver's insurance policies to understand the specific coverages and any potential implications.

Exclusions: High-risk drivers can be excluded from policies

When it comes to borrowing a vehicle, it's important to understand the insurance implications, especially if you're a high-risk driver. Here are some key points to consider:

Exclusions for High-Risk Drivers

High-risk drivers, such as those with a history of accidents or DUI convictions, can be excluded from insurance policies. This exclusion protects the insurance company from increased risk. If you are a high-risk driver and borrow a car, it's crucial to check if you are excluded from the owner's policy. If you are excluded, the owner's insurance will not cover you in the event of an accident.

Permission and Occasional Use

It's important to always obtain permission from the vehicle owner before borrowing their car. Most insurance policies cover occasional use by a driver who is not listed on the policy, as long as permission is granted. This is known as "permissive use." However, frequent or regular use by a non-listed driver may require adding them to the policy to maintain coverage.

Primary and Secondary Coverage

When a vehicle is borrowed and an accident occurs, the owner's insurance typically serves as the primary coverage. However, if the damages exceed the owner's policy limits, the borrower's insurance may be tapped as secondary coverage. This is why it's important for both the owner and the borrower to understand their respective insurance policies and coverage limits.

State Laws and Policy Variations

Insurance policies can vary widely depending on the state and the specific insurer. It's crucial to review your own policy and contact your insurance agent to clarify any uncertainties. Different states may have different requirements for listing household members or regular drivers on a policy, and these factors can impact coverage in the event of an accident.

Liability and Risk

As a vehicle owner, it's important to exercise good judgment when lending your car. Allowing a high-risk driver to borrow your vehicle can expose you to potential liability and increased insurance costs if they are involved in an accident. Always ensure you understand the risks and implications before handing over your keys.

Secondary coverage: The borrower's insurance may also pay out

When borrowing a vehicle, the borrower's insurance may also pay out as secondary coverage. This is when someone is covered under two health plans, with one designated as the primary health insurance plan and the other as the secondary insurance. The primary insurance is where health claims are submitted first, and the secondary insurance will then pay for any remaining costs that are eligible for coverage under its health plan. This is called the coordination of benefits, where insurance providers can avoid duplicate payments for claims.

Secondary insurance can be another medical plan, such as a spouse's plan, or a different type of plan purchased to extend coverage, known as voluntary or supplemental coverage. It is important to note that the borrower's secondary insurance will only pay out if their primary insurance is insufficient to cover the damages.

For example, if the borrower's insurance coverage limits are not high enough to cover the damages to the other driver's car or their medical bills, their secondary insurance may be involved in covering the remaining costs. This ensures that the borrower is not left with out-of-pocket expenses that exceed their coverage limits.

Additionally, in the case of an accident, the borrower's insurance may be responsible for paying for damages and injuries if they are found to be at fault. This is known as "non-permissive use," where the driver's insurance is held liable for any damages resulting from an accident while using a vehicle without the owner's permission.

Frequently asked questions