Insurance And Driving: What You Need To Know

Driving a car without insurance is illegal in most states, and you could face legal and financial repercussions if you do so. All states require proof of financial responsibility to pay for damages or injuries caused by an at-fault accident. If you don't have your own insurance policy and drive someone else's car, you should be listed as a driver on the owner's auto insurance policy. In most cases, insurance will not extend to other drivers if they are paying to use the car, and you will need an additional, specific auto insurance policy. Teen drivers and young adults face some of the highest car insurance rates due to their inexperience and higher accident risk.

Insurance requirements vary by state

Nearly all states in the US require drivers to have some form of vehicle insurance, even if it's just the minimum amount. The specific amount varies from state to state, and some states require additional coverage, such as personal injury protection (PIP). PIP covers medical expenses for insured drivers and their passengers, regardless of who is at fault. It can also cover lost wages or other benefits not covered by health insurance. About half of all states require uninsured/underinsured motorist (UM/UIM) coverage, which helps cover the cost of injuries and property damage if you're hit by a driver with little or no insurance.

The sole exception to the rule is New Hampshire, which does not mandate car insurance. However, drivers who choose not to buy car insurance in this state must prove they have sufficient funds to meet the state's financial responsibility requirements in the event they cause an accident. Florida is also an exception, as it only requires liability coverage for property damage and PIP coverage.

If you're borrowing someone else's car or lending your car to someone else, you should check the insurance policy. In most cases, insurance will follow the car and not the driver, but this can vary depending on the policy. Some policies will cover the driver if they have permission to drive the car, which is known as "permissive use". However, if they don't have permission, this is considered "non-permissive use", and the driver's insurance may be responsible for any damages or injuries.

Driving without insurance

If you are in an accident and do not have auto insurance, you could face serious penalties, including fines, impoundment of your vehicle, and suspension of your driving privileges. If you are found at fault in an accident that results in serious injuries or death, you may face a fine of up to $4,000 and, depending on the severity, up to one year in jail. You will also be required to pay for any physical injuries and property damage resulting from the accident.

If you are pulled over without proof of insurance, the police officer may be able to verify your insurance policy through a state-funded electronic database, such as TexasSure in Texas. Even if it is your first offence, you are likely to get a ticket that carries fines. Some states allow a short grace period for providing proof of insurance to the local police department before they issue a ticket.

If you do not have a personal car insurance policy and drive someone else's car, you should be listed as a driver on the owner's auto insurance policy. Car insurance policies typically follow the car rather than a specific person, so you may be covered by the owner's insurance in the event of an accident. However, it is important to speak with the insurance carrier representative to ensure you are listed on the policy. If the owner is hesitant to add you to their policy, you may need to get non-owner car insurance, which provides liability coverage for property damage and bodily injury.

Permissive use and borrowing cars

When it comes to permissive use and borrowing cars, the answer isn't always straightforward. It depends on various factors, including the state you live in, the insurance company, the specific policy, and whether you have permission to drive the car. Here are some key points to consider:

Permissive Use

Permissive use refers to when a car owner gives permission to another licensed driver to operate their vehicle, even if that person is not listed on their car insurance policy. This permission can be expressed (verbal or written) or implied (based on past behaviour or the relationship between the owner and the driver). Most large-scale car insurance providers offer permissive use coverage, but it's important to review your policy carefully as some companies only cover drivers listed as "active drivers". Additionally, permissive use typically applies to infrequent and short-term trips, and regular drivers should be added to the policy.

Insurance Coverage

In general, car insurance follows the car rather than the driver. This means that if you give someone permission to drive your car and they are involved in an accident, your insurance may cover the damages and injuries up to your policy limits. However, the driver's insurance may also come into play, depending on their policy and the specifics of the accident. It's important to note that permissive use may not provide the same level of coverage as the policyholder would have when driving. Additionally, business use of a vehicle under permissive use is typically not covered.

Important Considerations

Before allowing someone to borrow your car, it is essential to check that they have a valid driver's license and a good driving record. Lending your vehicle to someone with a poor driving history could have liability implications for you. Additionally, if you exclude a driver from your policy, and they drive your car with implied or assumed consent, you may not be covered in the event of an accident, and you could be held personally liable for damages.

Adding Drivers to Your Policy

If someone will be driving your vehicle regularly or for an extended period, it is advisable to add them to your policy as an additional driver. This ensures they have the same coverage as you and can help avoid unexpected expenses in the event of an accident. Discuss the deductibles, coverages, and any concerns with your insurance agent before listing them as a driver.

Adding young or teen drivers to your policy

In most states, all drivers must have some type of vehicle insurance, even if it's the minimum requirement. Driving without insurance is illegal and can lead to legal and financial repercussions.

Adding a young or teen driver to your policy can be expensive, with rates increasing by 70% to 150%. However, there are several ways to lower the rate. Here are some things to keep in mind:

• Contact your insurance agent or company to discuss your options and find out about discounts.
• Include your teen in the discussion so they understand the impact of their actions on insurance costs.
• Consider postponing getting a license for your teen. Younger drivers can result in higher insurance costs, so delaying until your teen is 17 can lead to lower rates.
• Choose the right car for your teen. Sports cars or high-powered vehicles will have higher insurance rates. Family sedans, minivans, or small SUVs typically have better rates for teens.
• Increase your collision deductible. Raising your deductible can lower your monthly premium, but keep in mind that your out-of-pocket costs will be higher in the event of an accident.
• Look for discounts. Some insurers offer family plan discounts when young drivers obtain insurance with their parents' insurer. Good student discounts are also available for students who excel in school.
• Assign your teen to the cheapest car on the policy. If your insurance company allows you to assign drivers to cars, you can save by assigning your teen to the most affordable vehicle.

Non-owner car insurance

In most states, all drivers must have some type of vehicle insurance, even if it's the minimum requirement. Driving without insurance is illegal and can lead to legal and financial repercussions.

• Borrowing cars often: If you frequently borrow a car and don't have your own policy, a non-owner insurance policy can provide liability coverage beyond what the car owner's insurance provides.
• Using a car-sharing service: A non-owner policy can be useful if you frequently use car-sharing or short-term rental services as it gives you liability coverage.
• Renting cars often: If you rent a vehicle without an insurance policy, a non-owner car insurance policy may be cheaper in the long run than purchasing liability coverage from the rental company each time.

You may not need a non-owner policy if you rarely drive or if you borrow a car from a household member, in which case the owner should add you to their insurance policy.

Frequently asked questions