Paul Sanchez
Whether auto insurance follows the car or the driver is a question that depends on several factors. In general, car insurance follows the car, not the driver. This means that if you lend your car to someone, you are also lending them your insurance. However, there are exceptions to this rule, and it's important to understand the specifics of your policy.
If you give someone permission to drive your car, this is known as permissive use. In most cases, your auto insurance will cover the permissive user, but there may be limitations on the coverage granted. It's also important to note that anyone who regularly drives your vehicle should be listed as a driver on your policy. This includes family members and roommates who live with you.
If an unlisted driver borrows your car without permission, this is considered non-permissive use, and your insurance may not cover them in the event of an accident. In this case, the driver's insurance may be responsible for any damages or injuries.
| Characteristics | Values |
|---|---|
| Who does car insurance cover? | In general, car insurance follows the car, not the driver. |
| Does car insurance cover other drivers operating my vehicle? | Yes, if they are listed on the policy. This may include family members and other household members. |
| Does car insurance cover other drivers not listed on my policy? | It depends on consent. If other people drive your car with your permission, then they should be covered under the terms of your policy. |
| Does car insurance cover other drivers in the following situations? | When extended family members visit or stay with you; when sharing the driving responsibility on a road trip or a long drive; when friends and family members borrow your car when theirs is being repaired. |
| Does car insurance cover other drivers in the following scenarios? | No. In most cases, your insurance will not extend to other drivers if they’re paying to use the car; excluded drivers; commercial activities. |
| Does my car insurance cover me when driving another vehicle? | If you’re specifically listed on the car owner’s insurance policy, you’ll be covered. If you’re not on the owner’s policy, applicable coverage will depend on consent. |
| Does my car insurance cover me when driving a rental car? | Your liability coverage will generally extend to the car, but comprehensive insurance coverage and collision insurance coverage may not. |
| Does my car insurance cover me when driving a car-sharing service? | No. You will likely need a separate insurance policy or supplement to insure these types of activities. |
| Does my car insurance cover me when driving a ridesharing service? | No. You will likely need a separate insurance policy or supplement to insure these types of activities. |
| Does my car insurance cover me when driving a car for work purposes? | In many cases, your personal policy may not cover you if you use your car for work purposes. If you regularly use your car for work, you may need a business auto policy. |
| Does car insurance cover permissive use? | Yes. Permissive use means that you have given another individual permission to use your car. In most cases, when this occurs, the person and your vehicle will be covered by your insurance policy if they are involved in an accident. |
| Does car insurance cover non-permissive use? | No. Non-permissive use indicates that someone is driving your car without your permission. In this case, you may not be held accountable for any damage they cause while driving it. The driver’s policy will serve as primary insurance. |
What You'll Learn
- Permissive use: when you give someone permission to drive your car
- Excluded drivers: when someone is specifically not covered by your insurance
- Rental cars: when your insurance covers a rental car
- Commercial use: when your insurance doesn't cover commercial use of your car
- Primary and secondary insurance: when both your insurance and the driver's insurance are applied
Permissive use: when you give someone permission to drive your car
Permissive use is when you give someone who isn't on your insurance policy permission to drive your car. This could be a relative, a friend, or a neighbour. Permission can be verbal and does not need to be in writing.
If the person driving your car has their own insurance, this will typically be used as secondary insurance. Your insurance will be the primary payer for any damages caused by your vehicle. However, the driver's insurance may also be used as secondary coverage if the costs of the accident exceed your policy limits.
If the person driving your car is not on your insurance policy and does not have their own insurance, your insurance may still cover the accident, up to your coverage limits. However, if the driver is found to be at fault and is uninsured, they may be liable for injuries and/or damages beyond the limits of your policy.
It's important to note that if you give permission to an unlicensed or inexperienced driver, your insurance company might try to deny coverage. Additionally, if you allow an unlicensed driver to operate your vehicle, you could face legal consequences, including fines or even incarceration.
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Excluded drivers: when someone is specifically not covered by your insurance
Excluding a driver from your car insurance policy means that they will not be covered by your insurance if they drive your car. Excluded drivers are typically household members who are considered risky drivers, such as those with multiple accidents, violations, or DUIs on their record.
To exclude a driver, you will need to contact your insurance company and may have to fill out and sign an exclusion form. Not all states allow policyholders to exclude household members, and some states may require excluded drivers to have their own insurance policy.
If an excluded driver gets behind the wheel of your car and causes an accident, any damage or injuries will typically not be covered by your insurance. This means that you or the excluded driver may be held personally responsible for the costs. Additionally, your insurance policy could be cancelled or not renewed as a result.
It is important to note that excluding a driver from your policy will not remove them from your insurance altogether. They will still be covered by your policy if they are a passenger in your vehicle.
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Rental cars: when your insurance covers a rental car
Whether your auto insurance covers a rental car depends on the insurance company and the type of policy you have. Generally, your auto insurance will cover a rental car for personal use. However, it is important to carefully review your policy to understand the extent of the coverage. Here are some key points to consider:
Liability Coverage
Liability coverage is typically included in your auto insurance policy and will cover any damages or injuries you cause to others while driving a rental car. This includes bodily injury to other individuals and damage to property. The coverage limits you have chosen for your personal auto insurance policy will apply when driving a rental car.
Collision and Comprehensive Coverage
If you carry collision and comprehensive coverage on your auto insurance policy, this will usually extend to your rental car as well. Collision coverage will pay for repairs or replacement of the rental car if you are in an accident or if the car is stolen. Comprehensive coverage will protect against non-collision incidents, such as vandalism, natural disasters, or theft.
Personal Injury Protection (PIP) and Medical Payments (MedPay)
If you have personal injury protection or medical payments coverage as part of your auto insurance policy, this will typically cover any medical expenses for you and your passengers if you are injured in an accident while driving a rental car.
Credit Card Coverage
Using a credit card to pay for your rental car may also provide additional insurance coverage. Some credit card companies offer primary or secondary rental car insurance. Primary coverage means the credit card company will pay out the claim first, while secondary coverage means they will only pay the amount not covered by your auto insurance policy. Check with your credit card company to understand the specific coverage and any restrictions that may apply.
Exclusions and Gaps in Coverage
It is important to note that your auto insurance may not cover certain situations when renting a car. For example, your personal auto insurance usually does not cover rental cars for business or commercial use. Additionally, there may be gaps in coverage, such as the rental company's "loss of use" fee, which is the charge for lost income while the rental car is being repaired. In such cases, you may need to purchase additional rental car insurance or rely on other forms of insurance, such as health insurance or homeowners insurance, to fill these gaps.
Adding Rental Car Insurance
If you identify gaps in your coverage or do not have a personal auto insurance policy, you may consider purchasing rental car insurance from the rental company or a third-party provider. This can include a collision damage waiver (CDW) or loss damage waiver (LDW), which releases you from financial responsibility for damage to the rental car. You may also want to add personal accident insurance (PAI) or personal effects coverage (PEC) to protect against injuries or theft of personal belongings.
In summary, while your auto insurance may provide some coverage for rental cars, it is important to carefully review your policy and understand any exclusions or gaps. In some cases, adding rental car insurance or relying on other forms of insurance may be necessary to ensure you are fully protected.
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Commercial use: when your insurance doesn't cover commercial use of your car
Typically, car insurance follows the car, not the driver. However, if you use your car for commercial purposes, your insurance policy will not cover incidents occurring during this type of use. This includes using your vehicle for delivering pizzas, driving for a transportation company, or operating a delivery or concierge service.
If you use your car for work, you will likely need a separate insurance policy or supplement to cover these activities. Commercial auto insurance will cover business vehicles owned by the business or an individual using the vehicle for business purposes, such as ridesharing or food delivery. It's important to note that commercial auto insurance will not cover personal use of your vehicle, and you will need separate auto insurance for that.
When determining whether you need commercial auto insurance, consider the following:
- Who owns and drives the vehicle: If a business owns your vehicle, you will likely need a commercial policy. If you're a sole proprietor, you may only need a personal policy, depending on how often and how the vehicle is used.
- How the vehicle is used: If you use your vehicle for business purposes, you will probably need a commercial policy. If you only use it for commuting or travelling to a few job sites, a personal policy may suffice.
- The type and weight of the vehicle: If your vehicle is heavier than a standard pickup or SUV, such as a dump truck or semi-truck, you may need a commercial policy as these vehicles can cause more damage in an accident.
- Required business liability limits: If your business vehicle requires higher liability limits, a commercial policy is likely necessary, as they typically offer higher limits than personal policies.
In summary, if you use your car for commercial purposes, ensure you have the appropriate insurance coverage. Commercial auto insurance will cover business-related incidents, while personal auto insurance will cover personal use.
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Primary and secondary insurance: when both your insurance and the driver's insurance are applied
When it comes to auto insurance, the primary driver is the person who drives the vehicle the most. This individual is typically the named insured on the policy and their circumstances will significantly impact the premium. The primary driver may or may not be the owner of the car.
A secondary driver, also known as an occasional driver, uses the car regularly but not as frequently as the primary driver. They may be a family member, friend, or coworker who resides in the same household or elsewhere. It is important to add secondary drivers to your insurance policy to ensure they are covered in the event of an accident.
In the case of primary and secondary insurance, both your insurance and the driver's insurance can be applied. The primary insurance is responsible for paying first on any claims. If the primary insurance policy cannot cover the entire claim, the secondary insurance comes into play and pays the remaining amount. This process is known as "coordination of benefits" and ensures that both insurers pay their fair share without overlapping.
For example, consider a married couple who share a vehicle. The wife has a health plan through her employer, while the husband's health plan also covers her. In this case, the wife's employer is the primary insurer, and the husband's health plan is secondary. The primary insurance will pay for the claim first, and if there is any remaining amount, the secondary insurance will cover it.
It is important to note that having dual health insurance plans can have advantages and disadvantages. While it can help reduce out-of-pocket costs in some situations, it can also increase overall expenses due to additional premiums and deductibles.
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Frequently asked questions
Permissive use means that you've given another individual permission to use your car. In most cases, when this occurs, the person and your vehicle will be covered by your insurance policy if they are involved in an accident. Non-permissive use indicates that someone is driving your car without your permission. In this case, you may not be held accountable for any damage they cause while driving it.
In many cases, your personal policy may not cover you if you use your car for work purposes. If you regularly use your car for work, you may need to invest in a business auto policy. There is some grey area here, however. If you use your car once in a while to, say, visit a client, your personal policy may cover you. But if the use is frequent and consistent, you will need a business policy to give yourself adequate protection.
If someone else is driving your car and gets into an accident, your insurance will be on the hook for paying for any damages. There may be exceptions — such as if you exclude a driver specifically from your policy — but most standard car insurance policies will continue to cover your car whether you're driving it or if someone else is with your permission.
