Auto Insurance Factors: Driving Your Policy Premiums

Auto insurance is a necessity for car owners, offering financial protection in the event of accidents, theft, or damage. While it primarily covers the insured vehicle, it's important to understand how it applies when someone else is driving your car or if you're driving another vehicle. Generally, auto insurance follows the car, so your policy will typically cover others driving your car with permission, but there are nuances to this. Let's explore the factors that determine whose insurance is responsible when someone else drives your car or you borrow someone else's vehicle.

Driving someone else's car

Permissive Use vs. Non-Permissive Use

Permission to drive someone else's car, also known as "permissive use," is crucial in determining insurance coverage. If you have explicit or implied consent from the car owner, their insurance will likely cover any accidents. However, driving without the owner's permission, or "non-permissive use," may not be covered by their insurance policy. In such cases, the driver's insurance may be responsible for any damages and injuries resulting from the accident.

Insurance Coverage for Permissive Drivers

When you have permission to drive someone else's car, the owner's insurance will typically provide coverage. This is because most insurance policies cover drivers who have the car owner's consent. However, it's important to note that the owner's insurance will usually be the primary payer, and the driver's insurance may serve as secondary coverage if the cost of damages exceeds the owner's policy limits.

Insurance for Uninsured Drivers

If you are an uninsured driver borrowing someone else's car, the owner's insurance may still cover you in the event of an accident. However, if you are at fault, you may be liable for any damages beyond the limits of their policy. In such cases, it is advisable to consider purchasing a non-owner insurance policy, which provides liability coverage for bodily injury and property damage when driving a car you don't own.

Adding Regular Drivers to Your Policy

If you regularly share your vehicle with another driver, it's recommended to add them to your auto policy to ensure they are covered in case of an accident. This is especially important for family members or roommates who frequently use your car. By adding them to your policy, you can avoid any complications or gaps in coverage.

State-Specific Variations

It's worth noting that insurance laws and regulations can vary from state to state. For example, in Maryland, the insurance typically follows the car, and permissive use is generally covered by the car owner's insurance. However, it's always advisable to consult with an insurance agent or a local attorney to understand the specific laws and requirements in your state.

Borrowing a car

Permission and Occasional Use:

It is generally accepted that if you have the vehicle owner's permission to borrow their car, their insurance will cover you in case of an accident. This is known as "permissive use" and is typically allowed by insurance companies. However, this usually applies only to occasional use and not regular borrowing. It is always a good idea to check with the owner's insurance policy to confirm that you are covered as a permissive user.

Primary and Secondary Coverage:

In most cases, the vehicle owner's insurance becomes the primary coverage when lending their car. This means that in the event of an accident, their insurance will be responsible for paying for damages and injuries, up to the coverage limits. The borrower's insurance is considered secondary and may provide additional coverage if needed.

Excluded Drivers:

If a borrower is specifically excluded from the owner's insurance policy, they will not be covered in the event of an accident. Excluded drivers are usually high-risk drivers with a history of accidents or driving under the influence (DUI). In such cases, the owner's insurance company will not provide coverage, and the borrower may be personally liable for any damages or injuries caused.

Regular Users and Household Members:

If you borrow a car from a friend or family member regularly, or if you live in the same household, you should be added to their insurance policy. This is because insurance premiums are based on the risk of loss from the regular users of the vehicle. Failing to disclose regular users may result in the insurance company voiding the policy for misrepresentation.

Non-Owner Insurance:

If you frequently borrow cars or use rental, ridesharing, or business vehicles, you may want to consider purchasing a non-owner insurance policy. This type of policy provides liability coverage for bodily injury and property damage when driving a car you don't own. It helps maintain continuous insurance coverage and proves financial responsibility.

In conclusion, while borrowing a car or lending your car to a friend is generally allowed by insurance companies, it is important to understand the specific implications of your situation. Always check with the insurance provider and be aware of any exclusions or limitations to ensure proper coverage in case of an accident.

Adding other drivers to your policy

Adding other drivers to your auto insurance policy is a fairly simple process, but it's important to know when and how to do it. Here are some key things to keep in mind:

When to Add a Driver

You should typically add any licensed driver who lives in your household and has access to your vehicle to your insurance policy. This includes spouses, partners, teenage children, roommates, and friends who regularly drive your car. It's important to check with your insurance company, as some may require you to include all licensed drivers in your household.

How to Add a Driver

Most major auto insurance providers allow you to add a driver to your policy by logging into your account online or through their mobile app, or by calling them directly. You will need to provide some basic information about the additional driver, including their full name, address, marital status, Social Security number, driving history, and driver's license details.

Cost of Adding a Driver

Adding a driver to your insurance policy may result in an increase or decrease in your premium costs. The cost is typically based on factors such as the driver's age, driving experience, and driving history. Adding a young or inexperienced driver may increase your premiums, while adding a more experienced driver with a clean record may lower your rates.

Temporary vs. Permanent Addition

In some cases, you may only need to add a driver to your policy temporarily, such as when you have a long-term house guest or when someone is borrowing your car for an extended period. Many insurance policies have a permissive use clause that covers occasional drivers, but it's important to check with your provider to ensure you have the appropriate coverage.

Impact on Coverage and Risks

Adding a driver to your policy provides them with the same level of coverage as the policyholder. This ensures financial protection for both parties in the event of an accident. However, it's important to note that adding a riskier driver could increase your premiums or impact your no-claims bonus.

Rental car insurance

When renting a car, you may not need to purchase the rental agency's insurance if you already have a personal auto insurance policy. Typically, your personal auto insurance will cover most rental cars, with the same coverage limits and deductibles. For example, if your auto policy includes comprehensive and collision coverage, you will be protected against physical damage to your rental car. Your liability coverage will also apply when driving a rental car.

However, there are situations where purchasing rental car insurance is beneficial:

• High deductibles on your auto policy: Rental car insurance often has low or no deductibles, which could save you money in the event of a claim.
• Avoid claims on your auto policy: Filing a claim with the rental car company avoids potential rate increases on your personal auto policy.
• No comprehensive or collision coverage: Adding a loss-damage or collision damage waiver can protect you from theft, vandalism, and damage to the rental car.
• Low liability coverage limit: If you only have the state minimum liability limit, additional coverage from the rental company will provide greater protection in the event of an accident.
• Travelling internationally: Most US auto policies only provide coverage in the US and Canada. If you're travelling to a country where your auto policy doesn't apply, rental car insurance is essential.

If you don't have a personal auto policy, you will need to purchase liability coverage through the rental car company. This is also an option if you don't want to use your own insurance, even if you have it.

Commercial use of your vehicle

If you use your vehicle for business purposes, you may need to consider commercial auto insurance. This is especially important if you use your vehicle for both personal and business purposes.

Commercial auto insurance is typically required if a vehicle is used for tasks related to your profession or business. This includes transporting goods or people for a fee, conducting a service, or travelling to multiple job sites per day. If you own a business and your employees drive your company vehicle(s) regularly, you will also need a commercial auto insurance policy.

Commercial auto insurance usually has higher liability limits and covers more complex claims than personal auto insurance. It also covers a more extensive variety of vehicles, including cars, vans, pickup trucks, box trucks, and service utility vehicles.

If you are a sole proprietor, you may be able to get by with just a personal auto insurance policy, depending on your profession and vehicle use. However, if you require higher liability limits or special coverages, you will likely need a commercial policy.

It's important to understand the differences between commercial and personal auto insurance to ensure you have the proper coverage for your vehicle use.

Frequently asked questions