Jane Dotson
There are several reasons why vehicles are insured instead of drivers. Firstly, car insurance generally follows the car, not the driver. This means that if someone borrows your car and gets into an accident, your insurance will likely cover the damages, and your insurance rates may increase. However, if you drive someone else's car and get into an accident, their insurance will typically be responsible for covering the repairs. Another reason is that car insurance policies often include multiple types of coverage with different rules regarding who is covered. For example, liability coverage protects the insured driver and will follow them regardless of the vehicle they are driving, while comprehensive and collision coverage are usually associated with the vehicle itself. Additionally, the policy documents will indicate the covered vehicles and drivers, and every policy is unique, based on factors such as state insurance laws and individual circumstances.
| Characteristics | Values |
|---|---|
| Who is covered by insurance? | The vehicle owner and any drivers listed on the policy. |
| What happens if an unlisted driver operates the vehicle? | Depends on the policy and state. Verbal permission may be enough for coverage. |
| What happens if the vehicle is borrowed without permission? | The owner won't be liable for damages, but their insurance will likely be used to cover damages to the vehicle. |
| What happens if the vehicle is used for commercial purposes? | The owner's insurance policy will not cover incidents during this type of use. |
| Does insurance cover rental cars? | Yes, if the driver has insurance on their own car, they generally don't need to purchase extra coverage from the rental company. |
| Does insurance cover car-sharing services? | Yes, but the coverage may be minimal, and business insurance may be required for renting out a car. |
| Does insurance cover work purposes? | Not always; a business auto policy may be required. |
What You'll Learn
Liability coverage follows the driver
If the driver is a member of your household, such as a spouse, older child, or relative, they are typically covered by your insurance policy and do not need to be added. However, if a friend or relative is regularly borrowing your vehicle, you may want to consider adding them to your policy. This can usually be done by contacting your insurance agent or logging on to your insurer's website and providing their name, social security number, driver's license number, and the date they were first licensed.
It's worth noting that if the person you're adding has a poor driving record, your insurance rate may increase. In some cases, insurers may even exclude high-risk drivers from coverage. Additionally, if you use your vehicle for commercial purposes, such as delivering pizzas or driving for a ride-sharing company, your insurance policy typically will not cover incidents occurring during this type of use. You will likely need a separate insurance policy or supplement to insure these types of activities.
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Collision coverage follows the vehicle
If the person driving your car is not designated as a covered driver, your insurance may not cover them in an accident. In this case, the driver's insurance may be secondary and would pay for any damage that exceeds your coverage limit.
It's important to note that collision coverage is not legally required, but it is generally required if you have a car loan or lease. Collision coverage pays to repair or replace your car if you collide with something, such as another car, a guardrail, or a tree. While it can be valuable coverage to have, you may want to consider dropping it if your car is older and has depreciated in value.
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Comprehensive coverage follows the vehicle
Comprehensive coverage is an optional coverage that protects your vehicle from damage caused by incidents that are not collisions. This includes theft, vandalism, glass and windshield damage, fire, accidents with animals, weather, or other acts of nature. It is referred to as "comprehensive insurance", but it is actually a specific coverage on an existing policy, not a separate type of insurance.
Comprehensive coverage helps cover the cost of repairing or replacing a vehicle damaged in an incident that is not a collision. This includes a stolen vehicle, glass claims, and windshield repair. It can also cover damage from weather conditions, such as wind damage from hurricanes, floods, hail, and falling objects. It can also cover damage from fires and explosions, as well as vandalism and accidents involving animals.
Comprehensive coverage is typically added to an existing policy and covers a wide range of incidents. It is not required by law in any state, but it is usually required by lenders if you are leasing or financing your vehicle. If you own your vehicle outright, you can decide whether to take out comprehensive coverage.
Comprehensive coverage is often confused with collision coverage. While both types of insurance cover your vehicle, collision coverage is used if you get into a collision, whereas comprehensive coverage is for non-collision events outside of your control.
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Insurance when driving a rental car
When it comes to renting a car, you don't need your own auto insurance to do so. However, you will need some type of insurance coverage. If you don't have auto insurance, you can either buy temporary insurance from the rental company, use a credit card that offers rental car coverage, or purchase short-term car insurance or non-owner car insurance.
If you already have car insurance, it's important to review your policy to see if it covers rental cars. In most cases, your personal auto insurance will cover rental cars, but there may be situations where adding rental car insurance is beneficial. For example, if you have 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. Additionally, if you don't have comprehensive or collision coverage on your personal policy, adding a loss-damage waiver from the rental company can protect you from physical damage to the rental car.
Rental car companies typically offer several types of insurance:
- Loss Damage Waiver (LDW) or Collision Damage Waiver (CDW): This releases you from responsibility for damage to the rental car, including theft and vandalism.
- Liability coverage: Pays for lawsuit-related costs if you cause an accident while driving the rental car.
- Personal Accident Insurance (PAI): Covers medical expenses for you and your passengers.
- Personal Effects Protection (PEP): Covers the cost of replacing personal items stolen from the rental car.
If you don't have auto insurance, you will need to purchase liability coverage through the rental car company. They may also offer additional coverages, such as collision and tire damage, which you can choose to add.
Credit cards may also provide rental car insurance if you use them to pay for the rental. Be sure to check with your credit card company to understand the specific coverage, rules, and restrictions.
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Non-permissive use
It's important to note that insurance policies vary, and there may be exceptions to this rule. For example, if a family member or household member takes your car without permission, they may still be covered by your policy. Additionally, if an excluded driver (someone specifically named in the policy as not being covered) takes your car without permission, your insurance company will likely try to deny coverage.
To ensure you understand the specifics of your policy, it's recommended that you carefully review the fine print and consult with your insurance agent if you have any questions.
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Frequently asked questions
In general, car insurance follows the car, not the driver. This means that if you give someone permission to use your car, your policy will cover them if they are in an accident.
If you are driving someone else's car, their insurance will generally be used to pay for any claims related to an accident. However, if their insurance is not enough to cover the damages, your own policy may be used to pay for the remaining costs.
Your car insurance will typically cover you if you are driving a rental car. However, some personal car policies do not include coverage for rental cars used for work purposes.
Yes, you can exclude certain drivers from your policy coverage. This is often done for high-risk drivers with multiple infractions or DUIs.
A named insured is the "owner" of an insurance policy, responsible for paying premiums and making changes. They are covered by their insurance everywhere they go, whether they are driving their own car or someone else's. An additional driver, on the other hand, is typically a person who resides with the named insured and/or regularly uses a shared vehicle. They are only covered on the vehicle they are listed under.
