When You Lend Someone Your Car, You’re Also Lending Them Your Insurance

In most states, car insurance generally follows the car and not the driver, so when you let someone borrow your car, in effect you’re also lending them your car insurance.

When someone is driving your car, your car insurance will cover them unless:

• They are specifically excluded coverage under your policy
• You do not have collision or liability coverage

Your insurance provides primary coverage, while your friend’s car insurance offers secondary coverage, meaning it will step in if your policy limits are exhausted. The circumstances surrounding the accident will determine coverage:

• If you gave someone permission to use your car and they got into an accident, they will typically be covered by your automobile insurance.
• If a friend or relative borrowed your car without your permission, their insurance would provide primary coverage, making your car insurance secondary. However, you will likely have to provide some type of proof that the person did not have permission to drive your car.
• If a friend causes an accident while driving your car, you will have to file a claim with your insurer, and either you or your friend (or both) will have to pay the deductible to get your car fixed.
• If your friend gets into an accident with your car but wasn’t at fault, you will have to file a claim with the at-fault party’s insurance carrier, who will pay for damages to your vehicle.
• If your car was stolen, you will not be liable for the damages caused to other vehicles and property in the case of an accident, although you may have to file a claim with your insurance provider to cover the damages sustained by your vehicle.

While a few states (Kansas, Michigan, New York, Virginia, and Wisconsin) don’t allow driver exclusions, others permit you to exclude specific drivers from your policy, such as someone with numerous accidents or DUIs, and insurance companies often encourage you to do so to avoid the added risk.