Does Car Insurance Follow The Car Or The Driver?
If you regularly let others use your car, you need to know what insurance covers and what it doesn't, especially if there is an accident. For the most part, auto insurance follows the car, not the driver. Assuming the vehicle is insured, there's a good chance an accident will be covered by insurance even if someone other than the owner is driving the vehicle. So if someone borrows your insured car, the policy for that vehicle would cover any damage caused by the driver unless they are excluded on your insurance policy. However, it helps if the borrower of your car is insured as well, in case damages surpass your coverage limits.
Keep reading to learn everything you need to know about borrowing or lending a car and car insurance.
What's the Difference Between Car Coverage and Driver Coverage?
All but two states require car insurance. So in most places, if a car is registered, it's probably insured. Of course, someone with their own insurance policy might occasionally drive someone else's car. This raises a question. If something bad happens, whose policy covers it? In other words, Does car insurance follow the car, or does car insurance follow the driver?
Drivers are sometimes insured in two ways:
They have a policy on a vehicle other than the one they're driving
They have a non-owner car insurance policy, which will be explained later in this article.
In most cases, car insurance covers a vehicle even if someone other than the owner is driving it. If the car owner's insurance doesn't cover all repairs, the driver's insurance may cover the remainder of the bill.
As a general rule of thumb, think of the car's insurance and the driver's insurance as two separate layers of protection. The car's insurance is the primary layer of protection, but there are situations where a second level of insurance can come in handy.
Does My Car Insurance Cover Other Drivers Who Operate My Vehicle?
If you gave a person(s) express permission and they are not excluded on your car insurance policy, yes, they are covered if there is an accident. The person must be licensed, sober and not using the car for commercial use.
What Happens if Someone Gets in an Accident While Driving My Car?
You've let someone borrow your car and there was some extensive damage to your car and a pickup truck it ran into. Your friend who was driving the car admits it was his fault. Your friend was licensed, sober, had your permission to use the car and was not listed as excluded from your policy.
For the most part, you should be covered for the damages to the truck with your liability coverage but you'll only be covered for your own car's damages if you have optional collision insurance.
If your friend has insurance and your liability coverage is not sufficient, his/her liability coverage may pay the difference.
When Does Car Insurance Not Follow the Car?
Non-permissive use. Permissive use means you allowed the driver to borrow your car. For example, you handed them the keys or otherwise directly told them it was okay. Also, other drivers who are listed on the car's policy are presumed to have permissive use. The catch is, if you didn't give permission – say a roommate saw your keys laying around and grabbed them to run a quick errand – your car insurance will not apply if there's an accident.
Excluded drivers. Some policies specifically exclude certain drivers. This would typically be someone living in your household who the insurance company views as a very high accident risk. It might be in your interest to have such people excluded, so they don't raise your insurance premiums. However, if someone is excluded, make sure they don't drive your car because the insurance will not apply.
Commercial use. If you plan to use your car to show homes as a real estate agent, you'll probably need additional insurance to cover these activities. An ordinary car insurance policy will not cover accidents when somebody's being paid to use the vehicle unless you have commercial auto insurance.
Unlicensed drivers or drivers with a suspended license. If someone without a valid driver's license uses your car, it's not covered.
Drivers under the influence of drugs or alcohol. Your insurance company expects you to make responsible decisions about who can use your car. This includes not lending it to someone who is under the influence of drugs or alcohol.
Of course, car insurance will only follow the car to the extent of the policy's coverage. So in addition to the above exclusions, if the car only has liability coverage, the policy would not pay for damage to the car or the medical expenses of the people in it. You can get medical coverage for anyone in your car if you have personal injury protection (PIP) coverage, which is required in some states. Otherwise, you should consider buying an option medical payments coverage, especially if you don't have health insurance.
When Does Auto Insurance Apply To the Driver?
Renting a car. You're often covered by your own car insurance when renting a car, but it's best to call your insurance agent and ask ahead of time. Also, had an accident and need a loaner? It helps to know if your policy covers rented vehicles before you shell out extra money to a rent-a-car company for an insurance rider on a rented car.
Medical payments. If your car insurance covers you for injuries sustained while driving, this should cover you no matter what car you're driving. Again though, wording matters so check your policy.
Secondary coverage after an accident. Think of secondary insurance as a back-up. The insurance on the car you're driving is typically the primary insurance for damage involving that car. However, secondary insurance kicks in when the car's coverage limits are maxed out. Suppose you use someone else's car and do $15,000 worth of damage. If that car's insurance only covers $10,000, your policy may cover the remaining $5,000. Of course, this depends on the type of coverage you have, and your coverage limits.
Does My Insurance Cover Me When I Drive Another Car
If you borrow a car with permission, that car's coverage would likely apply first. Your policy may help with any damages beyond the car's coverage.
Car insurance policies with collision and comprehensive coverage generally extend to rentals as well. Check your policy before you travel so that you don't pay the rent-a-car company extra for coverage you already have.
Do You Need Insurance if You Don't Own a Car?
If you don't own a car, it probably wouldn't occur to you that you need car insurance. However, if you regularly borrow or rent a car, it may be worth your while to get what's called non-owner car insurance. It's relatively cheap.
This is a policy that provides coverage for you as a driver no matter what car you drive, even if you don't own one of your own.
Most importantly, if you ever decide to buy a policy, you'll get a cheaper rate than having a lapse in coverage.
In particular, if you travel regularly and often rent a car, it might be a cheaper alternative than always paying the rent-a-car company extra for collision coverage.
Types of Car Insurance Coverage You Need
Before looking at some specific situations where the car's insurance or the driver's insurance might apply, it's helpful to review the basic types of coverage auto insurance provides. This is a key to understanding when coverage from the car's policy and the driver's policy might kick in.
The main types of coverage are:
Liability coverage. This is the type of coverage most often required by law. It covers harm done by your car to other vehicles as well as people and property outside of your car.
Collision coverage. This covers damage to your car as a result of collisions with other vehicles or objects. This does not include vandalism or acts of nature such as storm damage or collision with animals.
Medical payments. This covers treatment for injuries you sustain while driving.
Comprehensive coverage. This covers most types of damage (other than routine wear and tear or mechanical problems) to your vehicle that is not covered by collision damage.
A couple more important things to remember about auto insurance before looking at some specific situations where the car's insurance or the driver's insurance might kick in:
While liability insurance is required in most states, the other types of coverage are generally optional
All forms of coverage are generally subject to dollar limits, so there may be liability for expenses beyond those limits
With all of the above in mind, the sections below will examine how car and driver insurance might provide these various forms of coverage.
Buying the Right Car Insurance Policy No Matter Who's Driving
Situations where you lend or borrow a car often come up on the spur of the moment. There may not be time to comb through insurance policies to see who's covered for what. Better to check your coverage in advance, and make sure you have the right type of policy for situations that might arise.
If you're paying more for car insurance than you have to, it's a good idea to take a fresh look at your auto insurance and possibly add on some important coverages cheaply. By comparing rates, you may be able to improve your coverage while saving up to 40% on your premiums! Enter your zip code below and answer a few questions for free car insurance quotes from agents in your area.