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myth: car insurance follows the driver

Contrary to popular belief, in case of an accident, car insurance follows the car — not the driver. So if you lend your car to a friend or a visiting relative, you could be liable if an accident occurs.

Even if your friend has great coverage with the highest limits and the lowest deductibles, your car insurance would have to cover the damages if your friend got into an accident while driving your car.

Car insurance follows the car

If you're thinking of letting someone drive your car for a few hours, days, or weeks, keep in mind that you're not only lending your car, you're also lending your car insurance. In most states, comprehensive and collision coverage protects your vehicle regardless of who's driving it.

Though state laws vary, here's how car insurance coverage breaks down in the event of an accident:

  • If you give any non-excluded driver (that is, someone you don't explicitly exclude on your policy) permission to take the wheel, your car insurance takes primary coverage status, which means that your car insurance would be primarily liable if something happens. The permitted driver's own insurance would serve as secondary coverage. So, for instance, if you loan your car to your best friend Drew and he causes an accident, you'll have to file a claim with your insurer, pay the deductible, and possibly expect a rate increase.

    If Drew has car insurance, he might be responsible for any personal liability and medical expenses. Additionally, his coverage might have to step in if the limits of your policy have already been reached.
  • If Drew gets into an accident and isn't at fault, you won't have to worry about your insurance taking a hit. Generally, you can file a claim with the at-fault party's insurance, skip paying the deductible, and get coverage for any damages to your vehicle.
  • If Drew happens to be an uninsured driver and causes an accident, you could be liable for all of the damages. For example, if your uninsured friend causes a 3-car pileup that exceeds your car insurance limits, the injured parties could sue you to pay for medical fees and property damages.

Permissive use

Due to a provision in your car insurance policy called an "omnibus clause," your insurance will cover any driver, family member who lives with you, and even your dependent children away at school, so long as they have your permission to drive your vehicle.

Note that in some states, permissive drivers will have reduced coverage while operating your vehicle.

Non-permissive use

If your car's taken without your consent, you won't be held accountable for any damages. For instance, if a thief takes your car for a joyride and crashes it into a parked BMW 740i, you won't be liable for any damage to the BMW. However, you'll most likely have to use your insurance to cover any damages to your vehicle.

On the other hand, if a friend borrows your car without your permission and causes an accident, your friend's insurance will probably be considered primary coverage and yours secondary.

If your friend doesn't have insurance, you're out of luck. In most circumstances, you'll have to use your own car insurance to cover the accident.

One thing to note: unless it's clear that you expressly deny permission, most car insurance companies will usually assume that your friend, visiting relative, or family member residing with you has your permission to drive your vehicle. So, if an accident were to occur, chances are you'll still be liable for damages, even if you didn't personally or verbally hand over the keys.

Excluding drivers on your policy

While a few states (Kansas, Michigan, New York, Virginia, and Wisconsin) don't allow driver exclusions, many others permit you to exclude specific drivers from your policy. In general, car insurance companies may ask you to exclude certain drivers — say, someone with numerous accidents or DUIs — from your policy to protect them from added risk. Or you may decide to exclude a family member, such as a young teenage driver or a spouse with a less-than-stellar driving record and his or her own insurance, to save on your premium.

If an excluded driver takes your vehicle for a spin, with or without your permission, your car insurance will probably not cover the accident if one occurs. Though state laws differ, the following generally applies:

  • If an excluded driver borrows the car with your permission and an accident happens, both you and the driver will be personally responsible for any damages caused.
  • If an excluded driver takes off with your wheels without your permission and gets into an accident, depending on your state's laws, you might not be held liable if an incident occurs.
  • If you live in a no-fault state, you may not be responsible for personal injury, but you and the excluded driver may still be responsible for personal liability. That is, if the injured party's insurance limits have already been reached to cover the accident, he or she could take both of you to court to recover any remaining expenses.

Listing drivers on your policy

As you can see, excluding a driver to save a few bucks could potentially cost you in the long run. To make sure that you have maximum coverage under all circumstances, consider listing all family members living with you on your policy.

If you're an Esurance policyholder, note that all members of your household with access to your vehicle must be listed on your policy. Of course, if your spouse or resident relative has his or her own vehicle and car insurance policy, it's possible to obtain an exclusion if your state allows.

If you have questions about this (or anything else), call us anytime at 1-800-ESURANCE
(1-800-378-7262).

Before you lend your car

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Before you lend your car to a friend or anyone else:

  • Check your policy or contact your insurer to get the specifics on the terms, conditions, and any restrictions.
  • Make sure that your friend has a valid drivers license. It's also wise to double check whether or not your friend has car insurance. (After all, you don't want to be liable in case an accident occurs.)
  • Verify that your registration and insurance information are in your glove box.

If you habitually lend your car to a non-resident relative or friend, or if your friend will be borrowing your car for an extended period of time (say a few weeks), consider adding him or her as an additional driver. Your insurer might consider the habitual borrower of your car to be a regular user of the vehicle, and if an accident occurs and your friend isn't listed as an additional driver on your policy, your insurer could deny coverage on the claim.

Related links

Excluding a driver
Learn why a driver exclusion may not be in your best interest.

Adding or removing drivers from your policy
If you need to add or remove a driver from your Esurance policy, you can do so by following these easy steps.

Accidents and car insurance claims
Did your friend get into an accident while driving your car? Here's some info on how to handle the accident at the scene and file a claim.

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