Insurance for borrowed cars

Wondering if you're insured when you borrow a car or lend yours to someone? Generally, both the borrower's insurance and the vehicle owner's insurance may apply in the event of an accident, but whose insurance applies and to what degree will vary based on the details of the accident and the language of each person's insurance policy.

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What happens when you let someone else drive your car?

If you allow someone else to borrow your car, it's still covered by your insurance policy. Insurers call this "permissive use." This is true even when the driver carries their own insurance. However, both your insurance policy and the driver's insurance may apply in the event of an accident. Whose insurance pays out, and in what amount, will vary based on the language of both policies and the details of the accident.

Pro tip:

If the driver frequently uses your car or lives in your household, your insurer may determine that they should've been added to your policy as a driver. In that case, it may be sufficient cause for your insurance company to deny your claim.

Can I borrow someone's car without insurance?

Uninsured drivers may be covered if they're borrowing an insured car with permission from the owner. The vehicle owner's insurance can cover damages based on the policy's coverages and limits. If the policy doesn't cover some of the damage or the damage exceeds policy limits, the driver could be held personally liable to cover any additional damages related to the accident.

Pro tip:

If you are uninsured but plan to borrow a car, you may want to consider investing in a non-owner insurance policy. This type of policy typically provides liability coverage for bodily injury and property damage, but it doesn't cover physical damage to the vehicle you're driving or any injuries you may suffer in an accident.

If someone borrows my car and gets in an accident, am I liable?

In most cases, your insurance can cover the accident, but depending on your policy limits and the details of the accident, the driver's insurance policy may cover all or part of the claim. There are certain situations where your insurance policy may not cover an accident after someone borrows your car and gets into an accident, including:

  • The driver borrows your car without permission: This is known as "non-permissive use." In this case, the driver's insurance may be responsible for covering the costs of damages resulting from an accident. If the driver is uninsured, they may be personally liable for the costs.
  • Another driver causes the accident: If the driver of your car isn't found at fault for the accident, the at-fault driver's insurance would be responsible for the damages.

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