You’ve lent your car to a friend to go to the grocery store. An hour later, you get the call that they’ve gotten into an accident.
How will their accident affect you? You weren’t involved in the accident, but your car was. Who’s liable for the damages or injuries?
You are responsible when…
In most cases, auto insurance follows the car, not the driver. So, if your car is involved in an accident, your insurance will be the first to step in to cover it.
This means that, even though you weren’t in the car, you would have to pay your deductible, and your rates would likely increase following the claim.
Your friend’s auto insurance is secondary, meaning it only kicks in once yours is exhausted. So, for example, you have $50,000 worth of property damage coverage. If the accident totals $60,000, your insurance would likely pay up to $50,000 and your friend’s would likely pay the remaining $10,000.
This applies to anyone (friend, family member, roommate, valet, etc.) who is using your vehicle under “permissive use.” Whether or not you give them written permission, you’re lending your car to someone with the confidence that they’ll use your car appropriately. Because of that “permissive use,” you’re assuming the risk of them driving your car.
You are not responsible when…
You likely wouldn’t have to pay for damages if the other driver in the accident (not your friend) is found at-fault for the accident.
For example, your friend is driving through a green light and someone runs a red going the opposite way. That other driver is responsible for any property damage or injuries that are incurred. The accident was the other driver’s fault, so you and your friend are not liable. The other driver’s insurance would have to pay for any damages.
Your insurance won’t cover…
Say your friend is the at-fault driver. In most cases, your insurance would cover the damages, and your friend’s insurance would work as secondary insurance.
But there are some exceptions to this. Your insurance will not cover any damages if:
1. The driver (your friend) was under the influence or intoxicated
2. You didn’t grant permission (the car was reported stolen)
3. The driver was specifically excluded from coverage (like if you excluded your husband from coverage because he has a bad driving record, so removing him meant lower rates)
4. The driver uses your car frequently but is not listed on your insurance policy
Note number four especially. If someone uses your car frequently, at least once per month, your insurance company wants you to list them on your policy. Remember that insurance companies quote your policy rates based on your driving record and risk. Adding more drivers adds more risk, so they’ll want to take that into account. If they are a frequent driver but they aren’t listed, your insurance company may not pay for damages.
How can you lower your liability risk?
1. Don’t lend your car. If someone wants to use your car, offer to go with them and drive them. This gives you full control and minimizes any liability confusion.
2. Never lend your car to someone who is intoxicated or under the influence. You will be responsible not only for damages but also potentially considered as an “accomplice” for any illegal acts.
3. Add any “frequent drivers” to your insurance policy. This includes anyone who drives your car more than once per month, lives in your household, or drives you around if you need assistance.
4. Know your insurance policy. Some insurers are stricter than others when it comes to lending out your car. Read your policy and talk to an agent to make sure you’re fully covered.
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Remember that auto insurance follows the car, not the driver. So if your car is involved in an accident, you are almost always held financially responsible for damages. Make sure you only hand your keys over to someone who is trustworthy and responsible.
If you’re not sure what your auto insurance covers, talk to your insurance agent. Ask them how your policy covers other drivers in your car, and inquire about your coverage if you lend someone else’s car.
The more you understand your coverage, the better.