If you let someone borrow your car, or you’re driving someone else’s vehicle, there’s always the chance of an accident. Then the question comes up: Does car insurance cover the car or the driver?
In many cases, the vehicle owner’s insurance policy kicks in first, even if someone who isn’t on the policy is driving — but there are exceptions.
Understanding how it works can help you decide whether you’re comfortable letting someone else behind the wheel of your car.
Most standard car insurance follows the car, not the driver. If you allow someone to drive your car (known as permissive use) and they cause an accident, your insurance policy should cover them up to your policy limits. You’ll have to file an insurance claim, which will likely cause your premium to go up.
If the driver of your car is at fault and uninsured, they may be responsible for damage or injuries if these costs exceed your policy limits.
There are some situations where the policy providing coverage applies to the driver, not the car. Just be aware that the specifics depend on your state and insurance policy. In other words, you’ll want to clarify what (and who) is covered with your insurance company.
In general, a driver’s policy will provide coverage ahead of the vehicle owner’s policy when:
The driver uses a car without the owner’s permission
The driver uses a borrowed car for business purposes, like driving for a rideshare or delivering take-out orders
The driver pays the vehicle owner to rent their car
The driver is listed as an excluded driver on the owner’s car insurance policy
Otherwise, in most circumstances, the vehicle owner’s policy applies as long as the driver has permission to drive the car. The owner’s policy covers household members and drivers who are listed on the owner’s insurance policy, as well as friends or family members who are not listed.
If you’ve ever purchased an auto insurance policy for yourself, you’re listed as the named insured driver. This is also referred to as the policyholder, primary insured, or name of insured. As the policyholder, your insurance company will step in if you experience a covered event. That might include:
Property damage you cause while driving
Bodily injury you cause to other drivers and their passengers
Damage to your vehicle if you hit another car or an object like a tree or street lamp
The cost to repair or replace your car if it’s vandalized, stolen, or damaged by weather or an animal strike
That can include your spouse, children, and other relatives who live with you. You might also be able to add your roommate to your policy since you share the same address, but each driver who owns a car must have their own policy. Even if a roommate isn’t explicitly listed on your insurance policy, they would likely be covered if you give them permission to drive your car and they cause an accident.
Again, any licensed driver who has permission to drive your car will likely be covered by your insurance policy. That includes someone who drives your car sporadically, like a friend visiting from out of town who borrows your car for a day. But someone who drives your car regularly, like a nanny or other caregiver, may need to be explicitly listed on your policy. You’ll want to reach out to your insurance company for clarification if you plan on letting another driver use your car on a regular basis.
An excluded driver is someone who is explicitly listed in your insurance policy as not covered. That might be a family member, roommate, or friend you don’t want driving your car if they:
Have a history of accidents, tickets, or filing insurance claims
Are new drivers who don’t have much experience on the road
If an excluded driver causes an accident while driving your car, your policy won’t cover any related damage or injuries.
Here’s how things could pan out if you have permission to drive someone else’s car and you get into an accident:
The accident was caused by another driver: The other driver’s insurance should cover any injuries you suffer as well as damage to the car you were driving.
You’re at fault: The vehicle owner’s insurance policy will likely cover any property damage or injuries that you cause to others. Damage to the car might also be covered, depending on the owner’s insurance coverage. Your own car insurance might provide secondary coverage if the cost of damage exceeds the owner’s policy limits.
If someone gets in an accident driving your car, it’s important to note that how much insurance you have will play an important role. Each state has its own minimum car insurance requirements, which typically include some level of liability coverage. This will kick in if you cause injuries or property damage while driving.
The types of coverage you carry also matter. Collision coverage protects you if your car is damaged after hitting another vehicle or object. Comprehensive coverage kicks in if your car is stolen, vandalized, or damaged by something that isn’t a collision. Both are optional coverage types of coverage, meaning states don’t require drivers to carry them. But if you have an auto loan or lease, your lender will probably require you to buy comprehensive and collision, in addition to liability insurance.
Even if a covered driver causes an accident in your car, your insurer will only pay up to your coverage limits. Anything beyond that might fall to the driver — and their own car insurance may or may not cover the difference. Having said that, here are the people who should be covered under your car insurance policy.
Your primary car insurance policy will likely extend to a rental car. You’ll often have an option to purchase additional insurance through the rental company if you’d rather keep your insurer out of it. Your credit card company might also provide rental car coverage if you use your account to pay for the reservation.
If you have something called a named driver policy, then you’re the only driver who will be covered. If you let a friend borrow your car and they cause an accident, your insurance company will not pay toward any damage or injuries. This type of policy may be less expensive than a standard auto insurance policy.
It depends on the situation and your insurer. Your insurance company will probably want you to list any drivers who will be using your car regularly. If you don’t, and that person causes an accident while driving your car, they may not be covered. In extreme cases, your insurer might go as far as dropping you.
