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Insurance 101: How Car Insurance Works When You Borrow a Car

Insurance is a complex topic, and many people are overwhelmed by the sheer number of jargon one has to comprehend. Many times, a friend or a family member will borrow your car to run some errands. However, do you think about who would be liable if he/she is involved in an accident? This means that you need to understand how your car insurance works in such a scenario. Your car insurance doesn’t cover every traffic accident that your vehicle is involved in, in some states. Depending on the insurance policy coverages, car insurance may sometimes follow the car and not the driver. Today, let’s break down what you need to understand when you borrow someone’s car.

Will My Car Insurance Cover Me While Driving Someone Else’s Car?

Ideally, the standard rule is that car insurance follows the car and not the driver. This means if you borrow another person’s car, you will be covered under your friend’s vehicle insurance cover up to the necessary limits the insurance provider chooses. According to insurance experts from this site, the claim goes to your insurance record and can affect your car insurance rates in the long-term. Additionally, you should also note that this counts for unforeseeable borrowing. For instance, if someone drives your vehicle to work every Wednesday, your insurance provider may feel different about it.

Listing Extra People on Your Insurance Policy

Individuals who borrow your car regularly might not be covered because your vehicle’s frequent driver should be registered in your insurance policy. This is why we advise adding regular car borrowers to your insurance policy, such as your roommates or family members. Doing this will ensure your insurance will pay when an accident happens. However, you should note that adding extra people can impact your rates. For instance, adding a youthful individual could cause your rate to increase, while adding an experienced driver could lower it. In some states, insurers are allowed to lower coverage limits for individuals not listed on your insurance policy. The crux is that you should contemplate registering on your insurance policy any non-family individuals who frequently borrow your vehicle.

What Happens to Car Insurance Rates?

If you allow another driver to operate your car, you are merely taking responsibility for the driver. Many insurance companies will add an extra fee to a vehicle owner’s policy with an at-fault accident. In many cases, insurance providers base your insurance rates on the likelihood of a future claim. This means if you loaned the car out during the time of the at-fault accident, you’re a higher risk for having done so. Insurance providers will place a higher price on your insurance premium in the long haul because of being a higher risk.

Understanding Permissive Use

This term is used in an automobile insurance policy, which means that you allow another person – who’s not covered by name or as a household member – to operate your car. For instance, if you allow a friend to borrow your car, that is permissive use. in simple terms, this means you give your friend permission to use your vehicle. You should also note that not all automobile insurance policies cover permissive use. For instance, some of these policies that cover permissive use might only provide limited coverage for permissive users. Additionally, they might also require higher deductibles if a permissive use car insurance is made. We recommend examining your insurance policy before lending out your car.

Secondary vs. Primary Cover

When a claim gets too tricky, insurance providers spend plenty of time determining who is responsible. This involves taking points on issues to do with compensation. In secondary responsibility, the insurance provider only kicks in when the primary coverage lapses. If you allow an individual to use your car, your car insurance takes primary cover status. If the damage done exceeds your cover limits, the driver’s policy takes over.

Is Insurance Up-to-Date?

Many states require auto insurance coverage. Additionally, some states stipulate that the vehicle owner’s auto insurance provides primary coverage when an accident occurs and not the drivers. In simple terms, this means if the driver causes an accident and your insurance has expired, you could be liable for damages. Since state regulations vary, it would be best to verify whether the driver has his/her car insurance.

Borrowing a car or lending out your car will sometimes leave you more stressed when an accident happens. In such circumstances, the driver feels terrible, and you, as the owner, might feel more irritated. You are inconvenienced by car repairs and may also face potential surcharges. It would be best to consider these factors before lending out your car.


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