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Aug 08, 2014

Most people have an idea of what’s covered and not covered under their various insurance policies. But we get a lot of questions about borrowing or loaning a car. 

Generally, insurance coverage follows the vehicle rather than the driver. So in most instances, as long as the owner of the car has insurance, it’s covered even if someone other than the owner is driving it — as long as they have the owner’s permission.

The borrower’s insurance is considered secondary, meaning that in the event of an accident, it could apply if the owner’s insurance is insufficient to fully cover the damage.

It’s important to note that there are some exceptions to what is called “permissive use” coverage. For example, permission must be given by the owner, unless the borrower has a reasonable belief that they are allowed to use the car. However, the borrower cannot give permission to someone else. So if your teenager allows one of his or her friends to drive your car, your coverage likely won’t apply.

Coverage might also be denied if the borrower operates the vehicle in a negligent or criminal manner. And if the borrower is using your car for business purposes, your personal auto policy likely won’t cover that.

If you have a regular long-term arrangement to either borrow or lend a car, the borrower should probably be added to the owner’s personal auto policy. Those who don’t own a car, but often borrow one, might also consider “named non-owner coverage,” an endorsement that provides bodily injury and property damage liability, uninsured motorists coverage and more.

Ultimately, it’s usually safe to loan your friend your car for occasional errands or projects. And the same goes for borrowing a car. Just make sure it’s for “normal” use. You’ll want to confirm that the car has coverage and that your insurance, whether you’re the owner or borrower, will apply.

Feel free to give us a call if you have any questions — after all, you don’t want to wait until after an accident to get answers!

Eight Article Comments

Steve Jenson

Excellent post! It’s been quite helpful. Thank you so much for sharing your knowledge. I am looking forward to reading your future updates.


Lisa

So under the law, all “borrowers” of the car are insured under my policy? How does this work with a teenager? The car is not hers. She must ask to borrow the car, which she seldom does. She is away at college and does not have a car at school. Is she not covered if she’s borrowing my car? Likewise, if my teenage neighbor asks to borrow my car to run an errand now and again, is he not covered under my policy?


Kim Brubaker

Without knowing the specifics, generally speaking if the teen borrowing your car is residing in your household, he or she should be added to your policy as an additional driver. This would also apply to the daughter away at college. A neighbor that borrows your car with permission would not need to be added unless he or she is driving the car on a regular basis. As always, I recommend you check with your insurance carrier as underwriting rules can vary from company to company.


John

I got sate farm liability insurance, and I hit somebody’s car when I drove my friend’s car. My friend’s car does’t have any insurance. If accident is my fault, will my liability insurance covered it? Thanks.


Kim Brubaker

Thanks for your question, John. Typically the vehicle owner’s insurance would be primary and the insurance of the person driving the vehicle would be excess in a case like this. You’ll want to check with your State Farm agent to see exactly how your insurance will respond.


Tamika

I have USAA insurance and I was in an accident with an uninsured person, who was driving a vehicle that he stated “in the process of purchasing” from someone else. On scene, he said he was using their insurance until he made all payments. The outcome is still pending because the owner of that vehicle refuses to call her insurance company. How does coverage apply?


Kim Brubaker

It depends, on the insurance carrier and type of coverage the vehicle owner has, Tamika. In a situation like this, it may be best to file the claim through your carrier, USAA, and have them pursue the at fault party’s insurance.


Marisa

Okay, so this is a little confusing. My boyfriend paid for this car wirh the insurance is in his name. (I’m not on the policy) Although, the car is registered in MY name. I drive the vehicle every once in a while with his permission. The other day someone hit ME while I was driving the car that’s registered to me but his insurance. I don’t have insurance myself since I don’t have my own car. Is all of this legal? I want to know before I make a claim. Thanks!


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