Grandparents are known for helping out their grandkids. And grandkids are often happy to accept.
When your grandkids reach driving age, they may ask to borrow your car. With this kind of help, though, you may need to think twice before you say yes.
Your first instinct may be to hand them the keys and tell them to be safe. But there are a few big questions that you need answers to first.
What happens if grandkids get into an accident while driving your car? Will your auto insurance cover drivers who have borrowed your car?
In most cases, the answer to both questions is yes. That could change, though, depending on a few factors.
- If you let a grandchild borrow your car, the car will most likely stay covered under the terms of "permissive use."
- Permissive use is meant to apply to occasional uses, so grandkids who borrow a car on a regular basis may have to be added as a driver on your insurance plan.
- If your grandchild is on their own auto insurance plan, their coverage will be seen as secondary, and your policy will be the first one held liable for claims.
- State law and insurance rules vary, so it's best to call your provider if you still aren't sure whether your situation will be covered.
What Is Permissive Use?
You might have heard the phrase, "car insurance follows the car, not the person." A little less common is the insurance term "permissive use." Both of these matter when you're thinking about letting your grandkids drive your car.
Let's say a grandkid is visiting and wants to borrow your car. (This could also apply to a sibling, aunt, or uncle. ) If you agree to let them borrow it once or twice, in most cases, they will be insured under your policy. That's what "permissive use" refers to. You just have to be sure the person using your car has a valid license.
In most areas, the term "permissive use" is used broadly. That's good for you because it means the person borrowing your car is covered in more cases.
But there are still times when loaning your car to a grandkid — or any other family member — could be a problem.
Since car insurance rates are affected by the age and experience of the driver, your car insurance may deny a claim based on your grandchild not having as much driving experience as you do.
What If a Grandkid Is a Regular Visitor?
If your grandchild visits you often and uses your car on a regular basis, the loan might not count as permissive use anymore. In that case, you may have to add their name to your plan in order to have them covered.
Talk to your insurance agent to find out if loaning your car is considered permissive use or not.
The rules for permissive use vary from state to state and insurer to insurer. Most insurance companies expect family members living in the same home to be listed on the policy. If your grandkid lives with you and uses your car, you should add them to your policy.
Even if your grandkids don't live with you, they may still need to be added to your policy. This would be a safer choice if they use your car on a regular basis.
What Does It Mean for Your Policy?
When you loan your car to anyone who is not listed on your policy (including a grandchild), your policy takes the "primary coverage" status. This means that if your grandkid gets into an accident in your car, and it's their fault, your policy is the first one liable for the damages.
If your grandchild has separate auto insurance, either on their own or through a parent, that plan will take "secondary coverage" status. It will have to cover any personal liability, medical expenses, or any other damages beyond what your policy pays.
Before you loan your car, you also have to think about your rates. If a grandchild borrows your car and gets into a crash while driving, you are going to have to file a claim with your insurer. That could mean paying your deductible, which can get expensive. You might also find that your rates go up.
Insurance Rules May Vary
Rules for permissive use, who needs to be listed on your policy, and how your plan handles claims involving a grandchild can differ depending on where you live and your insurer. Before you lend someone your car, look into the laws where you live and read through your policy.
If you have any questions about whether a grandchild or any other driver will be covered, call your agent before you hand over the keys. You may avoid a lot of time, money, and hassle down the road.