When Teen Drivers Are Allowed to Drive a Grandparent's Car
What to Know About Auto Insurance Coverage
There are few things grandparents love more than helping out their grandchildren. And grandkids are usually happy to accept. When your grandkids reach driving age, don't be surprised if they come around asking to borrow your car. With certain kinds of help, though, it's important to think twice.
Your first instinct will be to hand them the keys and tell them to drive safely and have a good time. But then it will hit you. What if they get into an accident? Will my car insurance cover my grandkids when they borrow my car? In most cases, the answer is "yes," but as usual, it's going to depend on the circumstances.
Permissive Use and Your Grandchild
You have probably heard the phrase, "car insurance follows the car, not the person." You've probably also heard the term, "permissive use." Both have some relevance when you're considering letting your grandchildren drive your car.
Let's say that a member of your extended family is visiting you and wants to borrow your car. It could be a sibling, aunt, or uncle. Or a grandchild. If you grant them permission, 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 (grandchild in this case) borrowing your car has a valid license.
In the majority of jurisdictions, the term "permissive use" is interpreted broadly, and that's good for you. But that doesn't mean there aren't circumstances where loaning your car to a grandchild could be a problem.
Since car insurance rates are affected by the age and experience of the driver, a car insurance company may deny a claim based on your grandchild being an inexperienced driver.
When a Grandchild Is a Regular Visitor
This is where permissive use, and loaning your car to a grandchild, can get a little tricky. Problems may arise when your grandkid is more than an occasional visitor to your home or borrower of your car. If that is the situation, you may have to add their name to your policy in order to have them covered.
The specific rules vary from state to state and insurer to insurer, but in general, most insurance companies expect family members living in the same household to be listed on the policy. Even if your grandchild doesn't live under your roof, they may still need to be listed on your policy if they use your car on a regular basis.
What It Means for Your Policy
Whenever you loan your vehicle to anyone that is not listed on your policy (including a grandchild), your policy takes the "primary coverage" status, which means that if your grandkid gets into an accident in your car, and it's their fault, your policy is primarily liable for the damages.
If your grandchild has their own separate auto insurance, that policy will take "secondary coverage" status, which means that they may be responsible for any personal liability or medical expenses, or for any damages above and beyond the limits of your policy.
You also have to think about your rates. If your grandchild falls under the category of a permissive use driver and gets into an accident in your vehicle, you are going to have to file a claim with your insurer and that means paying your deductible and possibly experiencing an increase in your premium rate.
Rules May Vary
The specifics regarding permissive use, who needs to be listed on your policy, and, more specifically, how your policy handles claims involving a grandchild, can differ substantially depending on your state of residence and your insurer. It's critical to understand the applicable laws of your jurisdiction and read your policy carefully. If you have any questions at all regarding the coverage of a grandchild, or any other driver, call your agent before you hand over the keys.
Nolo. "'Permissive Use' Car Insurance Coverage." Accessed April 23, 2020.
Insurance Information Institute. "What Is Covered by a Basic Auto Insurance Policy?" Accessed April 23, 2020.
Claims Journal. "Does Automobile Insurance Follow the Car or the Driver?" Accessed April 23, 2020.