When Your Grandkids Borrow Your Car
What to Know About Auto Insurance Coverage
Grandparents, you're an easy touch when it comes to your grandchildren, aren't you? That's the way it's supposed to be. They know it, too, by the way, and when they reach driving age, don't be surprised if they come around asking to borrow your car.
Your first instinct will be to hand them the keys and tell them to drive safe and have a good time. But then it will hit you. What if they get into an accident? That's why we're here to answer the all-important question: Will my car insurance cover my grand-kids when they borrow my car? In most cases, the answer is "yes", but as usual, it's going to depend on the circumstances. So, let's take a closer look.
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 to our discussion.
Let's say that a member of your extended family is visiting you and wants to borrow your car. Someone like a sibling, aunt or uncle. Or grandchild. And you give them permission. In most cases, he or she will be insured under your policy. That's what "permissive use" refers to. Just 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.
When a Grandchild Is More Than an Occasional 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 and/or borrower of your car. If that is the situation, you may have to add his or her name to your policy in order to be covered.
The specific rules vary from state to state and from insurer to insurer, but in general, most insurance companies expect family members living in the same household to be listed on the policy. Additionally, even if your grandchild doesn't live under your roof, he or she may still need to be listed on your policy if they use your car on a regular basis.
Lots of Wrinkles
I'm don't mean in your physical appearance, I'm talking about loaning your car to your grandkid. For example, 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 his or her fault, your policy is primarily liable for the damages.
If your grandchild has his or her separate auto insurance, that policy will take "secondary coverage" status, which means that he or she may be responsible for any personal liability or medical expenses, or for any damages above and beyond the limits of your (primary coverage) policy.
Here's another wrinkle. 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. Something to think about before handing over the keys.
Again, Rules May Vary
It's important to remind you again that rules regarding permissive use, who needs to be listed on your policy and, more specifically, how your policy handles claims involving a grandchild, vary substantially depending on your state of residence and your insurer. And that means it is extremely important 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 as soon as possible.