If you're thinking of loaning your car to a friend, you may have a few questions on your mind. Does car insurance cover the driver of the car or the car itself? Does your policy automatically cover everyone who lives in your household? Can you keep your insurance from covering risky drivers who happen to live with you? Do you need to buy extra coverage for friends who plan to drive your car?
You must know who is insured to drive your car before you let them drive it. If you are ever in doubt, ask your insurance agent.
Who Needs to Be Listed as a Driver?
First, you should know who is supposed to be listed on your car insurance policy. Some insurers are stricter than others when it comes to who needs to be listed as a driver. That can make the whole process quite confusing. You must find your carrier's requirements, because it could cause problems if you knowingly did not list a driver who should have been listed.
Most insurers expect the following people to be listed as a driver on your policy:
- Licensed family members living in the household
- Unrelated licensed drivers living in the household
- Anyone driving your car and not insured under another policy
In general, you should include everyone in your household as a listed driver so that they can be covered by your car insurance.
Automatically Covered Drivers
Some drivers will be covered under your policy as long as you have given them permission to drive your car. This is considered "permissive use." These drivers may include immediate or extended family, friends, or even a boyfriend or girlfriend who doesn't live with you.
When you let someone drive your car, your car insurance will be the primary insurance in an accident. The driver's insurance will be secondary.
What if You Live With Risky Drivers?
You may be concerned about the expense of adding a risky driver who lives with you.
Suppose your best friend just moved in with you. You love hanging out with them—you just don't love their driving record. This new roommate doesn’t own a car, and so you let them drive yours. Adding your friend as a driver to your policy could raise your rates due to their bad driving record. So, you try to get around it by not adding them as a driver.
You are taking a gamble in letting someone who is living in your household drive your car without listing them as a driver.
Depending on your insurance carrier's rules, a claim could be denied if you intentionally didn't disclose a household member with a risky driving record.
In some states, some policies would cover a claim with your roommate as the driver under "permissive use," but you could run into trouble if you didn't give that person permission to use your car. If they get into a wreck and don't have insurance, you're probably still liable for the damage to your car.
One good rule of thumb is to consult your insurance agent whenever you add a new driver to your household (whether they just moved in or just got their license). If that person has a poor driving record, it is better to have them listed as an excluded driver than to not have them listed at all.
What About a Teen Driver With a Permit?
Again, it really depends on your policy. A learning driver may be covered as a permissive driver under your policy. Other carriers only require licensed teens to be listed. Your insurance agent can tell you whether someone who lives with you is properly covered and, if not, what you'll need to do to change your policy.
Unrelated Drivers Living in Your Household
One of the toughest issues is figuring out whether an unrelated driver living in your household—a roommate, for instance—needs to be listed on your policy. Again, it depends on your insurer. Some carriers want every licensed driver in your home either listed or excluded from the policy. Others extend coverage as long as that driver has his or her own car insurance policy.
It is in your best interest to check with your insurer to make certain your policy is set up properly.
If you let an uninsured driver drive your car, and they get into a crash, you could be responsible for paying damages above and beyond what your insurance covers. If an uninsured driver needs to drive your car, ask your insurance agent whether you can add them as a driver.
Allowing an uninsured driver to drive your car can be riskier if the driver has recently committed a major traffic violation, such as a DUI, or has a suspended license. Your insurer may wish you to exclude such a driver from your policy.
The one time you can be certain you don't have coverage is when an excluded driver drives your car. A driver is excluded when the insured person signs documentation stating that they understand that they will be excluded from coverage on a policy. You should know whether any drivers are excluded from your policy. If an excluded driver damages your car, you’re on the hook for the damage. So, be careful about whom you let drive your car.
Each policy is unique. It’s best to speak with your trusted insurance agent to protect yourself from the potential consequences of improperly listing the drivers on your car insurance.
Frequently Asked Questions (FAQs)
What is non-owner car insurance?
Non-owner insurance is a policy that someone can purchase for cars they drive but don't own. This type of coverage kicks in after the vehicle owner's insurance is maxed out. Non-owner policies can cover bodily injury, property damage, and many of the other add-ons that you can include on a standard auto policy. If you drive someone else's car regularly, a non-owner policy may be worth considering.
What if I lend my car to a friend, and they have an accident?
If your friend has an accident while driving your car, your insurance will kick in to cover the damages according to your policy coverage. If your insurance is insufficient to cover everything, the driver's insurance would kick in.
What happens if you don't have car insurance?
If you don't have the minimum auto insurance required in your state, you could be subject to fines and having your license suspended or revoked. In some cases, you could even have your car confiscated.
Worse, if you or someone else driving your car are at fault in an accident without sufficient insurance, you could be exposed to significant financial liability for your own injuries and the medical bills of any other drivers or passengers involved in the accident, along with the cost of property damage. You could be sued, and it may be difficult for you to get insurance in the future. It's never worth the risk to drive uninsured.