Auto insurance for your own driving and vehicle is one thing, and it’s pretty clear; such insurance covers events that happen while you’re behind the wheel. But what happens when you let your friend or family member drive your car and they get into an accident? Does your insurance still cover them? We’ll answer these questions and more below.
Whose Auto Insurance Covers the Car?
This depends on the type of accident and the type of coverage that the car owner house on the vehicle. In most accidents where there is an at-fault driver, coverage is automatically deducted from the vehicle owner's insurance policy. In other words, even if someone borrowed your car and got into an accident through actions of their own fault, you will still be financially on the hook for any collision costs from the accident. Your vehicle’s deductible will apply.
It’s up to you and the driver of your vehicle to work out who’s going to actually pay for the damages; the one who borrowed your car can pay you on the side, for instance. But they can always refuse as well. The key thing to note is that legally the car owner is the one responsible for the insurance payment.
This type of insurance can also come into play depending on how severe the accident was. If an accident was particularly bad and the damages were very high, the vehicle owner’s liability insurance might not have enough to cover the total cost of the accident. In this case, the person driving the car will find their insurance policy on the hook for financial compensation. In this case, both the driver in the vehicle owner may be required to pay part or all of the costs depending on the details of the accident and each person’s specific liability policies.
Does the Car Owner’s Insurance Rate Go Up?
Yes. Insurance companies see lending your car to another person, even on a casual and short-term basis, as you taking responsibility for that driver and their actions. Most carriers will surcharge your policy in the event of an accident where the driver was at fault. This can go on your insurance record and may cause an uptick in insurance rates for future policies.
In a nutshell, lending your car to another person counts a lot like a generic risk factor to insurance carriers. So avoid lending your car to another person if you are trying to repair your insurance record.
What About Tickets?
The only good news here is that traffic violations only apply to the person driving the vehicle rather than the owner. If you lend your car to someone and they get a traffic ticket, the ticket goes on their driver’s license record and their insurance will get hit. Your car may still be noted in the incident by your insurance will not be affected by the event at all. This also means that you won’t be financially liable for any traffic fines. The only possible exception to this pertains to underage drivers like kids.
In the end, letting someone borrow your car without an explicit agreement for insurance and accident costs is usually a bad idea. In most cases, you’ll be on the hook for financial costs regardless of the type or severity of an accident. It’s only a good idea to lend your car to someone if you trust them explicitly, both in terms of their willingness to pay you back for damages and their history as a good driver.