There’s a lot of information out there about car insurance and some of it’s simply not correct. To stay protected you should know how car insurance works, when you are covered, and when you aren’t.
One common myth is that car insurance goes with the person listed on the policy. In fact, car insurance belongs to a vehicle, not a person. Yes, it can cover injuries to you if you have an accident in your covered car, but it does not help you if you are in an uninsured driver’s car. And, if you let someone borrow your car, it is your insurance that will cover any damages they cause.
It is important that you understand the type of coverage you have and how it all works if another driver has an accident in your car. Here are the basics.
The first thing to understand is exclusions. You can list someone on your policy who will be excluded from any coverage. This is uncommon but is sometimes useful if a driver in your household has a bad history of driving and will make your rates go sky high.
For any driver who is not excluded, if you give them permission to take your vehicle, then your car insurance policy is the primary coverage should anything happen.
The good news is that, should something happen, this driver’s own car insurance would become the secondary coverage. So, if the accident ends be very expensive, perhaps with lots of vehicle or property damage, or maybe serious injuries, the driver’s insurance would likely cover any damages beyond your own policy limits.
What this means for you is that if you are going to loan your car, you are better off to loan it to someone who has their own auto insurance. Just in case.
Here are some scenarios.
The Driver is At-Fault
Let’s say your friend causes an accident while driving your car. Because it is your car, you will file an accident claim with your insurance company and pay your deductible. You’ll likely be looking at a rate increase when it’s time to renew also. If the cost of the accident exceeds your policy limits, your friend’s insurance will cover the extra (up to their policy limits) as long as they have insurance. If they do, their policy may also cover their personal liability and medical expenses. Again, it’s best to lend your car to a driver who has their own insurance.
The Driver is Not At-Fault
If your friend has an accident and is not at-fault, your insurance will still cover. The good news is that you will likely not have to pay your deductible or experience a rate increase. The at-fault driver’s insurance takes the burden here.
The most important thing to remember is that car insurance follows the vehicle. And if you’re unhappy about the type and amount of coverage you have, use InsuranceWins to get free quotes from major carriers. You just may save some money!