Updated August 22, 2023
Maybe this has happened to you: You loan your car out to a friend or family member. You think everything will be fine but get a dreaded phone call. Your friend has crashed your car. Now what?
What happens next? Who is responsible for the damage? Will this affect your insurance rates? Today, we’re answering your most urgent questions about loaning your car to someone else.
You may be nervous if you’re considering letting someone else drive your car. Will the driver keep your car safe? Will your insurance cover the damage in case of an accident? A car is one of our most expensive investments, so it’s critical that you don’t lose coverage in case of an accident. Read on to find out when a borrowed car is covered and when it may not be.
Do you need to loan your car to a friend or family member? This is one of the most common scenarios. It’s always best to check with your insurance before letting someone borrow your car. But, in most cases, your insurance will cover the car if they borrow it with your permission.
The most important factor in who pays damages after a car accident is who is at fault. Because Indiana is an at-fault state, the at-fault driver’s insurance is responsible for paying damages. Therefore, if someone driving a car insured by someone else is the victim of an accident, then the at-fault driver’s insurance should cover the damages.
But what if your friend or family member is at fault? When you give someone permission to drive your car, insurance will typically cover the damages. Insurance companies refer to this as permissive use.
Suppose you want your nanny or babysitter to drive your car and take your child to school or soccer practice. You should contact your insurance company if they will be driving your vehicle regularly. They may require you to add this person to your insurance policy.
Typically, the vehicle at fault for the accident determines coverage after an accident. No matter who drives your car, the at-fault driver’s insurance will typically pay the damages. However, suppose you loaned your vehicle to someone else, and they are at fault in an accident. Your insurance will be responsible since your car caused the accident.
One thing to keep in mind is that your insurance may pay for damages, but you may still need to pay any deductibles your plan specifies.
If you let someone drive your car occasionally, you probably do not need to add them to your insurance. As long as you give the driver permission to borrow your car, they will likely be covered in case of an accident. However, if you expect someone to drive your car regularly, you may need to add them to your insurance policy. Contact your insurance for more information.
One exception is when the temporary driver lives at your house. If a family member who lives at home will regularly borrow your car, your insurance company likely requires their name on your policy to ensure coverage.
If you have a teen driver in your household, you may allow them to drive your car. However, you must add them to your insurance policy since they live at home and will be driving regularly.
Unfortunately, insurance costs are often the highest for teenagers. Their inexperience and higher crash rates make them more likely to file a claim than other drivers. They are:
Contact your insurance company to review your coverage options and ensure that your teen and car are protected during a crash.
What happens if your friend gets pulled over for speeding in your car? Unlike car insurance, which follows the car in the event of a crash, a traffic citation will follow the driver. Your driver will be responsible for the ticket, and the driver’s personal car insurance costs may increase. In most cases, the owner of the car will not be responsible.
What should you do if you do not want a specific person in your household to drive your car? If they’re of legal driving age and live at your address, ask your insurance company to designate them as an excluded driver.
Consider this option if someone in your household has a poor driving record or is not a safe driver. If you include them in your policy, they may drive up your rate. There is one caveat though: This person should not drive your car under any circumstances. If they are in a car accident, most likely your insurance will not cover the damage to your vehicle and the excluded driver will be considered to be driving uninsured. Your insurance company may also choose not to renew your plan. However, each policy is different and it is important to confirm the terms of the policy with your insurance agent.
Do not take lending your car to a family member or friend lightly. Even if your insurance will cover any damages they cause, a car crash is – at the very least – an inconvenience to everyone involved.
Protect yourself by asking the following questions:
Contact your insurance representative if you have any questions about your insurance coverage. You do not want to be responsible for several thousands of dollars in damages because you misunderstood your coverage.
If you are the victim of a car accident or you loaned your car to someone who crashed it, you may need an experienced car accident attorney to ensure that you’re receiving a fair amount of damages. Contact the accident attorneys at Wilson Kehoe Winingham now for a free consultation.
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