Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health insuran...

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager Chris Harrigan

UPDATED: Mar 31, 2022

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Key Takeaways

  • Some policies allow you to lend your vehicle to anyone and only require you to give them permission
  • Relatives may be easily covered if they live with you
  • Always check with your insurance company to ensure you understand all the issues in lending out your car

Can someone drive my car and be covered on my insurance?

Yes, someone can drive your car and be covered by your insurance policy. For the driver to be covered, they may be required to be a listed driver on your auto policy.

You may also be required to give them permission to drive your car. Depending on the insurance company and the policy, if you are driving someone else’s car, you may not be covered by the car owner’s policy in the event of an accident.

Lending or borrowing a car may not be as straightforward as you think. Here’s what you need to know about auto insurance and loaning your car out.

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How does your insurance work when loaning your car?

Policies differ in how they will cover a person not listed on the policy as a driver. Some companies may offer the same coverage you enjoy as long as the driver has your permission to drive.

Other companies may offer coverage but will reduce the policy liability limits for property damage and bodily injury. When the insurance company provides reduced liability coverage, they may reflect your state’s required minimum liability limits. State minimums are the least amount of coverage you can carry and still be able to drive.

The main point is that you need to understand how you are covered and how that coverage may change if you loan your car to someone else. If you are unsure, call your insurance company, explain the situation, and ask them if you and the driver are appropriately covered.

Permissive Use Driver

If you list a temporary driver on your auto policy, they become a permissive use driver. They are covered like you while driving the car. Depending on your policy, you may be able to add permissive use drivers when you need to lend someone your vehicle and are concerned about their coverage. Adding the driver extends the policy’s coverage to them.

Some policies allow you to extend coverage by explicitly authorizing the person to borrow your car. These policies don’t require you to add the person to the policy physically. Your permission extends coverage similar to listing them as permissive use drivers.

Loaning Your Car to a Relative

Insurance companies may automatically extend coverage to relatives of the named insureds on the policy. To cover a relative, they usually must reside in your household. Relatives who do not live in the home can generally get coverage. However, that coverage may be lower than a household member can obtain through your policy.

Coverage may be different depending on the living situation of your relatives. Other policies may extend coverage to your relatives, friends, or acquaintances if you have given the driver permission to drive your car. It’s essential to check with your insurance carrier to determine how your coverage will work for your specific situation.

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How to Find out if Someone Is Insured

If the party borrowing your car doesn’t have insurance or has an inadequate policy, this can affect how your coverage will work in an at-fault accident.

Of course, before you lend your car to a driver, it can be helpful to ascertain their insurance status. This can be easily accomplished by asking for their current insurance ID card. If they hesitate, it can be helpful to say that you would like to provide it to your insurance company to ensure everyone is adequately covered to drive the vehicle.

As draconian as this sounds, you might be doing yourself and your friend a favor if you discover the coverage is insufficient before an accident occurs.

Obtaining proof of insurance from them and passing it on to your insurance company will help you determine if additional coverage is needed to cover the person borrowing the car and you.

Commercial Coverage vs. Personal Coverage

If you assume your commercial and personal auto policies will operate the same if someone borrows your vehicle, you can get into trouble.

Depending on the policy, coverage may or may not extend to the driver, and it can and does differ by policy type and the insurance company. So, it is vital to understand your auto policies and the differences between your commercial and personal auto policies.

Even if the personal and commercial auto policies are from the same carrier, coverage can vary dramatically between commercial and personal policies. It pays to call your insurance company as they will be more than happy to explain the differences in coverage and offer options to help you in your specific situation.

What if they get in an accident after they borrow my car?

The answers may not be as straightforward as you want them to be. If you loan your car out, and they wreck it, your insurance company will be your first call. And since insurance coverage generally follows the vehicle, the answer to that question is somewhat complicated depending on how things are currently covered and what the policy offers someone who borrowed your car.

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What if there is an accident, but it isn’t their fault?

If the accident isn’t their fault, the at-fault party will be paying for vehicle repairs and not the person who borrowed your car or your insurance policy.

Can I lend my car to my friend, and will it be covered while they drive?

Your insurance company may cover your car while your friend is driving it. However, you need to ensure they have auto insurance and then check with your company to verify coverage and add anything needed to cover them adequately while driving your car.

Will it affect my rates if my friend gets in an accident, and will I have to pay the deductible?

If your friend causes an accident while driving your car, you or your friend will be responsible for the deductibles. Also, you may see a rate increase on the premium you pay to insure your vehicle. Your friend will probably also see rate increases on their policy as many insurance companies will also hike up your friend’s premiums on their policy because of the accident.

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If I don’t carry comp or collision, will my insurance repair my car if my friend wrecks it?

If your friend caused the accident, then the short answer is no. That isn’t because your friend was driving. Insurance companies won’t repair a car that doesn’t have full coverage added no matter who was driving when it was damaged.

If someone steals my car, does the coverage work the same way?

Companies look at theft slightly differently. Generally, your policy liability limits will protect you and not the thief. If you didn’t have full coverage on the vehicle before an accident, the insurance company wouldn’t pay to repair the car. You may be able to obtain reparations from the thief in the courts, but that often takes months or years to get your money back.

Will the coverage limits apply to whoever borrows my car, or are the limits lowered to state-required minimum liability limits?

Some policies will extend your policy liability limits for bodily injury and property damage to whoever borrowed your car with your permission. Some will automatically offer lower limits, usually equal to state minimums.

While it can be complicated to loan out your car, it is something all of us deal with from time to time. Taking a few minutes to understand how your company will cover your vehicle and the person who borrows the car can save you time and headaches down the road.