Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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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

UPDATED: Oct 13, 2020

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Here's what you need to know...

  • When you own a vehicle, you’re legally required to satisfy state auto insurance laws
  • Failure to comply with the laws can result in damages that you’re liable for, fines and penalties
  • The vehicle owner’s insurance will extend to listed drivers as well as permissive users who don’t have their own insurance
  • If you’re borrowing a vehicle, your own liability insurance will be primary
  • You won’t receive permissive user status as a household member, co-owner or excluded driver
  • Having your own liability insurance is important when you’re driving owned and borrowed vehicles to protect your assets and wages

If you borrow a friend’s vehicle, it’s important that you know whether or not you’re insured before you get behind the wheel. Just because you’re not legally required to buy coverage on a vehicle that you don’t own doesn’t mean that you don’t need it.

It’s easy to assume that you’ll automatically be covered with an adequate amount of protection, but that assumption could land you in some hot legal water in the tragic event that you have an unexpected loss.

Auto insurance laws exist in every state. You’ll need to know the law and then understand your obligations as a driver and not necessarily an owner.

If you’re planning to borrow a friend’s car or you’ll be renting a car in the near future, read this guide to when you’ll need insurance for non-owned cars and learn what you need to know.

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Table of Contents

Who is required to buy auto insurance?

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Every state has different rules when it comes to buying auto insurance. In a majority of states, you’re required to buy a minimum amount of liability coverage just to satisfy the law.

What many drivers don’t understand is that they’re only required to comply with the mandatory auto insurance law when they own a car registered in the state and not necessarily when they’re a driver.

The only time someone who doesn’t own a vehicle is technically required to purchase auto insurance when they don’t own a vehicle is when they’re high-risk drivers who are required to file an SR-22 to state officials.

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Will you be covered by the owner’s car insurance policy?

Since it’s the vehicle owner that is required to insure the registered car, it’s fair to assume that you don’t need your own coverage when you’re borrowing your friend’s car. Auto insurance does extend to other drivers who aren’t listed on the policy, but not all of the time.

There’s a huge debate as to whether car insurance follows the driver or the car 100% of the time, but neither is true. In some instances, car insurance follows the driver and in others, it follows the car and whoever is driving it.

You’ll need to learn how each scenario is handled before you really can feel comfortable when you drive your friend’s car.

How Liability and Physical Damage Insurance Covers the Car

When it comes to filing a claim for third-party liability damages and medical bills, the car insurance on the car will follow the car and most drivers behind the wheel at the time of the loss.

While it’s common sense that listed drivers are covered, it can be surprising to some to learn that unlisted drivers can be covered for liability claims in the vehicle under permissive user status.

When it comes to physical damage claims after a collision, coverage extensions can get a bit more confusing. This is because physical damage also covers the car, but there can be limitations to how damage coverage pays when permissive drivers are borrowing it.

While most insurers will still extend the car’s physical damage coverage when borrowers are driving, some companies limit extensions to only children, spouses, and family members even when the driver has permission.

You’ll need to have the owner of the car ask their agent how their coverage will work before you come up with a solution for gaps that might exist.

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Who’s considered a permissive user?

If everyone was classified as a permissive user, it’d be easy for policyholders to save on their premiums because they wouldn’t list high-risk drivers who have regular access to their car.

This is why there are restrictions when it comes to who can and can’t be covered under the permissive user provision. Here are some of the limitations that most companies enforce when they’re investigating claims filed by people borrowing a car:

  • Drivers who are specifically excluded under a driver exclusion filed on the policy aren’t covered under the provision
  • Individuals who weren’t given express consent to drive won’t be covered
  • You allow an intoxicated person to drive your vehicle
  • An unlicensed driver borrows the vehicle
  • Household members borrow the vehicle and aren’t on the policy
  • Friends who have regular access to the car don’t have coverage under the primary policy

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How does your insurance coverage you when driving a borrowed car?

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If you own your own vehicle and you borrow a friend’s car, things get even more confusing. Your auto insurance doesn’t just cover you when you’re driving your own vehicle, it covers you for certain types of losses when you’re driving a vehicle as a temporary substitute.

It’s important that you don’t assume your coverage will always pay. Here’s a breakdown of how your coverage extends to a vehicle that you don’t own:

All standard car insurance policies include liability coverage that will pay for third-party losses. The coverage has specific limits that apply to damage losses and to injury losses.

If you’re responsible for an accident in a borrowed car and you have your own liability insurance, you would actually file a claim against your policy first.

Since your car insurance liability coverage is primary, it’ll be exhausted first before the owner’s policy will pay. Still, it’s possible that the insurance on the car will pay if you have low limits or if there are catastrophic damages.

If you have a full coverage insurance policy, the coverage extension is another story. The only time that your comprehensive and collision will extend is when the borrowed car fits into the right definition of covered auto.

Damage coverage extends to rentals because they are temporary substitutes.

If you can prove that the borrowed auto is temporarily replacing your car while your other car is out of commission, your coverage may extend. If, however, it’s not a substitute, coverage doesn’t extend.

What happens if you don’t own a car but you regularly borrow cars?

Not everyone who borrows cars has their own existing auto insurance to rely on. If you want to borrow a car and you don’t have insurance on your own vehicle, you should ask the vehicle owner if they have a policy that will cover you.

If your friend has called and the company won’t extend coverage to you, it might be time to consider an alternative. One option would be to purchase a specialty non-owners auto insurance policy.

What is non-owners auto insurance and who does it cover?

Non-owners car insurance isn’t available to everyone. It’s strictly for drivers who are licensed but who don’t own their own vehicle or have a vehicle that’s regularly furnished for their use.

If you fit this criteria, you may be eligible to buy yourself your own policy that will provide you with third-party liability coverage.

Before you assume that you’re covered for everything, you should review how non-owners coverage works. Since you don’t have an insurable interest in the car, damage coverage won’t apply. Here’s a list of the coverage options that are available through a non-owners plan:

  • Bodily Injury Liability
  • Property Damage Liability
  • Uninsured Motorist Protection (only some carriers in some states)
  • Medical Payments (only some carriers in some states)

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Why buy nonowner’s car insurance?

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If you don’t have coverage and you’re driving, it’s important to have protection regardless of what the law says. You don’t want to assume the coverage on the car will pay for your claims just to find that you’ll have to cover the damages on your own.

If you do have a loss without insurance, you could end up in court fighting for months and still be left to pay for court costs and the settlement. It’s even possible to have your wages garnished.

Now is the time to find out how much insurance will cost you in your current situation. Use an online rate comparison tool and you can compare the premiums through the best insurers.

Enter your personal information, select coverage options, and limits, and then make a selection based on both price and company reputation too.

Start comparing car insurance rates now by using our FREE tool below!

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