March 10th, 2015
Auto insurance covers the car, not the driver. So when you let someone borrow your car, understand that it's your insurance that's involved, not theirs. Every car insurance policy is different, and your car insurance may or may not cover the cost of damages caused by someone else driving your vehicle. Whether you're letting your roommate run to the grocery store, the babysitter drop the kids off at practice or your significant other borrow it for the day, use this guide before lending your car, motorcycle or any other motorized vehicle.
Excluded driver versus non-excluded driver
Your insurance company may ask you to specifically list people on your policy that should not be driving your car. This might include someone with a DUI record or a new teen motorist. If an excluded driver borrows your vehicle, any damages they cause will not be covered under your car insurance.
A non-excluded driver is anyone who is not listed on your policy as excluded. You can loan your car to these people, but you should fully understand the risks involved before doing so. Additionally, you can list people on your insurance policy that regularly borrow your car, such as a babysitter or roommate. Speak with your insurance agent to add the names of frequent borrowers and ensure that your car is covered.
In the case of an accident
Your car insurance will most likely cover the cost of damages if you give your friend permission to borrow the car. However, know that you will have to pay the deductible since you are the owner. A "pro rata" case is when the insurance companies of both you and your friend split the cost of damages when your non-excluded driver is at fault.
Make sure your friend has insurance. Pro rata can't happen if there isn't even another insurance company to split the costs. If you loan your car and you're the only one with insurance, consider what will happen if the medical costs of injuries to the people your friend hit exceed your insurance policy limit. The other party can sue you for the damages.
Revisit your car insurance policy to know which drivers it covers, and be sure to let your insurance agent know when someone other than you is going to drive your car. CoverHound's easy-to-use website provides several options for auto insurance.