The pros and cons of lending your car

Friends, family, or co-workers have most likely borrowed your car for a quick errand, to get to work, or for a weekend getaway. So, does your auto insurance policy allow you to lend your vehicle while being covered?

Even a fender bender can leave you and the borrower wondering what insurance will cover collision damage. Keep reading to see if you should let someone use your sports car.

The benefits of lending someone your car

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Advantages: The question to ask in this case is: Who is covered by your car insurance? Even if you’re not the driver at fault, most personal auto insurance policies can pay for damages caused by borrowers that fall into the following three categories:

  • Relatives who reside in your home and destroy your vehicle may be covered as a driver on your auto policy.
  • Your spouse or domestic partner with whom you share joint financial responsibilities may be a named insured in your policy and have access to your vehicle.
  • Persons covered by “permissive use” automobile insurance, i.e. a person with your exclusive authorization to drive your vehicle, declare The bank rate. They can be included in the primary policy, as explained in this Youtube video.

While most large auto insurance companies offer permissive-use auto insurance, some smaller insurance companies do not. Always check your policy details before handing over your keys to understand which listed drivers (named drivers) or named operators a car insurance policy protects.

The disadvantages of lending someone your car

The inconvenients: In the event of an accident where you were not the driver, you may be responsible for covering costs owed beyond the limits of your policy. For example, you face potential litigation if your friend was driving your vehicle and caused significant property damage or if his negligent actions injured someone.

According Erie Insurance, your insurance company can also refuse your request if the borrower is not declared according to the terms of your insurance policy. In principle, when you lend your vehicle to someone, you also lend them your driving record and, by extension, your auto insurance coverage.

So if your car is being driven by a friend who is driving drunk, has no auto insurance, or has a suspended license, it can increase your insurance premium. Also, if someone is still borrowing your car on a regular or long-term basis and remains an undeclared driver on your policy, your insurer may deny your claim.

The refusal will be motivated by the fact of not adding the borrower to your insurance policy as an “occasional driver” or not describing the uses of said vehicle in accordance with your insurance policy.

Which auto insurance policy covers repair costs?

A car loan sign in Alexandria, Virginia | John McDonnell/The Washington Post via Getty Images

Under the “vicarious liability” clause, you are liable if you allowed another person to drive your car and negligently caused damage or injury. This will not only increase your premiums, but until your friend’s car insurance kicks in, your policy is paramount.

You will have to pay damages out of your own pocket to compensate for any resulting damage or injury. If your friend has insurance that covers a borrowed vehicle and the damage caused exceeds the amount covered by your policy, their insurance may cover any responsible damage.

Keep in mind that as long as you give permission to an unlicensed driver, someone with a history of reckless driving, or someone who drives while intoxicated, you may be liable for what constitutes a ” mandate by negligence” and sued for personal damages.

The next time a friend or family member asks you to borrow your car and you don’t have full insurance, stop and think about how a liability claim for accident could affect your finances and policy premiums.

Talk to your local insurance agent and learn how to protect yourself and your vehicle when friends and family are behind the wheel.

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