Lending A Car To A Friend: What About Car Insurance?
You may have heard the expression “car insurance follows the car, not the driver,” but what exactly does this mean for you? If your car is involved in an accident and you aren’t driving, it could mean a great deal to you.
When you loan your car to a friend or a relative, you are also loaning them the use of your car insurance. If your friend happens to be involved in a car accident while driving your vehicle, it’s not their insurance that will be affected, but it could affect yours.
Your Policy Is The Primary Policy
When you give someone permission to drive your vehicle, your auto insurance becomes the primary insurance in the event of an accident. If your friend causes an accident, your insurance is responsible for covering the damages, and you’ll have to pay your deductible before your insurance policy pays out. You’ll have to be the one who files the claim, and it’s likely that your insurance premiums will be impacted.
Meanwhile, your friend’s insurance would act as the secondary policy, covering any costs in excess of what your policy allows. The secondary policy might also cover medical expenses or personal liability expenses.
Uninsured Drivers
If the accident is not your friend’s fault, your insurance won’t be responsible for the expenses. The other driver’s policy would cover any damages, unless they are uninsured or have less insurance than you carry.
If your friend doesn’t have their own insurance, and they cause an accident, you could be liable for all the costs. Since there’s no second ‘backup’ policy, you could end up paying out of pocket for any costs beyond your own policy’s coverage, as well as the costs for the other car’s damages.
How To Minimize Your Financial Risk
Short of never letting anyone else drive your car (which is not always practical), you can minimize your financial risk when lending your car to a friend in other ways.
- Opt for adding uninsured motorist coverage to your car insurance policy.
- Purchase as much coverage as you can afford, including comprehensive and collision. You never know when you might need it.
- Never loan your car to someone who is irresponsible, especially if you think they’ll be drinking while using your vehicle.
- If your friend needs to borrow your car for an extended period of time, consider adding them to your policy temporarily. It could reduce your financial liability should an accident occur.
- Before you loan your car to anyone, call and check your coverage with your insurance agent. They can give you the best advice on how to limit your liability and let you know what to expect should your car be involved in an accident.
If you’d like to know more about how lending your car to a friend can affect your insurance policy, contact us today. We’re always happy to help with all of your car insurance questions and needs.
