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There are all sorts of situations where you might let someone borrow your vehicle — whether it’s a friend visiting from out of town or a family member who needs to get to work. But what are the insurance implications of lending out your car or borrowing someone else’s? Will your coverage apply in the event of a collision?
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Tips for lending out your vehicle
According to NerdWallet, your auto insurance follows your vehicle, not you. So, if you give someone permission to borrow it, they’ll generally be covered if it’s just a one-time or occasional trip. If this person causes an accident, you’ll be responsible for covering liabilities and repairs via your policy. If those costs exceed your coverage, the borrower’s insurance may kick in to pay the rest.
If the borrower lives in your household or uses your vehicle on a regular basis, it’s wise to add them to your policy. Your insurer might refuse to cover costs if they’re incurred by a frequent driver who isn’t listed on your policy. Also, if you’ve excluded a household member from your policy because their status or driving record increases your premiums, damages won’t be covered if they drive and wreck your vehicle.
If you lend out your car, make sure you’re covered in case the borrower causes a crash
Photo: W. Robert Howell via Creative Commons BY-SA 2.0
Always exercise caution when lending out your vehicle. Make sure the borrower has a valid license, liability insurance of their own, and a good driving record. If they cause an accident while driving your car, you’ll likely be the one who pays in the form of increased premiums.
Auto insurance specifics will vary from policy to policy, so be sure to understand what’s covered and what’s not before you lend out your vehicle. Consult your policy or call your insurance agent if you have any questions — you don’t want to find out after a collision that you and your vehicle’s borrower weren’t appropriately covered.
A longtime editor/writer and recently transplanted Hoosier, Caleb Cook lives in Xenia, Ohio. His favorite activities are reading and listening to music, although he occasionally emerges from the heap of books and vinyl records in his basement to stand blinking in the sunlight. Once fully acclimated to the outside world again, he can be observed hanging out with his wife, attempting a new recipe in the kitchen, attending movies, walking the dog, or wandering into a local brewery to inquire about what’s on tap. See more articles by Caleb.
