Tito Bucheli


March 31, 2023

Edited By

John Davey
Does car insurance cover the car or the driver?
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As a driver, your car insurance is no doubt one of the most important insurances that you have in place.

Not only is it an important part of protecting your finances, but it is also legally required in most states. Your car insurance policy is made up of a set of coverages that protect you financially if something goes wrong with your vehicle. In general, car insurance covers the vehicle and not the driver.

In this article, Cheap Insurance takes a look at what this actually means and provide advices in terms of whether you can lend your car to another driver, or borrow someone else’s car.

Will Your Car Insurance Follow You or Cover Your Car?

For the most part, car insurance follows the car listed on your auto insurance policy. This means that if someone borrows your car, that they are essentially borrowing your auto insurance, too.

If someone gets into an accident with your car, whether they and your car are covered or not, your insurance coverage payout depends on whether they are a permissive or non-permissive driver.

Permissive drivers

permissive driver is someone who is driving your car with your permission. When a permissive driver is driving your vehicle, your insurance will cover them. For example, if your friend, roommate or someone else not listed on your auto insurance policy is driving your car and causes an accident, your auto liability coverage will cover the damage—as long as they received your permission to drive the vehicle. 

However, there are exceptions to permissive use.

For example, if you lend your car to an unlicensed driver, a person who you did not list on your policy but should have, or someone who drives the vehicle under the influence of drugs or alcohol, your auto insurance policy will not cover the damage for an accident that they caused.

Non-permissive drivers and excluded drivers

A non-permissive driver is someone who borrows your car without your permission. When a non-permissive driver is using your car, their auto insurance will be the primary insurance.

If they cause an accident while driving your vehicle, they will be held fully responsible for any damages.

Non-permissive drivers also include car thieves. In other words, if someone steals your car and causes an accident, you won’t be responsible for the damages and repairs to the other vehicle.

You do have the option to list someone as an excluded driver on your car insurance policy. This means that they will be explicitly excluded from your auto insurance coverage. For example, if you decide that your sibling should not use your car at any time, you can exclude them as a driver on your car insurance policy. This means that they will need to have their own insurance in order to drive your car. It is very important to note that in this case, if the person drives your car and causes an accident, your insurance will not pay out for any damages. Only if the excluded driver has their own insurance policy will their car insurance typically cover the damage.

Commercial use

If you allow someone else to drive your car for business or commercial purposes, your auto insurance policy will not cover them. This is because a standard or private car insurance policy is not designed to cover business use. If you need to cover your car for business use, it is a good idea to invest in a commercial auto insurance policy.

Unlicensed drivers or drivers with a suspended license

Your own car insurance will not extend coverage to non-licensed drivers, or any driver that has a suspended driver’s license.If you loan your car to an unlicensed driver, or someone who has a suspended license, not only will they be fined if they are caught driving, but you could also receive a fine.

Do the Various Car Insurance Coverage Types Follow the Driver or the Car?

Generally, auto insurance will follow the vehicle rather than the driver. However, there are some coverage types that follow the driver, too.

The variables that determine whether insurance coverage will follow the driver or the vehicle depend on the insurance laws of the state and policy type, as well as the coverage available within the policy.

Liability coverage

Your liability auto insurance protects you, the driver, rather than your car. It will always follow the driver, irrespective of whose vehicle they are driving.

Liability coverage is designed to pay for the medical bills and property damage of the other driver when you are at-fault in an accident.

Liability insurance is represented by three numbers. If you live in Colorado, for example, you will see these numbers listed on your insurance policy as 25/50/15.

These numbers relate to the amount of coverage you have for:

  • Bodily injury liability per person ($25,000 for Colorado).
  • Bodily injury liability per accident ($50,000 for Colorado).
  • Property damage liability ($15,000 for Colorado)

Bodily injury coverage pays for the medical expenses of the other driver and passengers. On the other hand, property damage liability coverage pays for repairs to property, such as the other driver’s car. It also covers any other property you damage in the accident.

Comprehensive coverage and collision coverage

With comprehensive coverage, it is your vehicle that is being covered instead of you, the driver. This means that if your car is damaged while another driver is borrowing it, the damages to your vehicle will still be covered by your car insurance. Comprehensive coverage also protects you financially if your car is damaged as a result of anything other than a collision. Examples of what comprehensive coverage will cover include:

It is the same with collision coverage. The car, rather than the driver, is covered for any damages that are caused to the vehicle. Collision coverage pays for any damage after your vehicle has collided with another object.

Such objects can include:

  • Another vehicle—either parked or in motion.
  • Telephone poles.
  • Guard rails.
  • Fences.
  • Traffic signs.
  • Trees and shrubbery.
  • Homes and other buildings.

Medical payments or personal injury protection (PIP)

You may have selected Medical Payments coverage for your car owner’s insurance policy. This insurance will pay for your medical expenses if you are involved in a car accident where you get injured, no matter who is at-fault.

Although it depends on your insurer, this coverage generally applies to you, the driver, and will not extend to other drivers that borrow your car.

If you have also selected PIP—which is also referred to as ‘no-fault insurance’—this coverage will reimburse you for both medical bills and lost wages if either you or your passengers are injured in a car accident, irrespective of who caused the accident.

Secondary insurance

If a friend borrows your car and causes an accident, your liability insurance will be considered the primary insurance. If your friend has their own insurance policy in place, this will serve as secondary insurance.

Making sure that anyone who borrows your car is covered by insurance is important. This is because if they are involved in a car crash, secondary insurance will cover the rest of the costs to repair damages when those costs exceed your own limits.

This is why it is always risky to, for example, loan the use of your car out to someone who does not have their own insurance. If they are involved in an accident, and your insurance limits are exceeded when paying for damages, you may need to pay for the excess out of your own pocket.

Will Your Car Insurance Cover You If You Are Driving a Rental Car?

Your car insurance will follow you, the driver, if you are using a rental car. Typically, when it comes to liability insurance, a rental car company will hire out a car with its own coverage. 

If you are borrowing a car from someone else, then their liability insurance will provide coverage if you are involved in an accident.

Keep These Handy Tips in Mind before Lending Your Car

If you plan on allowing someone else to drive your car, be sure to consider the following:

Ensure you both have car insurance coverage

Ideally, the driver who is going to borrow your car should have their own car insurance as well. You’ll also need to agree on who pays the deductible should the other driver be involved in a car crash.

Key Point: What Is a Deductible?

When it comes to car insurance, a deductible is the amount of money that you need to contribute to the cost of an insurance claim.

For example, if the cost of the claim (say repairs for damages to your car) is $5,000 and your deductible is set at $500 on your car insurance policy, your insurer will pay $4,500 toward a claim and you will need to settle $500.

Trust the driver

Be sure that if you do lend your car to someone else, that they are a trustworthy and safe driver, with a good driving record.

Will Your Insurance Premiums Go Up If Another Driver Has an Accident in Your Car?

If your vehicle is involved in a car crash and you need to claim from your insurance company, there is always the possibility that your insurer will increase your car insurance premium. For this reason, it is essential that you can trust the other driver with your car to avoid the possibility of your vehicle being involved in an accident, and your premiums subsequently increasing.