How auto insurance works if someone borrows your car

It’s a common situation: Someone needs to borrow your car (or you need to borrow theirs) but you’re not sure whether your auto insurance will cover you if something goes wrong. 

Maybe a relative is visiting from out of town and you want to lend them your car for the week. Maybe the babysitter needs to drive your child to the dentist. Maybe a friend wants you to drive their car home from the bar the next morning. Whatever the reason, it's important to make sure you've both got the coverage you need before handing over the keys.

Generally, in most states and with most insurers, your auto insurance will cover your vehicle (a car or truck described on your policy) if someone else is driving it as long as the following conditions are met:

  • They have your permission
  • They don't drive the car on a regular basis
  • They're not excluded from your policy by name
  • The type of use is not excluded

1. The borrowing driver must have permission

Allowing someone who is not specifically named on your auto policy to drive your car is called "permissive use." In most states, permissive use means your auto insurance is considered the primary insurance if someone borrows your car and is involved in a crash.

Not all insurers cover permissive use, and others may provide less coverage than they do for drivers named on your policy. Additionally, permissive use may not apply if an unlicensed or inexperienced driver borrows your car. Read your policy or check with your insurer if you're not sure what your policy allows.

What about family members?

Some insurers automatically consider drivers who are related to you, such as spouses and blood relatives, to be covered by your insurance if they live in your household. Others require family members and relatives to be included on the policy to receive coverage.

Generally, if a family member frequently drives your car but doesn't live with you, they will need to be included on your policy by name to be covered.

2. They can't use the car regularly

It's up to your insurer to determine what counts as "regular" use. If someone is borrowing your car on a consistent basis, even if they don't do it that often, it's best to check whether they should be included on your policy.

For example, if you have a babysitter who occasionally borrows your car to pick up your kids from school, they may need to be added to your policy even if it only happens a few times a month. 

3. They can't be excluded by name from your policy

Just as other drivers can be named on your policy, in most states, they can be specifically excluded. Your insurance won’t cover excluded drivers, you, your car, or any other injuries or property damage if the excluded driver is in a crash while using your car. It's very important to read the details of the exclusion to know what, if anything, is covered if an excluded driver drives your car.

Just because a driver in your household isn’t excluded doesn’t mean they’ll be covered when borrowing your car. If your insurer believes your roommate should’ve been a named driver but wasn’t when they borrowed and crashed your car, for example, they may deny a claim.

Since coverage for unnamed drivers ultimately depends on the specifics of the situation and your policy details, check with your insurer if you're not sure a specific driver would be covered.

What about their insurance?

If a friend or other person borrowing your car has their own auto insurance, their policy may cover damage they're liable for in a crash. This could happen if there's more damage than your liability coverage can pay for alone, or if your insurance seeks reimbursement from your friend's insurance. The exact details depend on your state and the terms of both your policies.

4. The type of use can't be excluded

If someone borrows your vehicle for business purposes, such as to drive for a ride-hailing service like Uber, your insurance policy may not cover that. If you expect that you or someone you let borrow your car is going to use it for commercial purposes, discuss it with your insurer. You may need additional coverage.

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