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When Another Driver Has an Accident in Your Car
No one can predict the future. You may loan your car to a friend, roommate, or family member, only to get a call that an accident has happened in your car.
It is important to really understand your coverages and how car insurance works if another driver crashes your car.
Who Is Covered When Driving Your Car?
It can be confusing to understand who is covered to drive your vehicle. Though policies will vary, the general rule is that anyone living in your house is typically covered when driving your car, unless expressly excluded on the policy (see “Excluded Drivers” below).
In many cases, everyone in the same household is actually required to be included on the vehicle’s insurance policy.
For those friends or family members who don’t live with you but use your car every once in a while – you can typically loan them your vehicle and not worry that they’ll be covered. Permissive use generally applies in these cases.
Permissive use means that if you give another driver permission to take your car, they will be covered by your car’s insurance coverage.
NOTE: Your own policy provides the primary coverage, not theirs. See below for more information.
Car Insurance Follows the Vehicle
It’s a common misconception that car insurance follows the driver. In reality, car insurance follows the vehicle.
This means that if you loan out your car to driver who is not excluded on your policy (see “When Could You Be Held Liable?” below), your car insurance is the primary coverage that would apply if a crash occurred. The driver’s insurance would act as secondary (or excess) insurance.
Let’s take a look at an example:
Let’s say you lend your car to your roommate, Annie, for the day. Annie hits another driver in the parking lot at her office. The primary coverage that would pay for damages to the other driver is your liability coverage. This means you’d have to:
- File the claim with your company.
- Pay the deductible.
- Accept any resulting rate hikes.
If the damages exceed your limits, Annie’s coverage will step in as secondary coverage.
If, however, the accident was not Annie’s fault, the claim would be paid by the other driver’s coverage and your insurance would be unaffected.
If you’ve excluded a driver from your auto insurance policy, e.g., because his driving record is poor and it could save you money to exclude him, your coverage will not pay for damages he incurs in the vehicle if he takes your car and gets into a crash.
NOTE: Depending on your state, if you did NOT give permission for the excluded driver to take your car, you might not be held liable for damages.
If your car is taken without your permission, it can be difficult to prove you didn’t give permission. You’ll generally end up paying. However, if it’s clear you did not allow someone else to drive your car and an accident happens, one of a few scenarios could occur:
- Theft: If someone steals your car and causes an accident, you won’t be liable for damages/injuries to the other vehicle/driver. However, damages to your own vehicle would probably be covered under your own coverage.
- Use of vehicle by a friend or family member: If your friend takes your car without your permission, their coverage would likely pay first and yours would step in to fill in the gaps.
- Use of your vehicle by an uninsured friend: If your friend takes your car without permission and is uninsured, you can expect your own car insurance coverage to pay.
When Could You Be Liable?
As stated above, if a driver that’s been excluded from your policy takes your car and causes an accident, you can be held liable.
Also, you can sued for damages if:
- You let an intoxicated/impaired driver operate your vehicle.
- You allow an unlicensed driver to take your vehicle on the road.
Understand Your Car Insurance Coverage
The most important thing you can do to protect yourself is to arm yourself with information. The first thing to do is to know what is covered on your current insurance policy. This will protect you, your vehicle, and other drivers.
As you decide on your coverage, talk to your agent at length about the terms of your coverage, so you know how it will work if an accident does occur. Find out what is not covered or is expressly prohibited on your policy.
Also, understand that whether your damages will be covered will depend on your policy. If the other driver was at fault and your own car was damaged, you’ll need collision coverage in order to pay for repairs. If you don’t have it, you’re on your own.
Decide Who Can Drive Your Car
Also remember, if there’s ANY chance a driver will use your car, think twice about excluding her. It could bite you in the end if she does have to use your car and something happens.
Finally, if you do loan out your vehicle, make sure you know whom you are lending it to. Don't let people you don’t trust take your vehicle, even for a short trip to the store.
An accident can happen at any time.
Contact an Attorney
If your car has been involved in an accident after you loaned it to a friend or family member, you might consider getting the help of an attorney, especially if your friend was uninsured, unlicensed, or impaired.
Because you could be subject to personal liability in those cases, meaning the other driver can actually sue you for damages instead of the person who drove your car, an attorney can help you if this happens.