If you own a car, you need auto insurance. But what happens if someone else drives your car? Do they need their own insurance, does your insurance cover them in the event of an accident, or is the situation more complex? Before you hand over the keys, take a look at what you need to know about auto insurance.
Why Is Someone Else Driving Your Car?
Insurance recognizes a difference between a friend who borrows your car once or occasionally and an employee driving it for business-related purposes. Before you decide to lend your car, consider the reason for it.
If you’re not sure whether the reason is friendship/leisure or business, talk to your insurance agent. The expert can help you to determine the reason or clarify a blurred line between the two. Your agent can also provide policy-specific details. Read on for more information on how your auto insurance policy should impact your decision whether to lend, or not lend, your car.
What Does Your Policy Say?
Different policies provide different types of coverage. This includes who is covered, what is covered, and how much you’ll need to pay out of pocket (the deductible) for repairs, injuries, and property damage. If you don’t fully understand your coverage you aren’t alone. Not every insured driver has expert knowledge of how auto policies work—but your insurance agent does.
Review your policy regularly with your agent and ask about specific permission or borrowing issues. The insurance professional can provide you with the policy-specific answers you need before you lend your car to someone else.
What Is Permissive Use?
Have you heard the term permissive use in reference to lending your car, but don’t know exactly what it means or how it applies to your insurance policy? As the name implies, permissive use refers to the use of a vehicle with permission. More specifically, with the owner’s permission. If you give your permission for a friend or family member to driver your car, you provide permissive use.
Under permissive use, the person who borrows your car is typically covered under your insurance. But this does not give you the freedom to allow a child, sibling, or other family member/friend who lives with you, works for you, or constantly uses your car to go uninsured.
In most cases you’ll need to add someone in your household/business who regularly drives your car to your policy. If you plan to regularly allow someone else to drive your car, talk to your agent about adding them on to your policy.
Who Pays for Damages?
If you provide permission for someone else to drive your car once or occasionally and they get into an accident, who pays? The answer to this question depends on several factors.
To start with, who is at fault? If another driver is at fault, it’s likely they’re insurance will pay the primary costs. But if your friend, family member, or whoever else you lent you car to is at fault, you’re responsible unless your policy directly says otherwise.
Is Employee Use Different Than Recreational Use?
Does you employee use your car once in a while for non-company-related drives? The line between business use and recreational use is sometimes blurry. An employee who asks to borrow your car once in a while for their own errands isn’t using it for business purposes. Provided you give your permission, this is similar to lending a car to a friend.
If you ask your employee to drive your car for business-related reasons, you may need business auto coverage. Discuss the use and your options with your insurance agent before you ask your employee to regularly use your car.
Do you need new auto insurance? Contact Metropolitan Insurance Service Consultants, Inc. for more information.