Car Insurance – Lending Someone your Vehicle

coverage for borrowed vehiclesIs someone covered under my car insurance policy if they borrow my car? Many consumers lend their vehicles to other drivers assuming that their car insurance coverage will automatically transfer to the person borrowing it. In some circumstances, coverage does extend to a person borrowing the vehicle as long as that person fits into the permissive user guidelines as described in their specific policy conditions.

Generally, coverage is extended to a driver which:

  • Does not live in your household
  • Does not have regular use or access to the vehicle
  • Does not have any ownership of the vehicle
  • Has a valid drivers license
  • Used the vehicle with permission
  • Is not an excluded driver on the policy

It can be dangerous to make any assumptions since each insurer has specific guidelines. Even if someone fits under the above circumstances, it is important to contact the insurance company to inform them of the person using the vehicle. If the driver drives the vehicle often, you should add the driver to your policy to avoid any problems with coverage. Some insures will provide coverage with lower limits for permissive users. For example, if your liability limits are $10,000 for property damage, policy conditions may state that permissive users will only be covered for $5,000.

Most of the time, policy premium will not increase when adding a driver of the same category as the policyholder, meaning a driver of the same age, marital status or similar/better driving record. The best thing to do is to contact your carrier to specifically ask their guidelines on permissive use.

It is also important to view your policy declarations page to see if there are any “excluded” drivers listed. When purchasing a policy, the insured usually signs an exclusion agreement which specifies their knowledge that the excluded drivers will not be covered in case of an accident. Most insurance companies want to know information on every household member so that they may be included or excluded. Insurance companies can even obtain names of household residents through reports such as CLUE and automatically list them on the excluded driver section for the insured to sign when purchasing the policy.

Some policyholder have even reported that they were unaware of the drivers excluded in their policy. In summary, one should contact their insurer to ask details on their guidelines for lending others a vehicle. Never assume that drivers are automatically covered if they do not live in your household.

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