Maybe you’re house-sitting for a friend and need to make a quick run to the grocery store. Maybe you’ve recently hired a new nanny and he doesn’t have a car of his own.
These are the situations in which you need to know — definitively — if your car insurance covers the driver or the vehicle listed on the policy. In the event of an accident that occurs when someone else is driving your car, who pays? And more importantly, whose insurance rates will be affected moving forward?
Myth: car insurance follows the driver
In most cases, auto insurance covers a particular vehicle. The policyholder carries primary coverage in the event of an accident. If someone is driving a borrowed car, their car insurance would act as secondary coverage, but the car's owner would be responsible for carrying insurance, as well as any out-of-policy damages. As a result of this incident, the policyholder's insurance rates could get more expensive.
Does my insurance cover other drivers?
If your policy includes permissive use, any infrequent driver (i.e., drives the vehicle less than 12 times a year) is able to drive your vehicle. In the event the permissive driver causes damage that exceeds the policy limits of your vehicle, their personal coverage can act as secondary coverage. Let’s say your friend was driving a car and they got into an at-fault accident with property damages of $10,000. If your policy limits maxed out at $5,000, your friend’s insurance could cover the remaining $5,000.
*Not every policy has a permissive use claim. Check your policy details prior to letting an unlisted driver borrow your vehicle.
Types of auto insurance policies and coverage options
Remember when we said, “in most cases, car insurance follows the car”? Let’s discuss the specific policies that can determine exactly what — and who — insurance covers.
Named policy: A named policy covers only those specifically listed on the policy. Meaning, for anyone to use your vehicle and have coverage in the event of an accident, they need to be explicitly listed on the policy.
Liability: Liability insurance is primarily for at-fault accidents. It pays for the physical damages done to other drivers (bodily injury) and their vehicles (property damage) in an at-fault accident.
Comprehensive and collision: Also sometimes referred to as “full” coverage, comprehensive and collision insurance coverages insure your car against physical damage. Whether that damage occurs as a result of colliding with an animal or a stationary object, this type of insurance is specifically for your vehicle. Most policies involving comprehensive and collision require family members to be listed on the policy, particularly if they reside together and share a vehicle.
Adding a young driver to your policy
If you have a teenage driver in your house, they might drive your — or the family's — car. If your young driver is involved in an at-fault accident, your insurance will pay for the damages. While it might seem risky, it’s better to have your teen on your policy, as opposed to having them get their own policy or allowing them to drive with no insurance at all. Add your teen to your policy as a named driver and be sure to ask about discounts.
If your kids are too young to drive and rely on a nanny to get them around, consider a non-owners insurance policy. Non-owner policies are created specifically for people who don’t own the car they drive, offering extra liability insurance, so your insurance isn’t forced to cover everything.
Do car insurance policies cover the driver or car? Overview:
Standard insurance policies cover the car. By adding complementary policies, you can guarantee you, the driver, and the vehicle will be protected in the event of an accident. If you have a named driver policy, any driver you want to be covered to drive the vehicle needs to be added to the policy. If you have someone driving your car, but not living with you, consult them and suggest they get a “non-owner policy."
With the correct car insurance coverage, you can drive with peace of mind.