You let your friend borrow your car. He or she caused an accident and damages your car. It gets better…there is damage to the other person’s car, and they left the scene in an ambulance. Who covers the losses?
The real-world answer is, it depends. It depends on so many factors that can play into the above scenario to determine if coverage applies. Some are: Does the friend have a valid driver’s license? Do you live together or use the same address? Is your friend a regular driver of your vehicle? Was it a one-time, never happened before situation because your friend was visiting from another state? Were alcohol or drugs in play? Does the friend have car insurance? Does the friend meet your insurance company’s underwriting requirements? Do you have a named-operator policy? Is your friend excluded from coverage? These are some of the factors that claims representatives investigate and take into consideration.
If the insurance company decides coverage applies and you have comprehensive & collision coverage (often called “full coverage,” meaning your car itself is insured) that’s when your company will repair your vehicle minus your deductible (are you ready to pay the deductible if your friend cannot?). If you have liability, then your vehicle is not insured -- just the damage caused to other people or things up to your policy limits. What if the damage is over your policy limits? An attorney can name both the driver and vehicle owner in a lawsuit.
If drivers have been excluded from your policy, and you let them drive anyway, there is not coverage…and did you know you can still be held responsible? Also, you could be sued for damages if you let an intoxicated/impaired driver operate your vehicle or if you allow an unlicensed driver to take your vehicle on the road. What if they don’t know their license is suspended (it has happened)? Another dilemma is, will your carrier renew you after letting an undisclosed driver drive your vehicle?
Best practice: it’s best to not loan your vehicle to people who are not rated on your policy. If your licensed brother has a good driving record and visits from out of town for a day that’s one thing, but if someone is going to be a regular driver of your car, add them as a driver. Often the cost is minimal if they’re the same age or older with an equal or better driving record (if their driving record isn’t good, might be best to reconsider letting them get behind the steering wheel of your car anyway).
If you're thinking of letting someone drive your car for a few hours, keep in mind that you're not only lending your car, but potentially your car insurance too. You’re accepting responsibility for their driving since it’s not guaranteed that they’re covered. Read the terms of your auto insurance policy and decide if it’s worth it. Perhaps you could take them yourself and spend some good time together!
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