If someone borrows your vehicle with your permission, most auto policies provide coverage in case of an accident – including liability coverage, comprehensive/collision coverage and medical payments or personal injury protection (PIP/MedPay).
However, do car policies follow their driver or their car?
Coverage for Other Drivers
Car insurance covers many things, from bodily injury and damage to vehicles to bodily harm to passengers – but understanding who exactly is covered under what circumstances can be dauntingly complex due to all the different kinds of coverage offered and their own set of rules and regulations.
As a general rule, most car insurance policies cover only those listed as insured on them – typically this means those living with or living at college with the policyholder and dependents such as children enrolled at university. Furthermore, coverage extends to anyone authorized by them to drive their car, such as visiting extended family or borrowing friends’ vehicles.
What happens when another driver causes an accident is less clear cut, particularly if that individual isn’t family or listed on your policy.
Permissive use features are available in most auto policies and allow policyholders to allow others to drive their vehicle without needing to add them as insured drivers on the policy. This generally refers to individuals with whom the policyholder has given explicit consent for them to drive, such as friends and extended family who visit as well as roommates.
Of course, the extent of coverage depends on your policy’s specifics. No-fault states may not apply since each party must carry their own insurer to cover damages and repairs; additionally, coverage could be nullified if driving is done contrary to policy restrictions such as drinking while driving.
If a friend or extended family member regularly uses your vehicle, it is generally beneficial to include them on your policy. This will ensure they are adequately covered should an accident arise; in addition, adding them may actually lower costs since their claims history will be taken into consideration when calculating policy costs.
Permissive Use
Car insurance policies often include a permissive use clause, allowing occasional drivers who aren’t listed on your policy to operate it. It is crucial that vehicle owners understand this coverage aspect as any unexpected accidents could have serious financial ramifications and this policy provision could save money in premium payments in case an incident does arise.
Permissive use refers to any individual with your permission who meets the insurer’s definition of household member in your policy. Usually this refers to blood relatives, adoption and marriage (wives/husbands/kids etc), although in certain instances even roommates and legal wards/foster children might qualify as household members – it is wise to check each policy detail for more accurate definition of who counts as household members.
However, while most insurance policies provide coverage for those not listed as household members, there may be limits to this coverage. For example, certain policies only offer limited liability coverage in cases of permissive use accidents while some states limit this type of coverage through law. It’s always wise to review your policy details closely and consult an agent in order to gain more insight into its details and obtain clarification from them on any unique coverage provided to you.
Most individuals have implied permission from their parents or siblings to use their vehicles, whether for shopping trips, picking up friends from airports, or borrowing someone’s car as transportation for personal reasons. Although it might not be explicitly written down, implied permission typically results from past behavior, relationships between persons involved, or absence of any objection from vehicle owners.
Although most policies provide permissive use policies, not all do. Some policies exclude certain usage types – such as driving for rideshare services or commercial businesses – while others have specific rules concerning unlicensed drivers or issues not covered. It is vital that you discuss any policy details and any potential liabilities with an insurance professional to make sure you fully comprehend your coverage.
Named Excluded Drivers
If there is an irresponsible driver living in your household, such as a 20-something who recently moved back home or an irresponsible teenager who has multiple accidents or tickets, putting them on a separate policy as an excluded driver may be necessary to prevent their risky driving record from raising premium rates.
High-risk drivers include problem drivers, teenagers and people over 70 whose accident claims tend to cost insurers the most money. When faced with these circumstances, insurers may insist upon exclusion of such drivers from your policy or charge an increased premium or threaten cancellation unless you take prompt action against them.
Assigning an excluded driver to your policy signifies an explicit promise to your insurance company that they will under no circumstance drive one of the vehicles covered by your policy. If this exclusion is violated and an excluded driver operates their insured car without permission, there will be no coverage and you could potentially be held liable for any damage caused depending on state laws.
Note that should you wish to reinstate an excluded driver on your policy later (perhaps they improved their driving record or found better employment), this can be accomplished. Simply contact your insurer and ask to have them added as covered drivers; likely proof will also be needed that they’ve maintained separate car insurance in the interim.
Sometimes you may choose to permanently exclude certain drivers from your policy, a good solution if a family member or roommate should ever get behind the wheel again. Just ensure they carry their own auto insurance since fraudulent claims filed by excluded individuals could increase premiums for everyone in your area.
Some states do not permit permanent exclusions, so you should consult with your insurance agent on what would be the most suitable solution in your case. Keep in mind that even if an excluded driver drives their own vehicle but doesn’t carry auto insurance on it themselves, you could still be held liable under vicarious liability rules despite whether or not an accident took place in your name.
Uninsured/Underinsured Motorist Coverage
Car insurance policies usually offer a range of coverage options to meet the needs of every driver, some required by state law while others optional but still valuable. Uninsured/underinsured motorist coverage stands out as an essential aspect of car insurance policies.
Uninsured/underinsured motorist (UM) coverage helps cover medical bills and property damages caused by drivers without sufficient car insurance, in some states this also covers passengers in your vehicle and pedestrians hit by vehicles. While required in certain states, most allow it to be optional coverage.
Many drivers do not carry car insurance at all or only carry policies with low coverage limits that don’t fully cover all their expenses following an accident. When this is the case, UM/UIM coverage can help cover up to the limit you choose on your policy.
As well as offering UM/UIM coverage, most policies also provide collision and comprehensive insurance. Collision coverage covers damages when your car hits another object such as a tree or guardrail; comprehensive covers damages caused by other causes like flood, vandalism or hailstorm.
Dependent upon where you reside, some car insurance policies offer Uninsured/Underinsured Motorist (UM/UIM) as separate coverages while others combine them into one type called “UMBI.” Both varieties help pay for damages when an uninsured or under-insured driver causes an accident that’s their responsibility.
If a car accident caused by an uninsured or under-insured motorist leaves you with extensive medical bills and repair costs, these extra expenses could leave you in financial difficulty. By purchasing this type of coverage for yourself, however, these extra expenses can be covered without having to come from your own pocket.
Car insurance coverage that meets minimum limits might not be available everywhere, and in cases involving an uninsured/under-insured motorist it could be subject to binding arbitration instead of going straight to court. A neutral arbitrator would review evidence provided and hear both sides before coming up with a final ruling that’s binding for all involved.
