Car Insurance Myths
Contrary to popular belief, in case of an accident, car insurance follows the car — not the driver. So if you lend your car to a friend or a visiting relative, you could be liable if an accident occurs.
Even if your friend has great coverage with the highest limits and the lowest deductibles, your car insurance would have to cover the damages if your friend got into an accident while driving your car.
If you're thinking of letting someone drive your car for a few hours, days, or weeks, keep in mind that you're not only lending your car, you're also lending your car insurance. In most states, comprehensive and collision coverage protects your vehicle regardless of who's driving it.
Though state laws vary, here's how car insurance coverage breaks down in the event of an accident:
If you give any non-excluded driver (that is, someone you don't explicitly exclude on your policy) permission to take the wheel, your car insurance takes primary coverage status, which means that your car insurance would be primarily liable if something happens. The permitted driver's own insurance would serve as secondary coverage. So, for instance, if you loan your car to your best friend Drew and he causes an accident, you'll have to file a claim with your insurer, pay the deductible, and possibly expect a rate increase.
If Drew has car insurance, he might be responsible for any personal liability and medical expenses. Additionally, his coverage might have to step in if the limits of your policy have already been reached.
If Drew gets into an accident and isn't at fault, you won't have to worry about your insurance taking a hit. Generally, you can file a claim with the at-fault party's insurance, skip paying the deductible, and get coverage for any damages to your vehicle.
If Drew happens to be an uninsured driver and causes an accident, you could be liable for all of the damages. For example, if your uninsured friend causes a 3-car pileup that exceeds your car insurance limits, the injured parties could sue you to pay for medical fees and property damages.