am-i-coveredAm I Covered?
a series by Mountain Lakes Insurance

We often get questions like “I’m borrowing my friend’s car … am I covered?” or “My friend wants to borrow my car… will their insurance cover my car?” or “I’m thinking about letting my daughter’s boyfriend drive our car to the prom, will HIS insurance cover me?”

Most people have a general idea of what’s covered and not covered under their various insurance policies, but at Mountain Lakes Insurance, we get a lot of questions about unusual or infrequent situations such as:

“Am I covered … when borrowing a car from someone or loaning my car to someone?”

The vehicle owner’s insurance is Primary.  Insurance coverage follows the vehicle rather than the driver. So in most instances, as long as the owner of the car has insurance, it’s covered even if someone other than the owner is driving it — as long as the borrowing party has the vehicle owner’s permission (permissive use) and they are legal to drive.

The borrowing party’s insurance is considered Secondary, meaning that in the event of an accident, the borrowing party’s insurance could apply if the vehicle owner’s insurance is insufficient to fully cover the damage.

It’s important to note that there are some exceptions to what is called “permissive use” coverage. For example, permission must be given by the owner, unless the borrower has a reasonable belief that they are allowed to use the car. The borrower is not authorized to give permission to someone else. So, if your teenager allows one of his or her friends to drive your car to Athens or Miami without your permission, your coverage may not apply.

You should also consider that coverage might be denied if the vehicle borrower operates the vehicle in a negligent or criminal manner. And if the borrower is using your car for business purposes, your personal auto policy likely won’t cover that.

If you have a regular long-term arrangement to either borrow a car or to lend a car, the borrower should probably be added to the owner’s personal auto policy. For those who don’t own a car, but often borrow one, the borrower might consider checking into “named non-owner coverage”.  This is an endorsement that provides bodily injury and property damage liability, uninsured motorist coverage and more.  Not every company offers this type of coverage.

Ultimately, it’s usually safe to loan your friend your car for occasional errands or projects. Just remember that your insurance will be primary in case of an accident.  The same goes for borrowing a car.  Always make sure it’s for “normal” personal use. You’ll want to confirm that the car has coverage and that your insurance, whether you’re the owner or borrower, will apply.

Mountain Lakes Insurance always recommends and encourages our insureds to check with us first when it comes to what is or is not covered.  Our experienced agents can provide answers to most questions right away or check with our underwriters or claims partners if we’re not sure.

Don’t want to wait until after an accident to get answers!

Information contained in this article is based primarily on the author’s knowledge and experience and also includes content derived from other expert sources including Insurance Information Institute, IIAG/Trusted Choice, and some of the companies that we represent such as Safeco Insurance Co., The Hartford, Travelers Insurance Co., Auto-Owners Insurance Co., Grange Insurance, Progressive Insurance, Foremost Insurance, American Strategic Insurance (ASI), Encompass Insurance, Hagerty Collector Car Insurance.