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The cleanup from a car crash can be messy. It can get messier if you weren’t driving your car but, instead, a friend was behind the wheel. Part of the complication surrounds who pays if your friend crashes your car.
Buckle up as we take you down the road of this potentially bumpy issue.
Car Insurance Normally Follows the Vehicle, Not the Driver
Auto insurance usually follows the car, not the driver. So, if you let a friend borrow your car, your own auto insurance is typically primary for anything that might happen to your car or the driver during that time. For instance, your collision insurance probably will cover damage to your vehicle and your car liability insurance can cover damage or injury to another driver that your friend causes.
Your friend’s insurance normally wouldn’t cover damage from a crash when they’re driving someone else’s vehicle.
Your insurance generally pays for the friend’s crash, as long as your friend is a licensed driver and doesn’t regularly borrow your car. (if they’re a regular driver of your car they should be listed on your policy anyway.)
Your friend’s insurance would be considered secondary coverage if your insurance limits are used up because damage and injury bills exceed your policy amounts..
However, not all policies are alike in this regard. For instance, certain auto insurance policies exclude other drivers—even family members in your household—unless your policy specifically lists those drivers. These “step-down” policies are generally sold as very cheap policies by sub-standard carriers. One reason they’re so cheap is because they exclude everyone except the primary driver or offer only limited coverage for other drivers. If you’re buying a standard policy from a respectable auto insurer, you won’t have to worry about this.
Also, you may not even be responsible for damage or injuries arising from a wreck when your friend is behind the wheel of your car. If the crash isn’t the friend’s fault, the financial responsibility may rest with other drivers who are at fault.
Permissive vs. Non-Permissive Use
“Permissive use” simply means that your friend had permission to drive your car.
What happens if a friend borrows your car without your permission (known as non-permissive use)? In some instances, your friend’s auto insurance will kick in as the primary coverage—not your coverage. But if your friend has no auto insurance, you may need to turn your policy to cover damage or injuries.
Here’s another twist. Let’s say the wreck involving your friend causes $17,500 in damage to another person’s car, but your car liability insurance limit for property damage is $10,000. In this situation, your friend’s auto insurance might have to make up the $7,500 gap.
Even if your own auto insurance policy is enough to cover the entire bill for damage, your insurer might try to recover money from the friend’s auto insurance company—a process known as subrogation.
Other Reasons for Claim Trouble
Personal injury attorney Patrick Salvi, managing equity partner and chairman of Waukegan, Illinois-based law firm Salvi, Schostok & Pritchard, says that if you let a friend borrow your car knowing they weren’t fit to drive—say they were drunk or had racked up numerous traffic violations—you might be held liable for damage or injuries connected to other motorists.
Furthermore, if your friend was texting while driving or otherwise breaking the law, your insurance company could deny a claim for damage or injuries associated with your car.
Insurance Rate Increases
Even if you weren’t in the car at the time, a wreck your friend causes in your vehicle may cause your auto insurance rates to go up at renewal time.
You could see an even bigger jump in your rates if your friend has been living in your home and has been regularly borrowing your car, but you didn’t inform your insurance company about this arrangement. The insurer will adjust the rates to properly reflect the drivers, or might pay the claim but cancel your policy.
The best strategy is to be very picky about who borrows your car.