I’m Borrowing a Car … Am I Covered?

Most people have an idea of what’s covered and not covered under their various insurance policies. However, at Shaw Insurance & Associates, Inc, we still get many questions about borrowing or loaning a car.

Now that summer is here, and you might be looking to borrow your neighbor’s truck for a home-improvement project or to move some furniture, we think it is a great time to provide a little more information.

Generally, insurance coverage follows the vehicle rather than the driver. 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 they have the owner’s permission.

The person who borrows the vehicle, their insurance is considered secondary, meaning that in the event of an accident, it could apply if the 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. However, a borrower cannot give permission to someone else. So, if your teenager allows one of his or her friends to drive your car to Atlanta, your coverage likely won’t apply.

Coverage might also be denied if the borrower of the vehicle operates the vehicle in a negligent or criminal manner. If the borrower is using your car for business purposes, your personal auto policy likely won’t cover that. Also make sure you didn’t specifically exclude a driver living in your household who has their own car and their own insurance. Know that a person excluded on the policy won’t be insured to drive any vehicle on your policy even if you give permission.

If you have a regular long-term arrangement to either borrow or lend a car, the borrower should probably be added to the owner’s personal auto policy. Those who don’t own a car, but often borrow one, might also consider “named non-owner coverage,” an endorsement that provides bodily injury and property damage liability, uninsured motorists coverage and more. Named non-owner coverage is generally secondary coverage and used if the vehicle owner’s policy is insufficient.

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

Feel free to give us a call at Shaw Insurance & Associates, Inc. at 770-479-0985 if you have any questions — after all, you don’t want to wait until after an accident to get answers!

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