Borrowed Car Coverage: Who’s Responsible?

As a general rule, car insurance follows the car, not the driver.¹ Typically, the owner of a car is liable for any damages that someone else driving their car with permission causes.

Most auto insurance policies have a “permissive driver clause,” which means that the owner can lend out their vehicle occasionally, and their insurance will still cover any damages. In such a circumstance, the borrower is not responsible for damages up to the amounts included in the policy. If you are considering lending out your car, make sure you trust the borrower first and foremost.

In most circumstances, the car owner’s insurance will cover any driver borrowing it with permission. However, it may be a good idea to purchase your non-owner insurance if you borrow or rent cars frequently (including carshares like ZipCar) and drive them long distances. Alternatively, if you borrow the same car frequently — for example, a partner’s car — the owner of the car can add you as a secondary driver on their insurance policy.

Non-owner insurance can cover bodily injury and property damage in the event of an accident, but it does not cover vehicle damage or your own injuries (for that, you’d need collision and medical payments coverage). Generally, rates for non-owner insurance are less expensive than standard auto insurance costs.

Non-owner insurance kicks in if the limits of the owner’s policy are reached, or if you are explicitly excluded from their policy. It can sometimes pay for personal injury or medical expenses, but it depends on the policy.

Perhaps you don’t have a driver’s license, but you own a car and need insurance for when others drive it. Can you get car insurance without a license?

In these cases, you may want to purchase insurance despite your lack of a license. Legally, you do not need a driver’s license to get car insurance, but not every company offers insurance to unlicensed people.

The Hartford is one provider that offers such insurance. The key is to purchase a policy and list yourself as an excluded driver. This reduces the risk for the insurance provider.

Owner’s insurance typically covers expenses related to accidents that someone borrowing the owner’s car caused, even if the driver has their own insurance.

However, there are circumstances where a car owner’s insurance does not cover a borrowed car.

• Frequent drivers: This is not defined strictly, but if someone borrows a car regularly, the owner’s insurance may not cover them.
• Member of household: If someone in your household is not a car owner but borrows a car frequently, you should add them to your insurance policy. In some cases, insurance companies may require you to add a partner to your policy if you live together.
• Excluded drivers: It may go without saying, but if somebody is explicitly excluded from coverage, they will not be covered when driving your car. This is common in families with teens who have poor driving records and are explicitly excluded from car insurance coverage.
• Commercial purposes: Standard auto insurance will not apply if somebody is driving your car for business purposes. For that, you’d need commercial auto insurance.

In the case of car lending, primary insurance is the owner’s coverage, while secondary insurance is the borrower’s coverage. In the case of an accident, you should first submit a claim to the primary insurer. However, a borrower’s secondary insurance may help pay for damage in certain circumstances.

For instance, if a borrower causes an accident that the owner’s insurance does not completely cover, their secondary insurance may cover the remaining costs. But they must have a policy that covers borrowed vehicles. Some insurance policies explicitly state that they don’t cover certain people. In that case, or if the borrower does not have their own auto insurance, it’s likely that the owner will have to pay for the damages exceeding their policy coverage with their own money.

All the usual tips apply when it comes to an accident, whether you are borrowing a car or get into an accident with a borrowed car.

1. Remain at the scene.
2. Call an ambulance if there are any injuries.
3. Contact the police and file a report. Get the names and badge numbers of all the officers involved. You’ll want to include the police report in your claim. Get a copy of the police report for your files.
4. Document the vehicle damages, the vehicle identification numbers of all the cars involved, and the names, contact information, and insurance information of everyone involved. Write down the date, time, and weather conditions of the accident. Take pictures of the damages.
5. Contact the person you borrowed the car from. They can file an insurance claim for you, or they might have you file the claim. If their insurance is insufficient and you have insurance, you may have to file a claim with your own provider.
6. If the accident wasn’t your fault, you’ll file a third-party claim with the at-fault party’s insurance provider. You might file bodily injury or property damage claims.
7. If the accident was your fault, file medical payments coverage and collision coverage claims to reimburse you for your injuries and damages. If you lack these coverages, you will have to pay out of pocket for your medical costs and property damage, as well as the other party’s.

If you are lending or borrowing a car for commercial activity, like ridesharing, then you need to check with your insurance provider. It is possible that your coverage won’t apply for business use and you’ll have to purchase commercial insurance. If that’s the case, check out the best ridesharing auto insurance.

Before you borrow someone else’s vehicle or loan a vehicle, read through these tips:

1. Check your insurance policy to ensure coverage. If you don’t understand your policy, contact your insurance agent or broker directly.
2. Only lend to people you trust.
3. Be clear about expectations (length of time, usage, cleanliness, etc.).
4. Take photos of the car first to ensure that your provider will cover new damages.

Don’t be afraid to ask for information, whether you’re loaning or borrowing a vehicle.

Loaning a Vehicle

• Are you a capable, confident driver?
• Are you licensed?
• Do you have your own car insurance?
• f so, what coverage does it provide?
• How long do you need the car?
• When do you plan to return the car?
• What do you plan to use the car for?

Borrowing a Vehicle

• Do I have permission to borrow the car?
• Where is the registration and insurance information?
• Do you have car insurance that covers me in an accident?
• Does your car have any issues or quirks I should know about?

Borrowing a car is fine, but it’s important to be informed of the insurance implications. For more information, keep reading our car insurance FAQs.