Am I covered when I lend my car to friends or family?
If you own a car, chances are you’ve let someone borrow it at least once.
But did you know that in the event of an accident it’s your auto insurance policy that typically would have to pay?
“By far, the number one misconception about loaning out your vehicle is that if you let your neighbor borrow your car, an accident should go on his insurance because he was the one driving,” said Dave Freeman, vice president and regional underwriting officer at Erie Insurance. “But in private passenger auto insurance, the coverage typically follows the vehicle, not the driver.”
Does my car insurance cover other drivers?
If someone else is regularly driving your car, let your Agent know. If you’re an ERIE Customer, insured drivers include:
Resident relatives: Most ERIE personal auto policies provide coverage to the named insured, their spouse or domestic partner and resident relatives. So if someone is a member of your family and lives in your home, they’re automatically an insured under your policy—unless they are specifically excluded.
Domestic partners: If someone lives with you but isn’t a relative, they are not named insureds under your policy. However, if you’re living with a domestic partner, they can be added to your policy as a named insured, but only if your relationship is the long-term, committed type— you share domestic responsibilities and financial obligations. Ask your Agent how to add a domestic partner to your policy.
Someone with permissive use: If you loaned out your car to a friend or neighbor, your ERIE policy will generally cover them if you gave your permission. If they are a regular and repeated user of the car, they should also have coverage. The only exception is if a driver has been specifically excluded on your policy.
Loaning your car: consider the pros and cons
If the driver falls into one of the three categories, and the loss is covered under the terms of your policy, your insurance can help pay for the damage—even if you weren’t the one driving.
However, depending on the situation—and the specifics of your policy—you might get stuck paying a surcharge on your auto insurance premium for an at-fault accident, even if you weren’t the one driving.
When you loan someone your car, you’re putting your name out there as a responsible party. You’ll be protected within the limits of your auto policy, but there’s always a chance of something happening that exceeds the limits.
For instance, if your neighbor runs a stop sign and causes significant injuries and property damage, you could be responsible for paying any amounts owed above the limits on your policy. That means you could be sued for your neighbor’s negligent actions because they were using your vehicle. (Liability in these situations varies by state, so check with your ERIE Agent about specifics.)
And what’s “permissive use” anyway? Maybe your daughter goes off to college and lets her friend borrow a car that’s in your name—but you, as the named insured, didn’t give permission. Is her accident covered? The answer could vary based on case law in each state.
If you do have to file a claim, rest easy. Griffin Insurance is here to help, and our prompt and personal attention will aid in getting you back to normal. If you do have questions regarding your coverage, please call our office and one of our knowledgeable agents will be able to help you with information to help you make a good decision that is right for you.