Does Auto Insurance Follow The Car or The Person?

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If you’ve ever loaned a car to a friend — maybe one with a less-than-perfect driving record — you may have wondered how car insurance applies when a non-owner gets behind the wheel. Generally, car insurance follows the car, not the driver. But there are a few exceptions, so you may want to brush up on the nuances before you swap rides with a friend or family member. 

Is the car insured or the driver?

You purchase an auto insurance policy for a specific vehicle, not a driver, but the policy documents will list the primary drivers on the policy — meaning the drivers who have regular access to the vehicle. If you live alone, this may be just you, but if you have a spouse, children or roommates, they are generally also listed as named drivers on your policy. 

If someone who is not a named driver on your policy asks to borrow your car, your existing policy will cover them in most cases. If they have an accident while driving your car, your policy will pay out on any approved claims. But this is not always true, and the best way to know how it works in your case is to read your policy documents or make a quick call to your insurance agent. 

The same logic applies if you borrow someone else’s vehicle. If you get into a fender bender, the owner’s insurance policy will likely cover the damage as long as they have the appropriate coverage types and limits in place and they agree to file a claim. If you were at-fault in the accident and the owner doesn’t have collision coverage, their policy will not pay for damage to their own vehicle. This is why insurance experts recommend that you ask about someone’s insurance policy details, including coverage types, before borrowing their vehicle. 

When car insurance follows the driver

There are some exceptions that could cause an insurance policy to follow the driver, not the car. These can include: 

You’re renting a car

Many car rental agencies offer the opportunity to purchase rental car insurance when you pick up your rented vehicle. In some cases, this may be an unnecessary expense, because it’s possible your policy (or even your credit card) already includes coverage for a car rental. Keep in mind, however, that some personal car policies do not cover using your car for work purposes, so if you are renting a car for business, you might not be covered. The only way you can know for sure is by reading the fine print on your policy or speaking with your insurance agent.

You purchased a new car

In most states, you need to meet minimum car insurance laws before you hit the road in a new vehicle. However, if you already own a car, a grace period typically applies where your existing policy will cover your new car at the same coverage limits as your old car. This grace period is usually up to two weeks, but you have to officially add your new car to your policy before it expires.

You get into an accident in a car with insufficient coverage

If you were to borrow someone’s car and cause damage that isn’t covered by their policy, there is a chance that your personal auto policy could kick in to cover the damage. Note that this may not be the case with all insurers, and filing a claim for damage — even if it’s not for your vehicle — will likely cause your rates to increase.

Adding other drivers to a car insurance policy

In most cases, members of your household who have driver’s licenses must be named on your policy. Most insurers expect that anyone who lives in your home — your spouse, older children or other relatives — is likely to drive the vehicles that are named in the policy and thus must be named on the insurance unless you’ve gotten a specific exclusion for those people.

When you purchase your policy, you may also be asked about other drivers who routinely drive your car. For example, if your in-laws live next door and borrow your car every few days while they’re watching your children, your insurer may want to include them on the policy. This may not be necessary for people who only occasionally borrow your car with permission.

• How do I add a driver to my auto insurance policy?
  

  If a friend or relative is regularly borrowing your vehicle, it may make sense to add them to your policy. This might be the case if you have a regular childcare worker who uses your car or an older relative who no longer owns a vehicle. In most cases, it can be handled simply by calling your agent or logging on to your account on your insurer’s website. You’ll need the following information for the added driver:

  • Their full name
  • Their Social Security Number
  • Their date of birth
  • The date they were first licensed
  • Their driver’s license number

  Be aware that if the person you’re adding does not have a great driving record, your rate may increase when they’re added to your policy. For example, if they have had speeding tickets or a recent accident, you may want to shop around and request quotes to find the cheapest possible coverage.

What happens if someone gets in an accident in my car?

If your policy has permissive use, you have given them permission to use your car and you have full coverage, which includes liability, collision and comprehensive, then you should be financially protected. However, if you only have minimum coverage, which generally includes just bodily injury liability and property damage liability, your policy will cover the other party’s medical bills and damages, but your own car’s damage would not be covered.

In some cases, the other person’s policy may be used as secondary insurance, but in an at-fault accident, yours will be the primary insurance policy that will pay for damages. If approved, the claim will be paid up to the limits of your coverage. This could cause your monthly premium to go up, unless you have accident forgiveness as an endorsement on your policy. 

*The quotes and citations included on this page have been verified by our editorial team and are accurate as of the posting date. Outlinked content may contain views and opinions that do not reflect the views and opinions of Bankrate.

Frequently asked questions

• What is permissive vs non-permissive use?
  

  Permissive use means that you have given another individual permission to use your car. In most cases, when this occurs the person and your vehicle will be covered by your insurance policy if they are involved in an accident. Non-permissive use indicates that someone is driving your car who does not have permission to use it. In this case, you may not be held accountable for any damage they cause while driving it. The driver’s policy, in that case, will serve as primary insurance. If they don’t have insurance, or if a thief takes your vehicle and damages it, you may still need to file a claim with your own company.

• When do I have to add someone to my car insurance policy?
  

  There is some wiggle room in determining the difference between an occasional user and someone who is a regular driver of your car. Knowing when you should have an occasional user transferred to a named driver on your policy may seem tricky. If you’re not sure, it’s best to ask your agent. State regulations and your insurer’s own policies may play a role in determining who must be added as a regular driver on your car.

• What if I use my car for work purposes?
  

  In many cases, your personal policy may not cover you if you use your car for work purposes. If you regularly use your car for work, you may need to invest in a business auto policy. There is some gray area here, however. If you use your car once in a while, say, to visit a client, your personal policy may cover you. But if the use is frequent and consistent, you will need a business policy to give yourself adequate financial protection.

• If someone borrows your car and gets in an accident, are you liable?
  

  If you gave the person permission, you are generally liable for any accidents they get into and your insurance will be used to pay for damages or medical care. However, if someone steals your car, you generally aren’t held responsible for damages. Instead, the driver’s insurance will be used.

• Will my insurance cover me if I drive someone else’s car?
  

  Generally, if you have the owner’s permission to drive the vehicle, your own insurance will cover you if you drive their vehicle. Keep in mind that their insurance will typically be used first in the event that a claim needs to be filed, while yours would be secondary insurance.