Imagine you have a situation where your friend needs to borrow your car. Being a good friend, you allow them to borrow your car but unfortunately, while they are driving it, they end up crashing your car. You both are probably wondering what would happen next.
Chances are that friend is not on your insurance plan as an authorized driver so what will your insurance do? There are a lot of factors that come into play when you start to talk about someone else driving your car and getting into a car crash.
Determining Coverage
Insurance companies have rules in place to cover accidents when someone besides the owner of the vehicle is driving. Typically, if the person is going to be driving the vehicle on a continual basis they are required to be listed as an authorized driver in order for them to be covered by insurance. This may require an additional policy and higher premium, but is the standard practice for auto insurance.
However, if the person driving is a one time user, insurance providers will generally cover the accident under an exception rule. This way the damages to the driver and the vehicle will be covered up to the limits set forth in your policy.
If the friend who drove your car and crashed it drives your car all the time but is not listed on your insurance, then it is likely the insurance company will deny the claim or at the very least, impose a penalty and only cover a portion of damages. It is important to remember insurance company’s business model depends on taking in more money in premiums than they pay out in car accident claims.
Accidents Involving Others
If the crash your friend is in involves another vehicle, this can be a difficult situation. If the car crash is determined to be the fault of the other driver, your insurance will not usually penalize you, but instead will go after the at fault driver for damages. Your friend may be able to file a civil claim against the at-fault driver as well. In a civil claim, the plaintiff may be able to recover damages for lost wages, medical expenses, property damage, therapy and more.
If, however, your friend is at-fault for the crash, then you may have issues with your coverage. In cases of a one-off use of the vehicle resulting in an accident, your insurance company may cover the accident but will increase your insurance premium. If the friend was on an insurance policy as an authorized driver then the coverage from that policy will go into effect.
The worst case scenario would be that your friend caused an accident and is a frequent driver of your car but is not listed on your insurance coverage. In this type of case your insurance company not only has the right to deny a claim, but they may greatly increase your premiums or cancel your insurance policy entirely. If this happens, you could be dealing with having to find a new insurance provider as well as facing a lawsuit from the victim.
How to Protect Yourself From Negative Consequences
In addition to dealing with the aftermath of a car accident, you may find your friendship is fractured. The emotional toll an accident can take may be more severe than the crash itself. The best way to protect yourself is to prevent the situation from happening at all.
The most obvious advice in this situation is to be careful who you loan your car to. If you know that your friend is going to need to borrow your car and you want to protect yourself, call your insurance provider and add another driver to your policy. This is the cheapest solution and will protect them and you in the event of an unforeseen car accident. You may also want to tell your friend to consider using a car sharing app, like Turo, Zipcar, GetAround or GIG.
If you are unsure of what your policy covers and want to learn more, you can talk to your local insurance agent about your current insurance policy and what your needs are to find the right coverage that will match.
