Lending Out Your Vehicle
By: Good2GoPublished: March 28, 2016
Many people think that car insurance follows the driver. Unfortunately this is not the case, as the car insurance follows the car. If you lend your car to a friend or relative, you could be liable if an accident occurs.
Even if the person driving your car has great coverage with the highest limits and lowest deductibles, an at-fault accident could result in an increase in your insurance premiums. Your car could be damaged to the point of being temporarily unusable. Even worse, it could be completely totaled, which does not necessarily mean you’ll get a brand new replacement car.
Rather, you’re more likely to get the significantly lower cash value of a used vehicle—minus your deductible, minus any remaining balance due on your car loan and payable to your auto loan holder.
Let’s use your buddy Sara as an example.
Scenario 1: Sara’s Fault
You lend your car to Sara. She causes an accident. You’ll have to file a claim with your insurer, pay the deductible, and possibly expect a rate increase. If Sara has car insurance, her provider will be responsible for medical expenses. Sara’s insurance may also be a backup if the limits of your insurance are reached.
Scenario 2: Not Sara’s Fault
If Sara gets into an accident and isn’t at fault, you won’t have to worry about your insurance taking a hit. You can file a claim with the other party’s insurance, skip paying the deductible, and get coverage for any damages to your vehicle.
Scenario 3: Sara is Uninsured
If Sara is an uninsured driver and causes an accident, you could be liable for all of the damages. For example, if Sara causes a multi-car pileup that exceeds your car insurance limits, the injured parties could sue you to pay for medical fees and the costs to repair damages.
Ultimately, the safest decision is to not lend your car to anyone. If you do, you’ll want to make sure the person who borrows your car is properly licensed. You’re best off if your friend also has their own car insurance, so their carrier can pitch in or maybe entirely cover any damages incurred.
Whether or not you choose to loan your car out to friends and family members, you will need auto insurance that is reliable. At Good2Go, we can help you decide what level of protection is right for you and your car – no matter who is driving. Visit us online or call (877) 200-9912 to speak to an agent and get your free quote today.