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If you’ve ever rented a car to a friend, you might probably have the perfect driving record – you may wonder how car insurance applies when a non-owner is behind the wheel. Generally, car insurance continues with cars, not drivers. However, there are a few exceptions, so you may want to hone the nuance before trading with friends or family.
Is your car covered by insurance or a driver?
You buy car insurance for a particular vehicle rather than a driver, but the insurance document lists the main drivers in the insurance contract. This means drivers who have regular access to the vehicle. If you live alone, this may be just you, but if you have a spouse, child or roommate, they are generally listed as drivers appointed in your policy.
If someone who is not a driver appointed in your policy asks you to rent your car, your existing policy will mostly cover them. If there is an accident while driving your car, your policy will pay for approved claims. But this is not necessarily true. The best way to know how it works in your case is to read your insurance documents and make a quick call to your insurance agent.
The same logic applies when you rent someone else’s car. If you enter a fender vendor, the owner’s insurance policy may cover the damage as long as there are appropriate coverage types and restrictions and agree to file a claim. If you are disabled in an accident and the owner is not eligible for collision compensation, their policy will not pay damages to your vehicle. This is why insurance professionals recommend asking someone about more details about their insurance policy, including coverage type, before renting a vehicle.
When car insurance continues to the driver
There are a few exceptions that allow you to follow the driver, not the car. These include:
You rent a car
Many car rental agencies offer the opportunity to purchase car rental insurance when you receive your rental car. In some cases, this can be an unnecessary expense. This is because the policy (or even credit cards) may already include car rental coverage. However, some personal car policies are not covered by using the car for work, so if you are renting a car for business, it may not be covered. The only way you can know for sure is to read detailed printings of your insurance contract or talk to your insurance agent.
I bought a new car
Most states require you to meet the Minimum Auto Insurance Act before you can reach the road with a new vehicle. However, if you already own a car, the blessing period will usually apply to a place where the existing policy covers the new car with the same coverage limits as the old one. This grace period is usually up to two weeks, but you will need to officially add a new car before it expires.
You get involved in an accident with a car with poor coverage
If you rent someone’s car and cause damage that is not covered by their policies, your personal car policy may start to cover the damage. This may not be the case for all insurance companies, and filing a claim for damages can cause a fee, even if your vehicle is not present.
Add other drivers to your car insurance
In most cases, household members with driver’s licenses must be named in your policy. Most insurance companies expect that the person who lives in your home (your spouse, older children, or other relatives) will likely drive a vehicle appointed under the insurance contract, so unless those people receive a specific exclusion, they will have to be named in the insurance policy.
When purchasing a policy, you may be asked about other drivers who drive your car on a daily basis. For example, if your step-law lives next door and you rent a car while your child is watching your child every few days, the insurance company may want to include them in your policy. This may not be necessary for people who sometimes just rent your car with permission.
What happens if someone gets into an accident with my car?
If your policy uses acceptable ranges, you have given them permission to use your vehicle, you have full coverage including liability, collisions, comprehensive, and you should be protected financially. However, if you normally only have minimum compensation, including physical injury liability and property damage liability, your policy will cover the other party’s medical expenses and damages, but not the damage to your own vehicle.
In some cases, other person’s insurance may be used as secondary insurance, but in an accident with a disability, it is the primary insurance that pays compensation. If approved, the claim will be paid to your coverage limits. This could raise the monthly premium unless the accident is forbidden as policy approval.
*The quotes and quotes contained on this page have been verified by our editorial team and are accurate as of the date of posting. Outlinked Content may contain opinions or opinions that do not reflect the views or opinions of the Bank.
