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Does car insurance cover borrowing a car?

Borrowing a car is usually covered by the car owner’s insurance — except in a few cases.

Updated

Fact checked

Letting a friend or family member borrow your car for a quick run to the store seems innocent enough, but whose insurance pays out in an accident? Most of the time borrowing is covered by the owner of the car’s insurance, but it’s important to know who is borrowing it and how often it happens.

Is borrowing a car covered by car insurance?

Car insurance always follows the vehicle first and foremost. You can give permission to anyone to drive your car anywhere in the US, and your car will likely still be covered by your insurance. The coverage that you have on your policy typically stays the same, too, regardless of who’s driving it.

This means that your liability coverage will kick in if the driver of your car is involved in an at-fault accident. The claim gets filed under your insurance, which will pay up to the liability limits you have on your policy. If you have comprehensive and collision coverage on your vehicle, your policy will still pay to fix your car if you let someone borrow it.

What kind of borrowing is covered by car insurance?

Letting someone borrow your car, or you borrowing another person’s car can happen in a number of ways:

  • You let your friend take your car to go to the store.
  • Your coworker uses your car to run a personal errand during lunch.
  • You let your adult child use your car while they’re visiting for the holidays.
  • Your friend is the designated driver when you’re having a night on the town.
  • You go on a road trip with friends and switch drivers.

All of the above situations would provide coverage under your insurance policy.

What’s not covered?

The main situation where you might not have coverage is with people who have regular access to your vehicle, or people who don’t have permission to use it. This usually involves family and household members, and sometimes roommates.

Insurance companies want these people to be listed as drivers on your policy so they know all the risks of insuring you.

Your coverage could be at risk if:

  • Your roommate gets in an accident while going to the store.
  • Your child, who lives with you, borrows your car and gets into an accident.

Each insurance company handles these situations differently, with some companies paying a claim and others denying it. If the company denies the claim, then any injured persons will likely still go after both you and the driver of your vehicle for payment.

To avoid a denied claim for a borrowed car, make sure you list all occasional drivers on your policy, and exclude any drivers you don’t want driving your car.

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What should I do after a crash in a borrowed car?

If you’re involved in an accident while borrowing someone else’s car or vice versa, treat the accident the same as you normally would. The only difference is the insurance claim goes through whoever owns the car.

  • Call the police to get a police report.
  • Call the insurance company that the car is under. If it’s your car and you’re not there, you still need to immediately report the accident to your insurance company.
  • Get a damage estimate and keep any bills or invoices you collect as a result of the accident.

Am I covered if I rent a car?

Renting a car isn’t the same thing as borrowing a car from an insurance standpoint. However, your insurance policy will usually still cover a rental car that you drive, as long as you rent and drive within the US or Canada.

Your insurance policy will cover any liability claim automatically while you rent, without adding a rental car to your policy.

It will also cover any physical damage to your rental car, but only if you carry comprehensive and collision on at least one vehicle on your insurance policy. Your deductible will still apply to the rental car.

A possible drawback to relying on your insurance policy to cover a rental car is that the claim will affect your insurance rates and insurance history. You might consider either buying coverage from the rental car company or using coverage provided by a credit card that’s already in your wallet. That way a claim with a rental car won’t affect your current car insurance rates.

Am I covered if I lend out my car?

If you lend your car to someone else for an extended period of time, you might still be responsible for any accident that person gets into.

To avoid this, you’ll likely need a contract from an attorney signed by the other person stating that they’re responsible for any injuries and damages sustained while they borrow the car. If that’s the case, their own car insurance should be the primary insurance for a claim.

Is it better to pay for a small claim out of pocket?

If you’re borrowing a car and have a small accident, it might be better to pay to fix the damage yourself rather than turn in a claim, if you can afford it. When you pay to fix the car out of pocket, a claim won’t be filed and the other person’s insurance rates won’t increase as a result of the accident.

The exact amount it will cost to fix damage to a car depends on the make and model of the car and what type of damage has been done. It might be an option to fix the damage out of pocket, rather than turn in an insurance claim, especially if the total cost is less than or close to the deductible.

Here are the steps to take and factors to consider:

  • Notify the vehicle owner about the accident.
  • If you know you can afford a specific amount of money, tell the owner you might be able to afford to fix it yourself.
  • Get an estimate to fix the damage.
  • Consider the other person’s insurance deductible and goodwill when deciding.
  • If the damage falls within your budget and the other person accepts, pay the claim yourself.
  • The car’s owner will likely be grateful and their rates won’t increase because of your accident.

Keep in mind that even small collisions may need to be reported to the police, even if you don’t file a claim. Check your state laws to find out when a police report is required.

How do I prevent an accident with my car when I lend it out?

While some accidents are completely out of a driver’s control, there are some steps you can take if you’re letting someone borrow your car or you are borrowing someone else’s car.

If you’re letting someone borrow your car

  • Be sure you trust that person with your car. If you question their judgment or they have a bad driving history, consider carefully whether you want them to drive your car.
  • Make sure you have proper coverage on your car. This includes adequate liability limits and both comprehensive and collision coverage, as well as any add-ons that could be useful.
  • If the person lives in the same household as you or has regular access to your vehicle, you’ll probably need to add them to your policy as a driver. Doing so can increase your premium, but will ensure a claim is paid if they get in an accident.
  • If you’re lending someone your car for an extended period of time, consider having a contract in place that requires the other person to have insurance and to take responsibility for an accident.

If you’re borrowing someone else’s car

  • Make sure they have insurance. If you’re driving a car that’s not insured, you could be hit with fines and your own insurance policy would likely pay the claim, causing your rates to increase.
  • Your insurance policy could always kick in as a secondary policy if the accident is severe enough, so consider raising your liability limits to increase protection.

Bottom line

Letting someone borrow your car doesn’t have to be complicated, but there are some factors to consider if you want to avoid ending up without insurance coverage after an accident. Car insurance always follows the vehicle first, which means you’ll want to make sure you have proper insurance coverage.

To find out what your insurance options are, be sure to review and compare different insurance companies to find the one that best suits your needs.

Frequently asked questions about borrowed cars

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