Most of us are quite comfortable with our ability to avoid a wreck while behind the wheel of our own car. But what happens when you hand over the keys to someone else? More importantly, what happens if that someone else damages your beloved automobile? Here are some answers to some common situations about which many drivers remain unsure whom their policy insures.
What happens if your friend wrecks your car?
Apart from ending your friendship…the general rule is this: the car insurance coverage follows the vehicle. That is, as long as your insurance company finds whoever you allowed to drive the vehicle an acceptable driver under your policy, your insurance will provide "primary" coverage for damages. The insurance company of the driver will be responsible for the claim as well, but their coverage will be "secondary".
What constitutes an unacceptable driver?
The only reason someone would fall under this category would be if they were listed as such in your policy. Sometimes insurance companies will request a list of roommates, a group which can be excluded from your policy. Most insurance policies define "Insured Person" as you or a relative or any person using your insured car with your express or implied permission to do so.
The complication is when the driver resides at your same address and has not been reported to the insurance company. You may want to call your agent to clarify their specific requirements for roommates.
Does it matter if you granted permission to use your car?
Absolutely. Insurance will not cover someone, for example, who wrecks your car after stealing it. Your car itself is covered under your policy because you pay for this service, but the unwelcome driver is not.
How does this affect your car insurance rates?
As is often the case, any time you file a claim under your policy, your premiums are likely to go up. It's quite simple. Your insurance company is not in business to lose money to you. If you file a claim, your rates will go up to offset those costs.
Adding a Driver to Your Insurance Policy
Adding additional drivers to a policy usually increases the premium, except in rare cases where a young person adds a low-risk adult to their policy. Most other times, adding another driver to your policy will increase the rates. This can be done by calling your agent, who will require specific driver information that will be used to assess the risk of covering the other driver. The crucial thing to remember is this: If the driver is in a position to borrow your car on a regular basis and does so (i.e., a car-less roommate), it is much safer to include that person on your policy.