I have always been curious, how does insurance liability work when borrowing a friends car? Let’s assume for all of the below, when insurance is mentioned it is full coverage (liability, collision, and comprehensive).
a) Let’s say both parties are insured for their own respective cars, but for some reason I borrow a friends and get into an accident. Will damages be covered by insurance, and if so, mine or my friends?
b) Is the insurance coverage/liability any different when borrowing cars between family members? And/or are there any specific restriction/rules to this?
c) Let’s say I seldomly drive, do not own a car and do not have insurance. If I borrow a friend’s car, who has insurance coverage, and get into an accident, what would happen and would the insurance cover the damages?
in a nutshell, I have a spare manual transmission car in my family that I would like to use to teach friends how to drive manual. It is registered to my brother, but it is not used regularly by anyone in the family. Nobody has added it as a vehicle on their insurance policy in my family, but we each have seperate policies on our regular cars. I want to know what I can and cannot do with the spare car, and want to cover myself/friends with liability.
Insurance is on the car, and covers it when any licensed driver is driving it (provided they have the permission of the car owner)*. So the insurance would cover regardless of who is driving it in the situations you mention. (The insurance company may raise your rates after the fact, based on the accident or the fact that you apparently lend your car out to bad drivers, etc.)
your insurance will not cover the deductible amount. Since the borrower is legally required to return your property in the same condition he borrowed it, he is thus responsible for reimbursing you for that deductible amount (and you can sue them in small-claims court if they don’t pay).
Note that if there is fraud involved, the insurance company may refuse to pay. A couple examples of this would be:
this car is primarily driven by your teen-age child, but you didn’t tell the insurance company that, to keep the rate lower.
this car was really purchased by your boyfriend/girlfriend/relative/etc., but it was registered (and insured) in your name, because they couldn’t get insurance/had a suspended license/had DUI tickets/had bad credit/etc.
The OP said that NOBODY is insuring the car. That may change things from tb@scc’s note.
Assuming you’re in the US …
I’m not an expert but as I understand it, there are several more-or-less standard set of rules in the US; of the 50 states, most fall into one of, say, 4 basic rule sets. Then most states put their own local tweak into the “standard” they chose to base on.
Then each insurance company is free to be as stingy or as generous in their rule interpretation as they think they can get away with.
Finally, as a bunsiess/marketing decicion, they can sell policies with edge-case coverage such as this either as inclusive or exclusive as they like within the rules as they interpret them. Are they selling ultra luxo coverage for the fatcat suburbanite who wants total safety in everything, or ultra cheapo coverage for the poor guy who just wants to be legal?
Bottom line: without knowing the state you’re licensed in, the state the other driver is licensed in, the states where everybody’s insurance is issued from, the state the car’s registered in, the state where the driving occurs, and the specific policy language of everyone concerned, there’s not much that can be said for sure.
You could try reading your insurance policy statements. I know what the answer to your question is on my policy because I saw it there yesterday while looking for something else. That’s a more reliable source of information than asking a bunch of strangers on the Internet, none of whom have access to the documents which provide the answer.
Just to be clear, you are talking about liability coverage, so we aren’t talking about damage to your own vehicle, right?
In Michigan the owner’s collision coverage (if there is any) pays for damage to the owner’s vehicle. If a vehicle’s driver is less than 50% at fault, the vehicle’s owner may sue the driver or owner of the other vehicle for up to $500.
It probably varies from state to state, although, most of the non-Michigan policies that I have looked at cover permissive users of an insured vehicle abd residents of the insured’s household (subject to some limitations).
Well, some policies in some states contain what they call the “owned vehicle” exception:
As **Cliffy ** said, you will need to review your policy (the actual policy is best–not some sort of summary or declaration page–the actual contract). If the language is not clear, ask a lawyer who is licensed in your state for legal advice.
My policy covers my liability, for my car whoever is driving. It also covers me for “replacement vehicles” whoever owns them. (rentals, borrowed, etc.) However, you need to read your own policy, since coverage is a contract between you and them, and you get only what you pay for, if that.
I just reread my policy. I was right about liability, but the road side assistance doesn’t cover the car, it covers me. I have to be driving the car, but it doesn’t have to be my car. How strange.
I didn’t read it that way. When he says “both parties” have insurance, and then “borrow a friends car”, I was reading it as the friend being the other one of “both parties”, not a new third person.
But say it really is another car involved, with no insurance on that car. Then here in Minnesota, your own policy includes coverage for ‘uninsured or under-insured vehicles’. Many US states have something like that, either required or as an option that you can purchase on your insurance. I’ve usually heard that used when your car is hit by an uninsured car, but it might cover when you are driving the uninsured car.
Otherwise, many policies have provisions that cover temporary use of other cars, like a test drive, or a loaner car. Those might apply. You really would need to look at the specific details of your own policy to see what it covers.
I assume I’m covered for anyone driving my car. There are exceptions though; when I was living with my parents and my younger brother in the same house, I had to specifically exclude him on my coverage as a driver, as otherwise my insurance premiums would be something like 50% higher.
(I think because we were living in the same house he would otherwise be automatically classified as a primary driver, thus the giant increase). That reminds me… now that I’ve got my own place, I should get that taken off.
Perhaps I am mistaken, but it was my understanding of PA law (perhaps not the same for you) that any vehicle you owned that was in a a drivable state (you had to get a formal statement or form or something to prove that it wasn’t) was required to be insured. Thus, even before the accident you would be doing something illegal. Someone please correct me if I have this wrong.
I was slightly off. In PA you cannot drive a vehicle without liability insurance on that vehicle. If you cancel the insurance you are required to send PennDOT your license plate (with the one exception of having a vehicle you only use part of the year, you are not allowed to use the vehicle when the insurance is not in effect).
Very simple -
If a car is not insured, you can’t drive in on the road, pretty much everywhere.
Your insurance is on the car. It covers what the car does.
The insurance may exclude some drivers, or all “borrowers”, or whatever. Read the fine print.
If the other car is at fault, you/the insurance company may recover damages from the other car’s policy.
If your friend damages the car, the insurance company (assuming they did not exclude other drivers) pays for repairs.
The deductible amount if payable is between you and your friend. Not the insurance company’s problem. The body shop will want their $500 before you get the car back.
Can the insurance company, however, go after your friend’s insurance or ask him to reimburse them?
If they can show fraud - i.e. this wasn’t an occasional thing, he borrows the car all the time and might as well be a primary driver too - then they may disallow the claim (won’t pay) if adding him would have meant higher premiums. (i.e. you deliberately forgot to include him on the list so you could get cheaper premiums).
Wish I had noticed…I would have semi-hijacked it earlier:
Our daughter is taking one of our cars to school this fall. Her apartment comes with only one parking spot so she and her roommates have agreed that whoever brings the car and gets the spot need to share it with the others on a limited basis.
We ran this by our agent who said it was ok as long as it wasn’t too often and the other drivers were legal and covered on their parents’ auto policy.
If I were in her shoes, “sharing it with the others” means I would keep the keys on my person at all times and drive everyone to the grocery store as needed. It would not become a communal car with keys kept in the living room.
If I were in your shoes, I’d say no to the proposal unless she puts the car and insurance 100% in her own name.
Remember, too, that many policies do NOT cover accidents due to DUI. If the damages are sufficent, the injured parties may come after the car owner. How badly do you need your house? Yes, get it all in her name not yours. Fortunately, college students are known for their sobriety and social responsibility. Plus, it sounds like the borrowing will be more than “occasionally”. Clarify with the insurance company - once the car is in her name, everyone in her house / apartment should be covered but that needs to be verified.
Also, she should verify that all drivers borrowing the car have valid drivers’ licenses. Sounds stupid, but I suspect even failure to renew may be grounds for the insurance company to deny a claim. (if necessary, she should haul out the cell phone and take a photo of the licenses to CYA.) Not sure what the status of a lawsuit would be if she had no money, whether she could dump a lawsuit liability with bankruptcy, but none of these are things she should risk.
Yes. don’t let her take the car; let one of the other roommates provide one. Buy her a monthly bus pass, too. Or find another nearby parking spot that she can rent.