Perhaps you have already done it: loaned your car to a friend for the day, or had family in town and let them use your car while you’re at work, or something along those lines. Loaning your vehicle to someone without even thinking about your insurance and how coverage actually works when someone else is driving your vehicle. While all family members living in the household are covered because they are listed on the policy, what about family not living in the house or non-family members?

This is a question that seems to come up often, so we thought we would share the answer with everyone in our newsletter. Allowing someone to use your vehicle falls under permissive use and your insurance becomes the primary coverage for your vehicle, not theirs, even if they have their own auto insurance. So, technically, any driver with a valid license that is not excluded on your policy, would be covered in the event of a loss.

Keep in mind, this is not intended to insure someone driving your vehicle for a long period of time.  That scenario increases both your and the insurance company’s liability exposure with unlisted drivers. If the intent is to allow family members not living in the household or a friend to drive the vehicle exclusively, the expectation is that this “permitted operator” would be added to the policy and assigned as the primary driver of the vehicle. The address where the car will be garaged will be included on the policy as well. The insurance company will then verify their driving history, just like they would for any other driver in your household. If their driving history is adverse, it will affect your policy eligibility and rate.

Keep in mind that if you allow someone to use your car and they have a claim, it could result in cancellation of your auto policy, causing you to pay much higher rates for an accident you never had.

Just like loaning money to your family and friends can be a bad idea, so can loaning someone your car to use for a long period of time.

Permissible Use

 

Key Points:

  • Valid Driver’s License
  • Not intended for Long Periods of time
  • Claim would affect your policy