5.23.2013

Lending Your Car Means Lending Your Insurance

The next time a friend asks to borrow your car, you may want to reconsider. You probably don't know this, but when you lend someone your car, you are basically also lending your insurance, which may cause you insurance problems, like higher rates, in the future.

A common misconception about lending someone your car is that if the borrower has their own car and policy that it is their policy that will cover them while driving your car. Not necessarily. If the person who borrows your car is in an at-fault accident, chances are it will go under your insurance history and your insurance rates will most likely be affected -not theirs.

Basically, when you lend your car it is your auto insurance policy that would kick in and provide coverage if there happened to be an accident.

Remember, if you lend your car you lend your insurance.

Still want to lend your car?

Your insurance policy will typically cover the driver using your car if:

You gave the driver permission to borrow the car. The driver is licensed and legally allowed to be driving a car. The driver does not use your car regularly. If they use your car regularly, you should have them listed as an occasional driver under your insurance policy.

Of course, the best way to know for sure that lending your car to a friend won't cause you insurance problems with your insurance coverage is to speak to your insurer. They'll be able to tell you about any conditions, concerns or restrictions that you need to know about before handing over your keys. It's the only way to know for sure how your insurer and the coverage you have will protect you and them; especially if they are in an accident.

In the event of an accident:

If the person you lent your vehicle to:

Has an at-fault accident, the claim will likely go through your policy and your rates will probably take a hit. Although highly uncommon, it may be possible further down the road (usually when the borrower is renewing or initiating a new policy) to "transfer" the accident claim onto your friend's policy instead of yours. In this situation you will need to talk to your insurance broker(s) or agent(s) as this change requires mutual agreement between the two insurers.

If the person you lent your vehicle to:

Is determined to be 100% not-at-fault for an accident (by the insurer), your premiums typically will not be affected. In general, it is at-fault accidents that are seen as rating factors when determining your auto insurance premium, especially in the absence of accident forgiveness.

Think about it before your friend drives away in your car

After reading this article, you may seriously want to reconsider the next time you go to toss your keys to your friend. If anyone asks to borrow your car, remember, when you lend your car, you are lending your insurance along with it. No matter how responsible your friends may be, accidents happen. It's best you know now what you could be in for if they're in an accident. Talk to your insurance provider before lending your car so you can avoid insurance problems next time you go to renew your policy.





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