If you let your friend drive your car, there’s always the risk that they’ll get involved in an accident. So, if your friend wrecks your car, who is liable for the damage?
You may think the accident and resulting costs will fall to your friend's insurance policy, but actually, it’s your own insurance coverage that will take the hit. In most cases, car insurance tends to follow the car rather than the person.
So if someone else is driving your car and it’s involved in an accident, your insurance will be considered primary, meaning all claims will go through it.
What “Permissive Drivers” means
In car insurance terms, “permissive” use refers to your ability to allow other motorists - who are not listed on your policy - to periodically drive your vehicle. This is the case with most standard insurance policies.
Most insurers define “periodically” as less than 12 times a year. So if a family member or friend is regularly driving your car, they should be listed on your policy, which of course will see your premium increase.
When a permissive driver is behind the wheel of your car, your insurance is considered the primary insurance, regardless of whether you are in the car with that person or not, and whether or not the person has his or her own insurance policy.
Occasionally, you might see "named driver policies", though these aren’t common. This type of policy only covers the drivers who are explicitly named and included in the policy. In these types of policies, if you let someone drive your car and they’re not named on your policy, you’re not covered for any accidents they’re involved in when driving your car.
In eight states, insurance companies are legally allowed to lower coverage limits for any driver that is not specifically named on your policy. These are:
- California,
- Colorado
- Michigan
- Missouri
- Ohio
- Oklahoma
- Pennsylvania
- Washington
In these states, even if you have a large amount of liability insurance on your policy, insurance companies can legally reduce coverage to state auto insurance minimums if a permissive driver is involved in an accident.
If you have collision insurance (which is optional) this will cover damages to your own vehicle, while the liability portion of your policy will pay for any damage that the driver of your vehicle did to another person's vehicle or for any injuries sustained by the other driver as a result of the accident.
However, the key thing to remember is that the protection only goes up to your coverage limits. This means that if your friend is in a serious accident in your car, the damages may exceed your insurance limits.
What happens if my friend causes minimal damage to my car only?
If you loan your car to a friend and he or she damages your car in an accident, it’s pretty much always the case that your insurance will pay, meaning you will be paying your deductible and that your insurance rates will possibly be increased.
Collision insurance is never a required coverage and if you are not covered by this type of insurance, you will be responsible for repair costs. If your car is undrivable and you have to resort to a rental, this will be covered by loss of use insurance if your policy carries this. However, if not, this is another cost you’ll have to cover.
What happens if my insured friend drives my car and causes an accident with a lot of damage?
Liability coverage consists of two different types: bodily injury liability and physical damage liability. This follows the car first and driver second, meaning the car owner's policy covers the driver and all passengers in the other vehicle for any bodily injury incurred. The car owner's liability also covers property damage caused by his or her car, and also covers the cost of your legal fees if the accident results in you being sued.
In most states, liability coverage is a requirement, but minimums vary a lot, meaning those in states with lower liability requirements may have it quickly swallowed up by medical bills and legal fees. For this reason, many experts recommend carrying much higher limits, as if the damage exceeds your insurance liability limits, the courts may look to your personal assets, such as your home, to recover the damages.
If your liability limits do not cover all the damages inflicted on the other party, your friend's auto policy may be considered as secondary coverage. These cases are known as “pro-rata” where your and your friend’s insurance policies share the cost of the accident. Sometimes, your insurer will cover the entirety of the damages and then seek compensation from your friend's insurer.
If your friend was injured and has personal injury protection (PIP), they can claim against their policy for this. PIP follows a driver first and car second, so if your friend didn't have PIP and you did, they could claim against your PIP coverage.
What happens if my uninsured friend drives my car and causes a lot of damage?
Lending your car to an uninsured friend is not a good idea at all. If the damage exceeds your policy limits, the injured party may come after you for medical and property-damage expenses.
What happens if my unlicensed friend drives and crashes my car?
Another very bad idea.
Many car insurance policies will exclude coverage of drivers of your vehicle if they don’t have a valid license. If your friend doesn't have a license, they’re unlikely to have auto insurance meaning you and your friend would be entirely responsible for any damages caused.
Even though you weren’t driving, as the owner of the car you have vicarious liability for anyone you allow to use it.
What happens if my friend drives my car without my permission and crashes it?
In this case, it’s unlikely that you’d be held accountable for the damages because your friend used your vehicle without your knowledge. In this case, your friend's insurance will cover the costs - if they have it.
If your friend is uninsured, it’s likely that you’ll need to use your collision insurance to cover the damages to your own vehicle, as well as your liability insurance to cover damage to others' property.
Most insurance companies will assume a friend has permission to use your car unless there are clear indications that you denied permission or didn’t give it in the first place.
If someone you know uses your car without your permission it’s termed "unauthorized use" rather than theft, meaning your insurer will not cover damages if that person causes an accident in your car.
You may have to file a report with the police to recognize the unauthorized use of the vehicle if you don't want your auto insurance policy used for claims.
