Picture this scenario: Your friend asks to borrow your car for the day, and since it was Saturday and you didn’t have anywhere to go, you complied with the request. But a few hours later you receive a call from your friend explaining that he’s been involved in an auto accident and that your car was damaged in it. Knowing that your friend is OK, your next step is to reach out to your insurance company to file a claim. That’s when you realise the dilemma – your friend isn’t on your auto insurance policy. So what happens now?
While the above scenario isn’t ideal, it doesn’t necessarily mean that your insurance won’t cover damages. Car insurance can be a bit tricky in trying to figure out what it covers and what it doesn’t, but a good agent can help make it a lot easier.
Here’s a closer look at how such situations commonly play out:
My Friend Wrecked My Car – Who Pays For It?
According to the U.S. Department of Transportation National Highway Traffic Safety Administration, more than five million accidents occur in the United States each year. And while the vast majority of accident claims involve the drivers that are listed on the insurance policy, it’s common for many drivers to loan their vehicles out to friends, roommates or family members not residing with them from time to time. Generally speaking, unless specifically excluded, anyone living with you in your household is covered by your insurance policy. In fact, including everyone of driving age in your household on the policy is required by many insurance companies.
But what about friends or family members that don’t live with you? How does insurance work if you loan them your car? What if the accident isn’t your friend’s fault?
In most cases, car insurance follows the vehicle. So as long as you’ve granted permission to a friend or family member not listed on your auto policy to use your vehicle, they’ll still be covered under your auto insurance policy. It’s important to note that even if your friend has his own auto insurance policy, it’s your auto policy that will cover the damages if he’s involved in an accident driving your vehicle. If your friend wasn’t at fault, things work the same way if you weren’t found to be at fault in an accident in at-fault insurance states – your insurance company could hold the other driver’s insurance company liable for some of the damages.
I Didn’t Give My Friend Permission To Drive My Car
Even if you didn’t permit your friend to drive your car, you still may be held liable for any damage sustained in an accident, either partially or in full. This is largely because it’s often very difficult to prove that you didn’t give permission. However, if you can prove it, things can play out a few different ways. For instance, you may accuse your friend of stealing your car. If your car was stolen and involved in an accident, you’re not on the hook for damages and injury to any other parties involved in an accident. (Note that your policy would still likely cover any damages to your car though. Remember, insurance follows the car.) However, if you don’t want to accuse your friend of stealing, it’s likely that their own coverage would cover them in this situation and that your policy would fill in any gaps.
What If My Friend Doesn’t Have Auto Insurance?
It’s likely that you’ve lent your car to your friend because he doesn’t have a vehicle. And if he doesn’t have one, he’d have no need to purchase an auto insurance policy. In a situation where an uninsured friend is involved in an accident in your car, the outcome is simple: your insurance would cover the damages.
It’s important to use good judgment when loaning out your car to family and friends. Make sure that they aren’t impaired in any way when you hand over your keys, and that they’re also licensed to drive in the state you reside. Failure to do so, and you could be held liable in the event of an accident. It’s also important to know your insurance policy in case this hypothetical situation of a loaned out car-turned accident were to occur.