What Does It Mean for Insurance If I Drive a Car Owned by Someone Else?
If you borrow or lend a car, you potentially open a legal can of worms. If a borrowed vehicle sustains damage or causes injury, insurance company lawyers must apply a bewildering set of rules that govern liability. Generally, the insurance company that originally insures the car picks up the tab for any damage the vehicle causes, but there are exceptions.
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What is Covered?
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Specific policies can vary, as do state laws. Generally, a car insurance policy provides collision, liability and uninsured motorist coverage. Collision coverage protects the policy owner against the physical damage to the vehicle, over and above the insurance policy's deductible. Liability coverage protects the policy owner against damages the vehicle may cause to other people. Uninsured motorist coverage ensures that if someone economically harms the policy owner, and that person has insufficient assets to collect in a lawsuit to compensate the policy owner, the insurance company will cover the claim.
Primary Insurance Coverage
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In most cases, the primary responsibility for covering damages to accident victims, including the car owner who may have suffered an economic loss, falls to the car owner's insurance company. That insurer, in turn, may pursue the driver or the driver's insurance company, if it feels it can recover a claim.
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Considerations
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If you borrow a car, you should ensure that the owner carries a current car insurance policy. Also, if you plan to borrow the car regularly, the policy owner should add your name to the insurance. Otherwise, if an investigation shows that you were a regular driver, and the policy owner did not report this to the insurance company, the company may have a reason to contest a claim.
Negligence
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In some cases, state law may hold the car owner responsible for negligent acts committed while someone else is driving the car. If you own a car, and your policy does not cover acts of negligence by you, it may not cover you in the case of negligent acts committed by the person who borrowed your car. If you lend your car to someone, you are effectively responsible for any negligence the driver commits.
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