The short and simple answer is usually: YES.
But that answer is full of exceptions, explanations, and consequences. There are things that you need to know before you loan your car to someone else. So let me expand on that answer.
Policy limits vary state by state. We’re discussing current provisions of typical policies sold in California. I’m in Napa Valley, and these provisions may not apply in other states.
If your policy has “excluded drivers” then they are not covered, no matter what. Rarely, some policies only cover a named person. Frequent users of your car may also be a problem. Discuss that with an agent. If someone lives with you, they also need to be added to your policy.
Coverage if someone else drives your car requires that permission must be given or implied, and it must be for “occasional” drivers.
Don’t assume anything, and remember- no coverage can be bound based on this article.
Whew. Now let’s talk about a typical situation.
Bob and the barbecue.
You have friends over for a barbecue. Someone realizes that you are out of hamburger buns. This isn’t good. But you are the grill master, and can’t leave your station. So you toss the car keys to your friend Bob, and Bob jumps in your car to go get more buns.
Bob gets distracted, and rear-ends another vehicle.
What happens “insurance-wise?”
When you loaned your car to Bob, you also loaned your car insurance.
In most cases, the insurance follows the car in California. So Bob does not file a claim with his insurance company- you file a claim with yours, even though Bob was driving. And the injured person gets reimbursed by your insurance- not Bob’s.
The good news: your insurance will pay to fix your car and reimburse the other person since Bob was at fault.
The bad news: even though Bob was at fault (not you), your rates will still go up.
Insurance premiums are based on risks. One of those risks is your judgment on who can be trusted to drive your car. If you choose poorly, you will pay higher premiums.
(Side note: in certain cases, Bob’s insurance may pay part of the damages. It’s complicated, and depends upon specific circumstances. But almost always- your insurance is primary.)
- Be careful about who drives your car.
- Never let someone drive who has had too much to drink, or doesn’t have a license.
- Always keep proof of insurance and registration inside the car.
- Don’t loan your car out to anyone for an extended period of time. If you do, make sure that you add them to your policy as a listed driver.
- Disclose all adults and teenagers of driving age who live in your home.
Talk with your local agent. Make sure you understand who is, and isn’t, covered.
Bruce Sackrison is an insurance property and casualty broker affiliated with Professional Insurance Associates helping clients with insurance needs for personal, commercial and business insurance. Bruce can be reached at 707-931-0186, firstname.lastname@example.org