Question: I’m thinking of letting my babysitter use my car to run errands for me (with my child in the car if it makes a difference). I believe she is under her parent’s policy, but I heard it’s my auto insurance that would pay if she was in an accident while using my vehicle. I wouldn’t mind her having use of my car, but what do I need to be aware of before allowing this?
Answer: Smart idea not to loan out your car to the sitter until you get more information – especially because as a car owner you have vicarious liability for those you allow to operate your vehicle. For this reason, it’s immensely important to know for certain if a driver will be covered by your policy before the person gets behind the wheel.
When you let someone borrow your car, your policy (as the car owner) is the primary coverage. So, if your babysitter were in an auto accident in your vehicle, your car insurance policy would be the first one looked to for payment by those that she damaged. Your own collision coverage would then be used for damage to your own vehicle.
To determine if your babysitter would be covered, you first need to review your car insurance policy; take special note of any restrictions and exclusions. Read over the policy terms and make sure you have coverage for permissive drivers.
The definition of permissive driver can vary by car insurance company, but in general it means all drivers who have your permission to operate your vehicle who aren’t in your household. (Those in your household should be listed drivers). This means if you let a friend, neighbor or babysitter use your car for an errand, or other infrequent event, that he or she will be covered if in an auto accident in your insured vehicle. (See “Who can drive your car?”)
There are, however, some auto insurance policies that don’t extend coverage to those that you loan your car out to. These policies are restricted and cover only named drivers. There are also policies that have “step-down” revisions, which means though you may carry higher than state-minimum liability coverages if someone not listed on the policy has an accident in your car the liability limits lower just to the minimum. (See “7 gotchas of cheap car insurance”)
Also, look for any exclusions for drivers under a certain age. Some policies exclude drivers under 25, which may not normally be an issue for you if you don’t have teens in your house but could be an issue for covering the babysitter if she is a young driver.
Once you are aware of what coverages you have for the babysitter, find out what coverage she might have under her own policy or by being under her parent’s auto policy. While auto insurance follows a car as primary coverage, the driver’s own coverage may need to be used as secondary coverage if she were in an accident serious enough that your liability coverages were exceeded.
For example, if your policy is 25/50/25 and the driver’s limits are 50/100/50, then if your limits were reached there would be more insurance coverage for the damaged party to go after – before coming after you and the babysitter personally.
Keep in mind that if your babysitter is going to regularly drive your car, then it’s possible that your car insurance company may require you to add her to the policy as an occasional driver. How much a person has to drive your car to be termed an occasional driver varies, so you’ll have to find out from your agent what your auto insurer says on this matter. There can be an extra charge for this since she would be on listed the policy.
Oh, and one last tip -- make sure the babysitter has a valid license.
We’ve heard from numerous people that didn’t simply ask if the person they loaned their car out to had a valid license and got a big surprise. You don’t want to get in trouble for allowing a person without a valid license operating your vehicle (the car owner can get ticketed for this in many states) and perhaps voiding out auto insurance coverage that would have normally extended to an accident if the person was properly licensed.