Question: Relatives are flying in for the holidays. They aren’t renting a car. I have a feeling they will ask to drive mine. I’d prefer they don’t use my car, but if they do will they be covered by my policy? They don’t need to be added to it, right?
Answer: Most car insurance policies will cover those you allow to drive your car, permissive users as insurers call them, without having to add them to your policy -- as long as their use is infrequent.
For instance, if you have a neighbor or a relative that lives nearby that uses your vehicle on a regular basis, then you may be required to add that person to the policy as an occasional driver.
The reason is that the risk a frequent driver of your car poses to the car insurance company is much more than a visiting relative that drives your car once a year, if that. Thus, insurers like to know about frequent drivers and want to calculate their risk by adding them to the policy and rating them.
Double-check coverages extended to permissive users
While most car insurance policies do cover permissive users just as if the policyholder were the driver, some policies will downgrade some of the coverages, or not cover other drivers at all. This is why I always advise drivers to read their policy in advance of lending a car to anyone.
You don’t want to loan out your vehicle to your relative to find out that if that person is in an accident your liability coverages are lowered to state minimum limits (even though you have higher limits on policy) or you have to pay a double deductible on collision coverage for non-listed drivers.
Or, much worse, you find out that your policy only covers named drivers and no other drivers.
Policies can be hard to read, so if you can’t determine if permissive drivers are covered or not, call your company to verify.
Risks other drivers pose to you
If you find out your car insurance policy does cover others, then you’re left with the personal dilemma if you should loan your car out.
There are risks involved with saying yes.
If your relative caused an accident while driving your car, it could cause your future car insurance rates to rise.
Even though you weren’t the driver at the time, it would be your policy that claims would be filed against --and claims can cause your rates to increase at your next renewal.
Also, there is the possibility that if your relative caused a serious accident your liability limits could be exceeded.
While the relative may be the driver at the time of the accident, you’re the car owner, and as such have vicarious liability for those that you allow to operate your vehicle. Thus, if your car insurance policy limits are surpassed your personal assets could be at risk since both you and the driver can be looked to for compensation from those that were harmed in the accident.
If your car insurance policy will cover your relatives to drive your car, it basically comes down to you deciding if you’d want to take a chance with your relatives driving your car, tell a white lie and say that that they aren’t covered by your policy, or just gently tell them you’d prefer not to loan out your car. Good luck.