If you let your best friend borrow your car and they speed through a red light and crash, whose car insurance policy pays for damage done to your car and others harmed in the accident?

Theirs, you think. Nope. If it’s your car, it’s your auto insurer that will pay.

Typically, an auto insurance policy follows the car. Thus, as the car owner, it’s your policy — and your future car insurance rates — at risk if someone who borrows your car causes an auto accident.

Key Highlights
  • Auto insurance policies follow vehicles because many drivers don’t have insurance policies in their own names.
  • A state-mandated liability car insurance policy linked to the vehicle ensures that there is always a way to pay if any driver of the car is at fault for injuries or property damage.
  • The PIP and MedPay coverages from your auto insurance policy pay out no matter who is at fault for your in a car accident.

Why are you on the hook even when you aren’t the one driving?

Mostly, it’s because many drivers don’t have insurance policies in their own names — teenagers, for example. A state-mandated liability car insurance policy linked to the vehicle ensures that there is always a way to pay if any driver of the car is at fault for injuries or property damage.

Here’s a rundown on which types of car insurance coverage follow your car and which follow you as a driver, so you won’t be left wondering, “If someone borrows my car, are they covered under my auto insurance?”

Liability coverages follow the car

The person who borrowed your car may get the ticket and the driver’s license points, but it’s your insurance that would end up paying if he caused the accident.

Root Inc. Chief Claims and Customer Service Officer Mark LeMaster says that lending your car – which is called permissive use — is generally covered in the case of a crash.

Your bodily injury liability and property damage coverage will pay for damages or injuries that others sustained, up to the limits of your policy.

If the damage exceeds your liability limits, then the driver’s own policy may be tapped as secondary coverage. This typically only happens if the driver’s liability limits are higher than your limits as the car’s owner.

“Minimum coverages for damage to property are as low as $5,000 in some states,” says Jeff Little, associate general counsel for SafeAuto.

If an auto accident results in $50,000 in damage, you would still be on the hook, along with your friend, if the victim chooses to sue for whatever amount insurance doesn’t pay.

Collision and comprehensive coverages follow the car

Collision and comprehensive auto insurance policies, which pay to repair or replace your vehicle if it is damaged in a collision, stolen, or damaged by natural disaster, also follow your vehicle.

Your friend may have collision coverage of their own, but it doesn’t apply to your vehicle. This is because it wouldn’t be fair for his insurer to have to pay for the total loss of a luxury vehicle if their auto insurance premiums are based on a compact car.

Your friend may get surcharged by their own insurance company for any ticket that lands on their driving record, but the claims for your car go through your policy.

Medical payments and personal injury protection follow the driver

Medical Payments (MedPay) and personal injury protection (PIP) follow the driver. The medical coverage benefits are based on people, not the insured vehicle, so the coverage in these parts of your policy can move with you and your family if you’re driving or riding in your own vehicle or someone else’s.

Your PIP and MedPay coverages pay out no matter who is at fault for your injuries and, depending upon the terms of your coverage, may even follow you when you’re walking or biking.

Medical coverages through your auto insurance policy can also follow the car. If your passengers don’t have medical coverage of their own, your MedPay or PIP coverages can extend and pay, up to your limits, if occupants of your vehicle are injured in an accident.

What coverage follows a policyholder when you rent a car?

Collision and comprehensive will usually follow a policyholder you rent a car since the rental car is a substitution for the person’s insured vehicle. The payout may be limited to the value of the vehicle insured; that is, if you own a Kia but rented a Lexus, the collision policy would pay the value of the Kia.

Your state-required liability insurance follows you as the insured driver, and MedPay or PIP coverages follow you in a rental car as well.

What about when you borrow a car?

Your liability coverage steps in only when the car owner’s limits are exceeded, and then only if your limits are higher than his. Your collision and comprehensive coverage do not apply to a borrowed car; however, your PIP and MedPay do follow you in a borrowed car.

What happens when you buy a cheap car insurance policy?

Cheap car insurance policies get that way by eliminating risk and not covering claims that might be handled under a more typical policy. Overall, policy terms vary greatly.

Some examples to look out for:

  • “Named-driver-only” policies will cover only those listed on the policy and not extend coverage to permissive users.
  • “Step-down” policies lower liability coverage to your state’s minimum requirements for permissive users, even if you pay for higher limits.
  • Double deductibles for a collision claim when a non-named driver is at the wheel.
  • Policy coverages that don’t extend to a rental car.

Check out our experts’ recommendations for who has the cheapest auto insurance coverage

— Kristin Campbell contributed to this article.

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Executive Editor

Laura is an award-winning editor with experience in content and communications covering auto insurance and personal finance. She has written for several media outlets, including the USA Today Network. She most recently worked in the public sector for the Nevada Department of Transportation.