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Does insurance follow the car or driver?

Fact-checked with HomeInsurance.com

Most people buy car insurance without giving much consideration to what exactly is covered and how car insurance works. It’s important to get a good grasp of your coverage to ensure you are protected from financial loss. Being underinsured or not understanding the conditions of your auto insurance policy may end up costing you significantly in the event of an accident or a claim. 

Consider lending a vehicle to another person — what insurance concerns might apply? Does car insurance cover the other car or driver? This article explores the issue of letting a neighbor borrow your truck for hauling purposes, or letting a friend borrow a car to get to work, for example, as the insurance impacts can be severe in the event of an accident.

Is the car insured or the driver? 

In most circumstances, letting a friend or relative borrow your car for a quick errand is not a major cause for concern. An auto insurance policy primarily protects the actual vehicle. 

But does insurance also cover the driver? Conditions apply, but the short answer is “yes.” Qualifying drivers can benefit from insurance coverage, even if they’re not listed on the policy. However, the driver must have a valid driver’s license, and they must have your permission to drive your car.

Allstate confirms the answers to the question, “does car insurance cover other drivers?” in this way; “If you let someone else drive your car and they get in an accident, your insurance company would likely be responsible for paying the claim.”

Does my insurance cover other drivers?

A car insurance policy will cover other drivers as long as they’re legally allowed to drive and you’ve given them permission to borrow your car. Essentially, when you lend your car to someone, you’re also lending them your auto insurance. The important distinction to note is which part of your insurance covers the car versus the driver.

For example, liability insurance will pay for damages and injuries to others. If you lend your pickup truck to your neighbor and he causes an accident, your insurance company will pay to repair the other car involved in the collision. If the other driver takes your neighbor (or you as the owner) to court for damages, your car insurance may provide compensation for legal costs for you and/or the neighbor, within policy limits.

On the other hand, a basic liability policy won’t cover your neighbor’s hospital bills if he’s injured. He would have to pay his own medical bills out-of-pocket or through his health insurance. In addition, you might face out-of-pocket for costs to repair damage to your truck, since liability coverage doesn’t include coverage for damage to your vehicle. 

Full coverage in that scenario would cover all the damages and injuries to all parties involved, including your neighbor’s medical bills and the repairs to your own vehicle.

What happens if someone gets in an accident in my car?

Although car insurance will cover an accident if someone else is driving your car, you should think long and hard before you lend your vehicle to others. You will ultimately be affected by claims to your insurance made by other drivers.

Let’s revisit the example of the neighbor who borrowed your truck — say you had full coverage and your insurance company will pay for all the damages. Your neighbor feels terrible about the accident and has agreed to pay you back for the $500 deductible. However, your car insurance rates will likely go up, even though you weren’t the driver that caused the accident. This could cost you hundreds of dollars or more in premiums over time, all because you lent someone your truck.

That’s also the best-case scenario. If you only had the minimum liability coverage required by your state, you will be responsible for the damage to your vehicle out-of-pocket, on top of potential rate increases. If your neighbor doesn’t agree to pay for the repairs to your truck after the accident he caused, you would either have to go to court to recoup your costs or take the financial loss.

Types of auto insurance policies and coverage options

Let’s recap the most typical kinds of auto insurance coverages and determine if insurance covers the car or driver: 

  • Liability: Covers the driver
  • Collision: Covers the car
  • Comprehensive: Covers the car
  • Medical payments: Covers the driver
  • Bodily injury: Covers the driver

When car insurance follows the driver

Although car insurance primarily follows the vehicle, some of the coverages listed above benefit the driver instead of the car itself. These coverages “follow the driver.” There are a few situations when car insurance follows the driver instead of the car. 

One example involves when renting a car. Although you can optionally purchase a rental company’s insurance for the rental vehicle, it may not be necessary. The car insurance you have for your daily-driver extends to your rental car in some cases. This may be an optional coverage offered by providers, or it might be included in your standard policy as a perk.

Primary versus secondary insurance is another factor to keep in mind. On some occasions, one insurance steps in before the other. Let’s say your neighbor borrowed your car without your permission; if the neighbor gets into an accident and you can prove they took your car without permission, their auto insurance would be responsible for the damages instead of yours. In other cases, if your insurance isn’t enough to pay for the damages, the driver’s own insurance would have to make up for the rest of the damages caused while driving your vehicle.

The takeaway

  • A car insurance policy provides a level of coverage to the car, regardless of the driver.
  • When you lend your car, you’re also essentially lending out your car insurance.
  • Some of the car coverages benefit the driver exclusively, while others benefit just the vehicle.
  • Your insurance may pay for damages caused by someone you lent your car to, but your car insurance premiums rise, even if you weren’t the one who caused the accident.

If you’re unsure about lending your car to someone, there is good reason for your concern. Although your car insurance will cover the driver you lent the car to, you could end up financially responsible for repairs, damages or liability, if they get in an accident. Your insurance premiums will likely increase from the claim as well. It’s important to carefully consider the risk in lending your vehicle to avoid costly financial impacts.

Cynthia Paez Bowman


Cynthia splits her time between Los Angeles, CA and San Sebastian, Spain. She travels to Africa and the Middle East regularly to consult with women’s NGOs about small business development.

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