Car owners may think it is a simple favor to let a friend or loved one borrow their car, but it could actually lead to car insurance nightmares for the owner.
There are no easy favors
Close to 6 million accidents happen each year resulting in 3 million injuries and 42,000 deaths, according to the National Highway Traffic Safety Administration. If a person borrows someone else’s car and gets into an accident, the owner of the car will most likely be responsible for any damages.
“You should really think long and hard before you let someone use your car, because you will be responsible for it,” says Ashley Hunter, president of HM Risk Group, an insurance and risk management brokerage in Austin, Texas. “There is nothing you can do. You are kind of stuck. You are going to be responsible for it.”
Why would the owner be responsible?
Many drivers may not understand why their car insurance would have to pay if they are not operating the car at the time of an accident, but the insurance policy typically follows the vehicle not the driver. The borrower would be considered an insured person under the owner’s policy as long as they had permission to use the car, according to Arthur Flitner, senior director of knowledge resources at The Institutes in Malvern, Pennsylvania, an insurance education group.
Even if the borrower has their own car insurance policy, the damage from the accident may still fall on the car owner. It is not until the owner’s insurance plan is completely used up that the victim may then go after the driver responsible for the crash.
When a person lends their car to someone they take on vicarious liability. This means that the owner’s insurance policy is responsible for property damage, bodily injury and other damages. Giving permission for the borrower to drive the car means the owner consciously accepted liability for what happens.
Additional coverage may be best option
Experts recommend that if an individual has a friend who regularly borrows their vehicle, they should add them to their insurance policy. Repeated use of another person’s car constitutes regular and frequent use, according to Progressive Insurance.
The cost of that additional coverage is directly related to the other individual’s driving record and how frequently they use the vehicle. Owners may want to compare car insurance quotes to find the most affordable policy.