Blog by Erie Insurance
If you own a car, chances are you’ve let a friend or family member borrow it at least once.
After all, there are plenty of reasons to hand over the keys. Maybe you needed a relative to pick up your kids from school. Or you’re helping someone get to work after their car broke down.
But did you know that in the event of an accident… it’s your auto insurance policy that typically would have to pay?
“By far, the number one misconception about loaning out your vehicle is that if you let your neighbor borrow your car, an accident should go on his insurance because he was the one driving,” said Dave Freeman, vice president and regional underwriting officer at Erie Insurance. “But in private passenger auto insurance, the coverage typically follows the vehicle, not the driver.”
Let’s break it down.
DOES MY CAR INSURANCE COVER OTHER DRIVERS?
If you’re an ERIE customer, insured drivers include:
- Resident relatives: Many personal auto policies provide coverage to the named insured, their spouse or domestic partner and any other resident relatives. So if someone is a member of your family and lives in your home, they’re automatically an insured under your policy unless excluded.
- Domestic partners: If someone lives with you but isn’t a relative, they are not named insureds under your policy. However, if you’re living with a domestic partner, they can be added to your policy as a named insured but only if your relationship is the long-term, committed type – you share domestic responsibilities and have joint financial obligations. All you have to do is call your agent and let them know. They’ll send out a short driver questionnaire and check your partner’s driving record to determine eligibility.
- Someone with permissive use: If you loaned out your car to a friend or neighbor, your policy generally will cover them – as long as you gave your permission. If they are a regular and repeated user of the car, they should also have coverage. The only exception is if a driver has been specifically excluded on your policy. If someone else is regularly driving your car, it’s important to let your agent know.
Chances are, anyone you let borrow your car will fall into one of these three categories. But just because someone is covered doesn’t mean loaning your car is risk-free.
LOANING YOUR CAR: CONSIDER THE PROS AND CONS
Here’s the good news: If the driver falls into one of the three categories above, and the loss is covered under the terms of your policy, your insurance can help pay for the damage – even if you weren’t the one driving.
But here’s the tricky part: Depending on the situation – and the specifics of your policy – you might get stuck paying a surcharge on your auto insurance premium for an at-fault accident, even if you weren’t the one driving at the time. (Every policy is different, so ask your agent if this applies to you.)