Car Insurance
Whose car insurance applies- the car owner or the driver?
Generally, insurance follows the car, but the specific answer depends on the particular situation in question. Coverage can also vary between states and insurance companies. There are many instances where this type of situation might occur, such as when a child living at home wants to borrow the parents car, when a child away at college wants to drive the parents car either at school or when visiting home, and when someone wants to borrow a car from a friend or family member.
Insurance Coverage When Loaning or Borrowing a Car
When someone asks to borrow another persons car, while the car owner may be more than willing to let this person borrow the car, it would be important to first consider what would happen if there was an accident. Will the car be covered if it is damaged in an accident and will the car owner be protected financially from liability or medical claims of any injured parties? If the car owner does not understand the coverage on his or her policy for this situation, it would be a good idea to call one's insurance agent and find this out before the car is borrowed.
As a generality, most standard auto insurance policies will cover any damage or injuries resulting from an accident on an insured car, no matter who was driving. However, the insurance company may still base coverage on the basis of certain basic criteria being met. Coverage would usually require that the driver had permission to borrow the car and that the driver was in fact a licensed driver. It may not mean that explicit permission was given each time this person drove the car if the person had a reasonable belief that he or she was allowed to drive it. Coverage would not extend to someone who was specifically excluded from the policy or apply if the driver had stolen the vehicle. If the car was driven without permission, the owner would probably have to provide a copy of the police report about the theft, and then the car owner would most likely not be held liable. If a person is borrowing a car from someone else, that person should make sure he or she has permission to do so from the car owner.
On most standard auto policies, insurance coverage on an a vehicle usually covers the owner (listed as the "named insured"), as well as a spouse living in the same household, other related family members (by blood, marriage, or adoption), foster children, children at college who still list the household as the primary residence, and any person that the owner allows to borrow the car. In the case of a teenager living at home, while he or she is technically supposed to be listed on the policy, many insurance companies will cover the accident claim but charge retroactively for any premiums that should have been paid from the time the teen was licensed.
While coverage usually follows the car, in some states and on some policies this is not the case. Some insurance companies require the car owner to list all primary and secondary drivers of an insured vehicle who may be driving the car, even if it is only on an occasional basis. Some policies require that everyone living in the house be included on the policy, either as a driver or as an excluded person. Some policies state that anyone driving a vehicle must be named on the policy for coverage to apply.
Insurance Coverage for Children Away at College
Auto insurance coverage for a child going away to college should be discussed with one's insurance agent for the best option in that specific family situation. If one's child is taking a car that owned by the parents to school, it may be the best option that he or she remain on the parents auto policy. However, some insurance companies may require a child to have his or her own policy, especially if the child is the registered owner of the car. Even if a child will not take a car to school or drive on a regular basis, some insurance companies may still require the child to remain listed on the policy for coverage to apply. If the insurance company does require this, one should find out if there is a premium discount since the child won't be using the family car on a regular basis, only on occasional visits home.
What Happens if an Accident Occurs
In the situation where the car owner loans a vehicle to someone and it's involved in an accident, the car owner will have to report it to his or her insurance company and file a claim against one's policy. The car owner can be held responsible for paying the deductible and may also face higher premiums as a result of the claim. If the driver also has auto insurance, that persons insurance may be co-responsible for any damages or liability. If the driver does not have his or her own auto insurance, and the amount of damage is greater than the car owners policy limits, the injured party can come after the car owner for property damage and medical expenses. Because of the liability involved in loaning out one's car, a car owner should always check with his or her own insurance company to find out exactly what's covered under one's auto insurance policy.