Does Car Insurance Cover the Car or the Driver?

When my car had to go into the shop a few years ago because of a recurring issue with the auto updates draining the battery, the dealer didn't have a loaner for me. I borrowed my dad's car to drive at the time, but that raised some important questions: What would happen if I were to get into an accident? Would my insurance cover it or my dad's?

Ultimately, the answer comes down to a key question: Does car insurance cover the car or the driver? That's more complicated to answer than you might think, since it depends on factors like whether the other driver had permission to use the car and what policies and state laws say.

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Is the vehicle or the driver covered?

Typically, car insurance policies cover the vehicle rather than a specific driver. However, whether that's really the case can depend on state laws, policy terms, permissive use rules, and the coverage type.

State laws

In many cases, state law makes it clear that liability car insurance policies cover the car.

In New York, for example, § 60-1.1(c) of 11 NYCRR (Reg. 35-A) says a liability policy must insure against bodily injury and property damage liability not only if a named insured driver is to blame but also anyone else who is driving the car with the insured person's permission.

Massachusetts law also states that "Auto insurance follows the vehicle, not the driver," while Connecticut says that liability insurance covers damage to others if "you or someone you let drive your car causes an accident."

These and similar laws across the U.S. ensure that insurance coverage is available when a car accident happens, so that victims can get compensation.

Permissive use

Although car insurance normally covers the car, there are some caveats. For example, if someone steals your car, it wouldn't really be fair for your insurance to pay if they crashed it.

As a result, typically, the rules under state laws and insurance policies say that your insurer covers the car only if the person driving it has permission to use it.

So, since my dad lent me his car and I had permission to drive it, his insurance would have covered me if I had caused a crash. If I decided to take my neighbor's car for a joyride, though, his insurance wouldn't have paid for any damages I caused.

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Policy terms

The policy terms also matter, though insurers still have to follow the law. This means if a state says liability coverage follows the car, the insurance company can't just say it doesn't. Insurance companies can impose rules and limits, though.

For example, insurers typically require you to list everyone who has a drivers license in your household on your policy. In some cases, you also have to list anyone who customarily drives your car, whether they're in your household or not.

This is the case in Massachusetts, for example, where they want you to list people who occasionally drive your car. Under state law, if you don't list a customary operator, insurance may not cover you in the event of a collision.

Since policy rules can be confusing, you should talk to your insurer or insurance broker to be sure that whoever you're letting drive is covered. It's always better to know in advance so you won't be left without coverage if something goes wrong.

When car insurance coverage follows the vehicle

While it may seem like I've now answered the car versus driver coverage question, there's actually more to know. Specifically, there are different kinds of auto insurance, and only some of them follow the vehicle. Those include:

Liability insurance: This pays for property damage and bodily injury losses to others.
Collision insurance: This pays for damage to your car in a crash not caused by others.
Comprehensive coverage: This pays for non-crash losses, such as someone vandalizing or stealing your car or the windshield getting cracked by a stone.

If you have another type of coverage, including medical payments (MedPay) or personal injury protection (PIP), those protections work differently and don't follow the car. You'll learn about those later.

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Exceptions to the rule

So, if you have liability, collision, or comprehensive coverage and your friend borrows your car, your insurer always covers the driver on your policy, right? Unfortunately, that's not necessarily true, since there's more to know about how car insurance works with other drivers.

As mentioned above, in Massachusetts, if someone in or out of your household habitually drives your car and you don't disclose it, your insurer could deny you when you file a car insurance claim, because you weren't honest on your application. This is also true in other states.

Insurers determine prices for policies based on risk and look at the driving records of all potential drivers. So, if you don't list someone you should, it's not fair to expect the insurer to cover a crash they cause.

There are also other circumstances where your policy may not cover a driver, including:

If the driver is unlicensed
If the driver is excluded, which means your insurer specifically said it won't cover them
If the driver is paying to use the car, such as if you rented it out through a service like Turo

Your insurance company may exclude drivers it doesn't want to cover if they have a past accident history. You may also decide to exclude a driver for these same reasons when you buy a policy, to avoid having your insurance rates go up. For example, my friend's husband got a lot of speeding tickets, so she had him listed as an excluded driver on her insurance to avoid paying very high premiums.

Secondary insurance

While your insurance will cover a person driving your car, it's possible that you may not have enough coverage to pay for all losses.

The other driver's insurer may become responsible for any extra losses in these situations. That's because that driver's insurer becomes a secondary insurer and can pay for additional losses beyond your policy limits.

Some real-world examples

So, how does this work in practice? Let's take a look at some examples:

You buy a car to share with your roommate but don't list them on the policy. If your policy required you to list regular drivers and you didn't, the insurer could deny coverage.
You buy a car and don't want your roommate driving it, so you list them as an excluded driver. If they crash your car, the insurer could deny coverage because you specifically excluded them from your policy.
You buy a car to share with your roommate and disclose the roommate to the insurer. If your roommate gets into a crash, your insurance would cover the damage to your vehicle and the harm caused to others.
You buy a car to share with a roommate whom you disclosed on the policy and permitted to drive your vehicle. Your roommate causes $100,000 in damages by injuring someone, but you only have $50,000 in coverage. Your insurer pays $50,000, and your roommate's insurer could be on the hook for the rest.

When car insurance coverage follows the driver

While several important types of auto insurance follow the car, other kinds of coverage follow the driver, including:

PIP: This pays for your medical bills and lost wages if you suffer injuries in a crash in a no-fault state.
MedPay: This can pay for medical bills and costs if you get into a crash in an at-fault state, but want to ensure your healthcare needs are covered.

Both PIP and MedPay help protect you from losses if you're physically injured, so it makes sense that they follow you and not your car.

If you are renting a car or using someone else's car for commercial use, their auto policy also won't typically cover you. You'll need to have your own insurance in place.

What happens if an uncovered person drives your car?

If someone drives your car and isn't covered by their insurer or yours (perhaps because they were an excluded driver or didn't ask permission), big problems can arise. Others hurt in the accident will likely want to pursue a damage claim to recover compensation for any losses due to the crash. However, there won't be insurance to pay for it.

In this case, the victims may decide to just make a claim against their uninsured or underinsured motorist coverage. However, they could also go after you or the other driver personally.

They would need to meet the burden of proof and show that you were at fault for the crash due to negligence or wrongdoing to get compensation from you. So, you'd be much more vulnerable to a lawsuit if you knowingly allowed an uninsured friend to drive your car and they crashed.

Tips for avoiding potential coverage issues

You don't want to find yourself responsible for a collision with no insurance to pay for it, so it's important to try to minimize your risk. You can do this by:

Reading policy terms carefully: Make sure you understand your obligations and what your policy says about letting others use your car.
Adding frequent drivers to the policy: Listing drivers is important to make sure an insurance company doesn't deny coverage on the basis of an undisclosed driver.
Making sure your coverage is adequate to meet your needs: This means you should have the right kinds of coverage (such as liability, collision, and comprehensive coverage), sufficient coverage limits to pay for damages, and an affordable deductible.

FAQs

What happens if my friend drives my car and gets in an accident?

If your friend drives your car and gets into an accident, your liability auto insurance would usually pay for damage to others. Your insurance might also cover damage to your vehicle if you have collision coverage.

This coverage should apply unless your friend was an excluded driver, drove without permission, rented your car for pay, or should have been listed on your policy but wasn't. You can ask your insurance company to be sure.

Does my car insurance cover me driving other people's cars?

If you're driving someone else's car, their liability insurance would usually cover you since it follows the car, not the driver. However, your coverage would be secondary and kick in if the damages hit their policy limits. If you have PIP or MedPay coverage, those types of insurance follow the driver and would cover you.

Can you insure a car but not a driver?

You can insure a car but not a driver. You would need to list the driver as excluded from the policy. They would not be allowed to ever drive the car, and your insurer wouldn't cover a crash if the excluded driver operated the vehicle.

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Bottom line

If you're thinking about lending your car to someone, be sure that you understand whether insurance is going to provide coverage. You should also consider that your insurance rates could go up if someone else crashes your car and you make a claim, so be careful who you trust to drive your car.

No matter who is driving, you should have the best car insurance in place to protect your assets in case the worst occurs and a crash happens. You don't want to be stuck with out-of-pocket losses.

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