What Does Your Car Insurance Policy Say About Loaning Out Your Car?
Do you feel uneasy about letting your friend borrow the car? Perhaps you’re on the other side of it, and your roommate or significant other has been reluctant to hand over their keys when you ask if you can run to the store. It’s natural for someone to feel apprehensive about loaning their $10,000 or $20,000 vehicle to someone who isn’t listed on their auto insurance policy.
But how are the rules of the policy actually drawn? Do you really have as much to worry about as your initial worries dictate?
In many states, the answer is no, but let’s dig a little deeper into what you need to know about loaning your car to someone (or borrowing a friend’s car) because it may not always be so cut-and-dry.
The Progressive blog explains: “In most states, the answer to whether you’re covered or not depends on how much you’re using the vehicle and what you’re using it for.”
The company notes that auto policies could differ from state to state, and advises that you check your state’s policy to see how you’re covered.
Here are some factors to consider before moving forward.
How Frequently Is The Car Borrowed?
“If you only borrow your friend’s car once a month, most likely your friend’s policy will cover you when you drive the vehicle,” Progressive explains. “An auto policy will define who it covers, which you can find in the definitions sections. In this instance, look for the definition of an ‘insured person’ to see who’s covered.”
As an example, the company states, an “insured person” may include “any person with respect to an accident arising out of that person’s use of a covered auto with the permission of you or a relative.”
“Under this definition,” Progressive says, “if someone else gives you permission to drive his vehicle, you’re covered by his insurance policy — as long as your other actions with the vehicle also fall within policy allowances.”
The same is worth consideration if you’re the one extending permission.
For What Length Of Time Is The ‘Insured Person’ Behind The Wheel?
Progressive notes that if the car is being used “for a day or two,” it probably won’t be considered “regular and frequent use.”
“However, if you borrow your friend’s car for several weeks, you may not be covered by his auto policy. In cases like this, you most likely would be considered a regular user, which means you should be added to your friend’s insurance policy if you use his vehicle in this manner.”
That’s why it is important for you to consider situations like this when signing up for coverage.
For What Purpose Is The Car Being Used?
Insurance companies place some importance on the purpose for which you or your friend are driving the other’s car. For example, if using the vehicle for business purposes — “like delivering pizza or hauling equipment for a landscaping business,” notes Progressive — you should make sure the vehicle is covered under a business insurance or commercial auto policy.
“Personal auto policies typically don’t cover anyone for conducting business with their vehicles,” the company states. “Auto policies have long lists of actions and circumstances that aren’t covered, so make sure you check to see what’s covered before you drive your friend’s vehicle.”
It’s reasonable to second guess the validity of driving another person’s vehicle, especially when it’s your brand new four-wheeled baby out there on the road in the hands of a friend of questionable driving reputation. While you probably don’t have anything to worry about handing over the keys for a brief period, it’s important to know what your auto insurance policy states on the matter and to not simply rely on secondhand information that may come from a jurisdiction where the laws don’t apply to your specific situation. As stated here, before you do hand over those keys, consider frequency of use, the amount of time the car will be in use, and the purpose behind the transfer.