Whose Insurance Applies When You Borrow a Car?

Insurance Follows the Car, Not the Driver

You ask to borrow a car. Your friend, neighbor or family member graciously agrees and hands over the keys. Before you drive away, ask another set of questions … related to the car insurance. In general, when you borrow a car, you are borrowing insurance, too. Insurance typically follows the car, not the driver. That means if you are involved in an accident while driving someone else’s car (not on your insurance policy), the owner of the car will probably be held responsible for any financial damages. In fact, the car’s owner may even be responsible for the deductible.

Insurance Matters When You Borrow a Car

Because the car’s owner is usually financially responsible for damages caused with their car, it’s important to know any insurance limits that may apply — before you borrow the car. In some cases, the car owner’s insurance may not provide coverage — or it may provide coverage lower than the owners selected limits.

For example, while the owner’s policy will generally cover someone who borrows a car with permission, there are some instances where it may not, based on the answers to these questions:

  • Do you borrow the vehicle frequently/regularly?
  • Are you a member of the household?
  • Is the car being used for business purposes?

If you can answer no to all three of the questions above, you are likely to be covered by the car owner’s policy. Insurance policies typically feature what’s called the permissive driver clause that allows a car’s owner to occasionally lend the vehicle to someone and still have the owner’s insurance apply. To be sure the permissive driver clause applies in your situation and state, check with the auto insurance company. If you’ve answered yes to any of the questions above, you may need to do some additional homework before you borrow a car.

Adding a Driver to a Car Insurance Policy

If you regularly borrow a car from someone you do not live with, you should be added to the owner’s auto insurance policy. The same is true if you plan to borrow a vehicle for a lengthy period of time. Being on the owner’s policy means coverage generally applies in cases where you are the driver and are judged to have been responsible for an accident.

Likewise, if you are living with your parents or another relative whose car you regularly borrow, you should also be listed as an additional driver on the policy. You will need to go through the same approval process as the person who owns the car.

Borrowing a Car for Business

Finally, if you borrow a car for business use, such as delivering pizzas or making some other kind of business-related delivery, you may not be covered in the case of an accident, unless there is a commercial auto policy for the vehicle. If you plan to borrow a car for this purpose, be sure to talk with the owner’s auto insurance company before you drive the vehicle. If you do not, the car’s owner will be at risk if you have an accident.

It is possible to borrow a car from a friend, neighbor or family member. Whether you have an errand to run, an unusually sized item to pick up or you just need to borrow a vehicle for the day, check the owner’s policy to be sure you understand the terms, conditions, and restrictions that may apply. Then, you’ll be ready to head out on your way!