Reader Question: Will My Liability Coverage on My Auto Insurance Pay If Someone Else Is Driving My Car and Causes an Accident?
So you have made sure to select good limits of liability and you feel pretty well-protected if you should accidentally hit someone. But are high liability limits any good if you’re not the one behind the wheel? It’s a good question, and a wise one. You definitely want to be sure you’re protected when someone borrows or uses your car. Here are the simple and most general rules to follow when trying to determine who’s covered when driving your car.
1. Permissive Use Drivers
• Permissive use drivers are those you have allowed to borrow your car for rare and very occasional uses, such as a neighbor who owns their own car, but theirs broke down, or a friend who was visiting you and borrowed your car to run to the store.
• These drivers are automatically covered if they should happen to cause an accident under your policy. Keep in mind that the limits on your policy are also the limits that are provided for those permissive use drivers; therefore, if you only picked the minimum amount of liability on your policy, that is all you have to cover them as well.
• In the situation where your permissive use driver causes an accident and your limits are expired, if they also carry auto insurance on another vehicle, the claimant can then go after their coverage. If they do not carry insurance, you and your driver could be sued to cover any remaining costs.
• This is another great reason to carry high liability limits.
2. Household Residents
• If you have household residents who hold a driver’s license, there are different rules in different states for how that is handled. You will have to check with your insurance company as to what you need to do.
• In general, anyone who has access to your vehicles, is of driving age, and/or holds a driver’s license must be disclosed to the insurance company. This is part of the risk you pose to the company and they must rate you correctly for the risk you expose them to.
• If your household residents own their own vehicle and have their own insurance coverage, often you will be allowed to exclude them from coverage or not list them on your policy. Otherwise, you would be wise to list them as a driver.
• If you are discovered to have a household resident who is not disclosed, your insurance company has a right to refuse to pay claims and cancel your insurance. In addition, you could be sued for insurance fraud.
If you are always honest and direct with your insurance company, you’ll be better protected for loss and you’ll never have to wonder whether a claim will be covered or not. If you’re not honest about who’s driving or your car or who may drive it, you’re taking a considerable gamble every time you pay premium. It is not worth trying to save a few dollars on your insurance to lie about who has access to your car. Being properly insured will save you hardship and worry later.