Borrowed car in accident. Whose insurance pays?
What happens if someone borrows your car and gets into an accident? Find out if you are covered by your auto insurance and who is liable and pays for repairs
Be it due to a breakdown, an errand, a designated driver, or a simple favor, it's not uncommon for drivers to be behind the wheel of a car they don't own. Normally, everything goes swimmingly and cars are returned without incident. Unfortunately, borrowed cars are occasionally involved in accidents. It can be confusing—not to mention distressing—to determine whose insurance company is responsible for covering the damages when a crash occurs.
General insurance rules on borrowed cars
There are some basic guidelines and rules of thumb here, but by no means is there a surefire answer. For starters, insurance usually travels with a vehicle. So if someone borrows your car and wrecks it, your insurance is responsible. If the accident is so severe that the limits on the owner's insurance are exhausted, the borrower's policy covers the excess.
The problem is that cars are often loaned out without any verification that everyone has insurance and that the car is properly registered. If you borrow an uninsured car, you, the driver, are liable for any penalties that result from this (such as a ticket), not the owner. However, owners aren't responsible if their car is used without permission.
Special car insurance policies
There are a number of special policies that influence this. People that don't own a car but find themselves driving a lot should probably obtain a "non-owners policy." This assures them coverage in case the owner's insurance is inadequate. Some companies also offer "broad form" insurance that insures the driver and not the car. It should be noted that not every state allows this, and the policies are uncommon.
Another facet to this already complicated explanation is that if a person is a frequent borrower of the same car but not on the owner's policy, the owner's insurance company may see this as a misrepresentation or non-disclosure of the vehicles usage. They might claim to be not responsible for damages caused by the unregistered driver, so always be upfront about additional drivers.
As with so many other issues, the best advice is to speak with an insurance agent about your specific policy to figure out the answers to all these questions. Laws vary from state to state and every insurer is different, but don't feel like you can't lend out your car or borrow someone else's. Just make sure everyone is insured so you don't get hung out to dry if an accident happens, because, well, accidents happen.
Learn more about insuring your car so that you're covered if someone borrows it and gets into an accident.