Borrowed car in accident. Whose insurance pays?

What happens if someone borrows your car and gets into an accident? Find out if you're covered by your auto insurance when you loan your car to a friend or family member.

car accident and tow truck

There are many reasons to borrow a car. It could be a breakdown, an errand, a designated driver, or a simple favor. It's not uncommon for one to drive a car that they don't own. Normally, everything goes well. Unfortunately, sometimes borrowed cars are involved in accidents. It can be stressful figuring out whose insurance company is responsible for covering the damages when a crash occurs.

General insurance rules on loaning cars

There are some basic guidelines and rules of thumb. However, car insurance policies can be very different when it comes to loaning your car. 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 the limits on the owner's insurance are exhausted, the borrower's policy covers the rest. At least it will if they're insured. That will provide some small comfort if the crash totals the car.

Sometimes cars are loaned out without checking that everyone has insurance and that the car is properly registered. If you borrow an uninsured car, you're liable for any penalties that result from this, not the owner. However, owners aren't responsible if their car is used without their permission.

Specific examples when a loaned car is in an accident

Here are answers to questions about what happens when someone not on your policy borrows your car and crashes it.

Q: Will my rates go up?

A: When you loan out your car, you’re agreeing to take responsibility for the driver of your car. Most insurance companies will increase the vehicle owner’s policy premium with an at-fault accident. Insurance companies base your insurance rates on the likelihood of a future claim. Even though you weren’t driving, agreeing to loan the vehicle to someone who crashes it, makes you a higher risk. This higher risk often translates into a higher car insurance premium.

The best way to reduce costs if someone crashes your car is to compare quotes from top auto insurance companies.

Q: Which type of car insurance covers the vehicles involved in an accident?

A: When an accident occurs, the vehicle whose driver was at fault is covered by its own car insurance policy. If the policy doesn’t include collision coverage, then no such coverage is provided. And, the vehicle’s deductible will apply. Both the vehicle owner and the at-fault driver will need to decide who pays the deductible. Either way, the deductible must be paid, in order for the car to be repaired.

Q: Whose liability will cover the driver? The car’s? Or the driver’s?

First, you need to determine if the car’s insurance policy includes liability coverage, as well as collision coverage. Depending on the scale of the accident, the car's liability coverage may not be enough to cover the damages. If this happens, and the driver has their own insurance, then their policy will pay for the rest. Or they will if the limits are higher than what were on the car driven in the accident.

If the driver of your car is uninsured, and causes an accident, you could be liable for everything. For example, what if the uninsured driver causes a multiple car pileup that exceeds the limits of your insurance policy? The injured parties could sue you for medical fees and property damages in excess of your coverage limits.

Q: If the driver of my car gets a ticket, will it affect my car’s insurance policy?

A: Any citations given to the driver, will not affect your car’s insurance policy. Traffic violations go directly onto the license of the driver, not necessarily the car’s owner. If the driver has car insurance and the accident is reported, their rates may go up because of the ticket.

Special car insurance policies

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 car insurance companies also offer "broad form" insurance that insures the driver and not the car. It's worth noting that not every state allows this, and these policies are uncommon.

And, if you borrow the car often but aren't on the owner's policy, the owner's insurance company may cry foul. They could see this as fraud or non-disclosure of the cars usage. They may claim that due to that, they’re not responsible for damages caused by the unregistered driver. So always be upfront with your car insurance carrier about additional drivers.

Before you lend your car

The best advice is to speak with an car insurance agent about your specific policy. Laws vary from state to state and every insurer is different. However, you don't have to feel like you can't ever lend out your car or borrow someone else's. Just make sure your registration and proof of insurance are in your glove box before the other person takes off. Also, be sure everyone involved is insured so you’re covered if an accident happens--because, well, accidents happen.

More questions and answers regarding the loaning of cars to others

Q: Will I be covered if I borrow my parent’s car once a week without being on their insurance?

A: It depends on the state you live in, whether or not you live with your parents and their insurer. Most carriers will require your name to be added to your parents’ insurance policy if you live at home. Some states require it as well. Do the research and make the appropriate decision based on what you find out.

Q: Is it legal to drive a borrowed car without your own insurance?

A: Yes, it’s legal. Car insurance follows the car, not the driver. So, there’s no question of legality as long as the car you’re driving is insured. Be sure you know where the registration and car insurance card are. If you’re pulled over for a ticket or are have an accident you're going to need them both.

Q: I borrowed a car without insurance and received a no insurance ticket. Will I have to show proof of insurance for two years even if I don’t own a car?

A: This is a tricky situation. Car insurance follows the vehicle, not the driver. Borrowing an uninsured car has opened you up to illegality as the ticket will go on your license. It won't affect the the owner’s license. And why should it? They weren't driving. However, since you don’t own a car, there’s no need for your own insurance because you have nothing to insure.

However, if you plan to borrow other people’s cars often and those cars aren’t insured, talk to an insurance agent. There are special circumstance policies available, such as the “non-owner” policy. They’re uncommon and not every state allows them. But it’s worth looking into if you find yourself needing to borrow uninsured cars.

Q: I borrowed a friend's car without permission, got into a one car accident (hit a tree). Can I use my insurance?

A: We recommend trying to use your car insurance to cover the damages. However, there’s a small chance they won't cover it, as you didn’t have vehicle owners permission to drive it. It depends on the state you live in and the details of your policy. In most states, a car's owner isn’t liable if they didn’t provide permission for the use of their vehicle.

So, by borrowing the car without permission, you may be in big trouble. You’ve opened yourself up to liability, a lawsuit and potential charge of being in possession of stolen property. Check with your insurer first. If they deny your claim, then the costs for repairs will be coming straight out of your pocket. Better to pay now, if you can, rather than later as those costs may include lawyer’s fees. And those can be expensive. LLC has made every effort to ensure that the information on this site is correct, but we cannot guarantee that it is free of inaccuracies, errors, or omissions. All content and services provided on or through this site are provided "as is" and "as available" for use. LLC makes no representations or warranties of any kind, express or implied, as to the operation of this site or to the information, content, materials, or products included on this site. You expressly agree that your use of this site is at your sole risk.