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Written by Doug Cohen
Who Is Covered by Your Insurance When You Loan Your Car?
One tricky aspect of car insurance for some is knowing who is covered under your car insurance policy. What coverages apply if you loan your car to a friend or family member? Who pays if your car is involved in an accident if another driver is behind the wheel? These are questions you should definitely know the answers to before you hand over the keys to your car.
Unfortunately, there are no standard regulations for car insurance, especially when it comes to other drivers operating your vehicle. State laws and insurance policy terms dictate what coverages apply and how. Ensurance.com president Doug Cohen says the best advice is to start by knowing how your policy is written. "You must always read your car insurance policy, as boring as this may sound, to really know who is and who is not covered to drive your car."
For some, understanding the language of the policy is the real issue. Cohen says if you’ve read your car insurance terms carefully but are still in the dark about who is covered under your current plan, it’s important to learn how your insurance company defines the terms of your agreement. "To do this, direct your attention to the definition of who is an insured." Cohen says. "Some policies are known as permissive use policies which means anyone you permit to use your car is an insured driver. A good way to keep this straight in your mind is to remember this: Lend your car, you are lending your insurance."
Unfortunately, not all auto insurance policies are as liberal as the permissive plans. If you carry a car insurance policy limiting your coverage to a specific group of people, do you know who is permitted to drive your car? According to Cohen, "Other policies are more restrictive and only insure those living with you who may have regular access to your car keys. Those policies can also be more expensive when you have people living in your house with bad driving records or who might be new drivers. You can sign waivers in most cases to specifically exclude certain members of your household and also to lower your rates."
These types of waivers may lower your costs, but Cohen says to beware of increased liability through using them. "If you do sign something like this and that person gets behind the wheel of your car and causes an accident, you may be found partially liable for the damages."
Many policies allow you to add drivers to your insurance by name, so putting a teen driver or other members of your household on your policy is an excellent idea if they will have “anytime access” to your vehicle.
By knowing the specific terms of your car insurance for other drivers, you can protect your own interests. If your insurance covers you regardless of who is driving, the main concern may be the ability of the person you are letting use your car. If your insurance is more restrictive, you may be forced to be a bit stingier with your vehicle to avoid liability issues.
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