Anybody who has their license and is legally able to drive a car will know how important car insurance is. You are not allowed to drive a vehicle on any public roads without it, and even though it is something that you probably will not use, it is something that you definitely need.
It is the car insurance that will cover you should you ever end up in a car accident. No matter how minor or major the accident, your car insurance will always payout to the amount agreed in your policy.
A lot of people let their friends borrow their cars, and it might not seem like a big deal. But should your friend get into an accident when they are driving your car, it could turn out to be a very expensive favor that you have given them.
It is a common misconception that when your friend is driving your car they are covered by their insurance, but this is not the case. Your car is tied to you and your insurance, so it is you who will catch it in the neck if your friend ends up in an accident as all claims will be made against your car, not the person driving.
Permissive Vs Named Drivers
Before we take a look at the different situations you might find yourself in should your friend wreck your car, we must clear up the terminology. In the USA, there are two main types of car insurance policies, one which covers permissive drivers, the other which only covers named drivers.
Permissive car insurance is a lot more common, and this policy basically allows you to let other people drive your car periodically on your insurance. It is permissive car insurance that would allow you to let your friend drive your car from time to time, but the term “periodically” is very important.
While most car insurance vendors will not state an exact number of times that someone can drive your car under the permissive insurance, it is generally accepted that other drivers can use your car up to 12 times a year.
While 12 times might seem like a fairly large number, this means that other drivers would only be able to use your car once a month which really isn’t a lot. This means that if your friend uses your car regularly they cannot do so on permissive insurance, and they should be added to your insurance as a named driver.
However, this is a commonplace error and something that often causes issues should a crash occur.
The other type of insurance is a ‘named drivers’ policy and this means that only those who are named as drivers on your policy can use the vehicle. However, you can have named drivers on a permissive car insurance policy.
This is what you should do if your friend uses your car regularly, as it ensures they are insured to drive your car as often as they wish. But due to the increase in your premium price, a lot of people choose not to name their friends as drivers on their policy. It is this that causes issues when a crash occurs.
Your Friend Uses your Car WITH Permission and Crashes
The first scenario that you might find yourself in is when your friend has borrowed your car with your permission and subsequently ended up in a car accident. For this scenario, we are assuming that your friend has a license and also has their own insurance policy.
If your friend has crashed your car and wrecked it, the crash has likely been pretty bad. This is likely to cause both body and property damage to your friend and the driver of the other car.
Both of these forms of ‘damage’ are covered under the liability section of car insurance which is why you will be dragged into the situation.
Even though you were not driving the car, liability insurance follows the car first and the driver second meaning that your friend will be covered under your insurance, not their own.
This can place you in a very bad place, especially if the costs of damage from the crash exceed what your car insurance covers you for. If the costs of the crash are below the limit on your insurance, the worst that can happen to you is that your car insurance premium will increase significantly.
Should the costs exceed the limit on your insurance, the extra costs will fall onto you to pay. This will likely result in a trip to court and could mean that a judge may attach your personal assets to cover the cost that is leftover from the crash.
This is a terrible situation to find yourself in, and really highlights how important it is that you name your friend as a driver on your car insurance if they use your vehicle regularly.
If they were a named driver on your policy, the cost of the crash would fall on them as well as you as their name is on the policy for the car.
Your Friend Uses your Car WITHOUT Permission and Crashes
The situation is completely different if your friend were to crash your car without your permission. If this were to happen, your friend’s insurance policy would kick in before yours as your friend was technically not a permissive driver on your insurance.
However, in this situation, you will need to have explicit proof that your friend did not have your permission to use the vehicle.
To prove that your friend did not have your consent, you may need to file a report with the police to ensure that the cost of the crash is not taken against your insurance policy.
If the claim was made against your policy, the cost of your premium will increase which would just add insult to the injury of your friend wrecking your car by driving it without permission
In short, if your friend crashes your car, it is most likely that the cost of the crash will be claimed against your insurance policy.
However, if your friend has driven your car without your permission and crashed it, the cost will be claimed against their insurance.
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