You’re headed out of town on a road trip with a group of friends. But before you leave, the often-asked question comes up: Does car insurance follow the car or the driver?
One friend remembers insurance sticking with the vehicle and says everyone is okay to drive. Another person thinks insurance stays with the person. So that means only people who have auto insurance should take turns behind the wheel.
Turns out — they’re both right. It depends on the situation.
Does my car insurance cover other drivers?
Some types of auto insurance follow the driver. But generally, auto insurance follows the car.
So if your friend borrows your car and they get into an accident, your car insurance extends to your friend.
But since we’re dealing with insurance, there are a lot of exceptions. The laws vary depending on where you live. In fact, auto insurance rules are different in every state.
The owner needs to give permission
The non-insured person will likely need the owner’s permission to drive the vehicle in order to have the coverage extended to them. You don’t need to write out a formal letter. Verbal permission is generally good enough.
Also, your coverage may stick with your vehicle if it’s stolen, even though the thief obviously doesn’t have your permission.
Regular drivers may be excluded
Insurance might not cover other drivers who regularly drive the vehicle, as the insurance company might think the person should be listed on your policy.
For example, your car might be covered while your sister from out of town drives it, but it likely won’t be while your roommate borrows your car for a weekly grocery run.
Some policies specifically name and include, or exclude, drivers
Some policies will only cover people named as drivers on the policy.
While others provide general coverage to occasional drivers. In some cases, you can have a list of named people who aren’t allowed to drive the vehicle. In that case, your coverage doesn’t extend to them.
Does car insurance follow the car or the driver?
As for insurance following the car or driver:
Coverages that follow the car and covers drivers who aren’t on the policy:
- Liability insurance
Coverage that follows the driver when they’re driving another car:
The breakdown of insurance
It’s easy to think of car insurance as one thing. After all, you probably only pay one bill each month. But auto insurance has several different types of coverage:
Comprehensive and collision
Full coverage is a combination of comprehensive and collision insurance, although they don’t actually cover everything.
Generally, collision insurance is for damage to your vehicle while you’re driving. Comprehensive insurance is for damage to the vehicle during other circumstances.
The two coverages often come as a package, but people can always buy them separately. When they do, they often purchase comprehensive over collision.
Comprehensive and collision coverage are optional unless you have an auto loan or are leasing the vehicle.
Liability insurancepays for the other person’s medical bills and for repairing their vehicle or property after an accident.
It’s mandatory in most states, although the minimum required coverage varies across states. It’s not recommended that you purchase the minimum required amount. This will almost certainly not be enough to cover any costs after an accident.
If you sustain an injury in an accident, medical payments coverage (MedPay) or personal injury protection (PIP) coverage may help pay for your medical bills, therapy, and lost income if you can’t work.
PIP is a requirement in some states and MedPay is optional in all but a couple of states.
You probably noticed above that liability is in both categories. It follows the car and the driver. Liability insurance might cover another driver using your car. Here’s why.
When does liability follow the car or the driver?
When two similar insurance policies can cover the same situation, one policy is the primary coverage. This means the policy will pay for everything up until its maximum limit, and then the secondary coverage may cover excess expenses.
Imagine you have a car and you pay for comprehensive and collision insurance, along with the minimum required liability insurance in your state.
Your friend is visiting from out of town and asks if he can borrow your car, and you agree as you have to work and don’t want him to be stuck at the house all day. He has a car at home and his own auto insurance policy.
Unfortunately, your friend gets into an accident and it’s his fault. While he’s okay, your car is wrecked and the other driver has injuries.
Your comprehensive and collision insurance covers the cost to repair your vehicle. But if you don’t have a high enough coverage limit to pay for all the repairs you might be out of luck — your friend’s collision coverage didn’t follow him.
Your liability also helps pay for the other person’s medical bills, but your minimum coverage only goes up to $25,000. If the person’s medical bills are for more than that, your friend’s liability policy may kick in as secondary coverage.
One thing to note. Although your friend will hopefully offer to help out, you may be responsible for paying the deductible. Your insurance rates might increase even if you weren’t in your car at the time of the accident.
Am I covered if I drive a rental car?
Different rules may apply if you’re renting a car versus borrowing a friend’s car.
Does car insurance cover rental cars? Generally, yes. Your car insurance will follow you and cover your rental car. That includes your liability insurance, collision and comprehensive coverage.
Does my insurance follow me out of the country?
While your liability coverage might step in as secondary insurance if you borrow a car, there are still limitations to when this can occur.
Your policy likely won’t provide coverage if you’re in another country. But there are sometimes exceptions for driving in Canada or Mexico.
These are only some of the potential exceptions to the general rule of thumb that auto insurance follows the car and liability or medical coverage can also follow drivers as secondary coverage.
Before you come to a firm conclusion about whether you’re covered (or someone else is covered while driving your car) you should contact your insurance agent and review your policy.