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Lending Your Car Out Could Cost a Bundle

lv-6Some drivers make the terrible mistake of letting somebody else drive their vehicle without checking their car insurance policy. This is a mistake that can get you into big trouble because lending your car out could cost you a bundle if somebody else gets into an accident.

Most insurance policies specifically exclude certain kinds of drivers. This usually means those with suspended licenses or no driver’s license but it can also mean persons under 18, drivers  with no car insurance of their own or people with restricted licenses.

If you let your friend who has a recent DUI arrest on his record, drive your car you might not be covered. It’s best to check your policy if your 17 year old nephew comes to visit and wants to borrow your car. Do the same if your cousin from New York who doesn’t have a car comes to visit and wants to borrow your ride. There’s a good chance they might be excluded from the policy.

A popular myth is that if somebody else drives your car their insurance will cover any accident claims filed. This is usually not true because the standard legal principle is “insurance follows the car.” If somebody else is driving your car and causes an accident there’s a good chance you will be held responsible.

Lending your car out to the wrong driver could cost a bundle. Most insurance policies cover what is called a permitted driver. A permitted driver is an individual who has your permission to drive the vehicle.

When a permitted driver is behind the wheel your policy is the primary policy. That means your insurance company will be the first hit with any claims arising from an accident. If you allow a person who is irresponsible to drive your car you will be responsible for any damage they cause.

80% of All Drivers Overpay for Insurance. Do You? Start Saving Now. The only time a permitted driver’s insurance might come into play is if the driver is liable or responsible for the accident. Something to be aware of is that your insurance company could file a claim with the permitted driver’s insurer.

Despite possibly embarrassing circumstances,  dealing with your friends and relatives it is a good idea to take a good look at their drivers license before you let them drive your car. If they do not have a license they would not be covered by your car insurance.  Lending your car to people who may be irresponsible or are bad drivers that may get into an accident could increase your insurance rates.