Borrowing Trouble: What to Do if Your Friend Wrecks Your Car

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You let a friend drive your car. The friend gets into an accident that is his fault. He has car insurance, you have car insurance, so whose insurance company pays for the damage? It’s a complicated answer, and largely depends on your insurance company.

According to the Insurance Information Institute, in most states, the auto insurance policy covering the vehicle is considered the primary insurance in this situation. This means that the car owner’s insurance company would pay for damages caused by an accident, regardless of who is driving. Policies and laws differ by state, so make sure you understand the rules before allowing another person to drive your car.

In the above situation, Shelter’s coverage would only pay the state required minimum liability minimum for the driver, retaining the remaining limits for you in case you are named in a lawsuit regarding the loss. Anything that needs to be paid out beyond what the state’s minimum requirements are would fall to your friend who wrecked your car. Be aware, this claim would be on your policy and may impact future rates.

Let’s say the situation is reversed and you are the one driving a friend’s car and you have an at-fault accident. Assuming you had permission to drive the car, not overall consent to drive it whenever you want, we would provide coverage beyond what your friend’s policy would cover. Depending on the provisions of both policies involved, the coverage may be handled by establishing a primary coverage and excess coverage or prorated between the two policies.

Uh-Oh—My Friend is NOT Insured
If your friend wrecks your car and does not have car insurance of their own, they will likely be responsible for the amount that exceeds what your coverage with Shelter will not pay. If they can’t afford to do that and they don’t have insurance of their own, there could be a problem.

Long Term Borrowing
If a friend needs to borrow your car long-term, or even for just a few months, it’s a better idea to add their name to your policy. If you don’t, and your insurance company finds out, they could deny the claim altogether.

Letting a friend borrow your car when they are in a bind is understandable, but be smart about it—call your agent first to help you understand what could happen if your friend has an accident in your car. Also, make sure your friend has car insurance, and find out how his insurance company would handle that situation. Of course, nobody can anticipate every claim situation—each claim depends on its own set of facts—but having that information will help you both make an informed decision.

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