I had to feel for my friend. The poor guy lent his car to a family member out of the goodness of his heart. Then, the car he had borrowed from my friend and the truck he collided with were both totaled in his relative’s serious accident.
For those who are unaware, when you lend your car to someone else, the insurance industry refers to that driver as a permissive driver. Here is how the insurance companies will react if a permissive driver causes an accident.
An Accident Caused by a Permitted Driver and Auto Insurance
The process is typically as follows if you gave permission to someone who isn’t listed as a driver on your auto insurance policy and that person causes a car accident.
1. If the driver and the car owner each have their own auto insurance policies, the policyholder’s insurance will cover any damages under the collision portion of the coverage after any required deductibles have been paid in full by the policyholder.
2. The car owner’s insurance will cover the damages as well as any associated legal costs of a lawsuit brought against them if there are significant property damages as well as bodily injuries to the other driver, his or her passengers, or pedestrians. The policy’s limits will be considered when making an insurance payout. The driver of the borrowed vehicle may file a claim with his or her own insurance company to receive the balance due for the damages if the policy’s limits result in an unpaid balance. The Personal Injury Protection section of the car owner’s auto insurance would typically pay for related expenses if the car borrower was hurt in an accident that they caused. If the owner of the vehicle has this insurance protection but the driver does not, coverage will be provided through them.
3. What if the borrower of the vehicle was involved in an accident but did not possess a current driver’s license? There is a good chance that coverage will be declined in this situation. Many insurance providers don’t provide coverage for drivers without a license. If this happens, you, the car’s owner, and the “permissive driver” will be liable for paying all damages and, if applicable, court costs.
But in addition to the associated annoyance and potential financial burnout, policyholders may discover that their premiums have increased when their policy is renewed.
Of course, dealing with a seasoned independent agency that has been authorized to conduct direct business with many of the top underwriters gives them the advantage of working with the market’s edge to find the most competitive premium.