The next time someone asks to borrow your car, you might want to think twice.
“Essentially you’re loaning someone your auto insurance when you let them drive your car,” said John Candaso, insurance agent for AAA Arizona. “Generally speaking, in Arizona, automobile insurance follows the car, not the driver.”
Most auto insurance policies will cover someone else driving your vehicle as long as they have a valid driver’s license. In fact, there’s a clause in most auto insurance policies called the “omnibus clause” that states your insurance will cover any driver of your vehicle, family member in the same household and dependent children away from home as long as they have permission to drive your car.
For example, if you let your friend use your car, and he is in a crash and found to be at fault, your insurance policy will cover any damage up to your policy’s limits. However, you will be responsible for paying the deductible and any additional costs not covered by your policy.
What if your friend was not at fault in the crash?
“In most cases, you should be able to file a claim with the at-fault party’s insurance with no deductible,” Candaso said.
Candaso cautioned that there are three things you need to check before turning over the keys:
Your own insurance policy. Make sure you’re comfortable with your coverage limits and that there are no restrictions for other drivers.
Your friend’s driver’s license and insurance policy. Make sure your friend has a valid license and an auto insurance policy. If he doesn’t have insurance, and your insurance limits are reached, you will be liable for all remaining costs.
Your proof of insurance and registration are in the vehicle. Show your friend where to find these items so he knows exactly where to look if something happens.
Other things to consider include whether this person drives your car regularly or will be driving it for an extended period of time.
“If that is the case, check with your agent to see if they will be covered for that type of usage,” Candaso said.
But remember, when you are driving someone else’s car, the points surcharged for an accident that you cause would follow you on your driving record, and that could affect your policy rates. Insurance generally follows the car, but points follow the driver. Be sure to discuss this with your insurance agent to understand your company’s accident surcharge guidelines.