If you allow a friend or relative to drive your vehicle, it's important for you to be aware of the insurance rules that apply to this situation. The following tips will help you decide whether the particular car-sharing scenario you're contemplating is a good idea.
If a family member lives with you, they are probably included in your St Paul auto insurance under a state-mandated "omnibus clause." Therefore, if your spouse drives your car, he or she will be covered even if you're the one named on your policy. There are exceptions which center around specifically high-risk drivers, such as teenagers or people with poor driving records or DUI's. In those cases, you must make sure to add their names to your policy and discuss the particular details with your insurer.
Insurance usually (but not always) follows the car
The insurance industry's word for someone to whom you lend your car is a "permissive" driver. In most cases, your insurance policy will cover a permissive driver in the same way that it would cover you, if you were the driver. This is not a simple, straightforward guarantee, however. Your particular auto insurance policy may have some unique limitations in its coverage, or it may pursue reimbursement from the driver's own policy for certain medical expenses and liability costs.
There are eight states in which a permissive driver has less coverage than the person named on the policy. These states are: California, Colorado, Michigan, Missouri, Ohio, Oklahoma, Pennsylvania and Washington. If you live in one of these states, it would be a good idea to have a conversation with your insurance company before lending out your car to anyone.
Occasional loan vs. regularly scheduled sharing
If your friend's car is in the shop for repairs, and she needs to borrow your car once or twice to go shopping, your insurance company will likely be agreeable about covering her. However, if you and your neighbor decide that you'll set up a car-share arrangement whereby the neighbor uses your car on a regular schedule, you could run into major difficulties with your insurer. Not only are they likely to deny a claim arising out of scheduled car-sharing, they may also terminate your policy altogether.
The situation becomes even thornier if the person with whom you're sharing your car actually pays you. A number of new car-share services are springing up in cities across the U.S., and even though most of them carry their own insurance policies, the car owners' insurers are threatening to limit or rescind coverage.
If that neighbor whose car is in the shop wants to borrow your car to make some business deliveries while she's at work, your insurance may suddenly cease its coverage. Commercial use of vehicles triggers an entirely different set of insurance rules, and regular private insurance doesn't extend into the commercial zone.
Before lending your car out, make sure that the driver has a valid license, and talk with them about whether they carry any insurance of their own. Make sure the registration and insurance information are easy to locate inside your car.
If you have more questions about letting someone else drive your car, give Lancette Agency a call at 651-264-1230.