Permissive Driver Coverage

Whose Insurance Covers Your Borrowed Vehicle.


It happens all the time with very little thought.  A friend, neighbor, or relative asks to borrow your car so you toss them your keys.  It seems like a small enough request and you’re a nice person.  Nothing would ever happen but even if they do cause an accident they are responsible and have their own insurance so you have nothing to worry about, right?  However, the way in which this situation actually plays out may surprise both you and the driver.

Insurance Follows the Vehicle First

With all of the different insurance carriers in the market, standards are needed in order to avoid a long and drawn out battle over which company should pay.  In situations with permissive drivers, this standard is that the vehicle’s insurance is primary and the driver’s insurance is excess.  What this means is that because you are the owner of the vehicle, your insurance will pay until the limits are maxed out before the driver’s insurance will respond.  However, when the driver’s insurance does respond after your insurance limits are reached, it is protecting the driver and not you.  So even though you did not cause the accident, your insurance will pay first and if it runs out the driver will have their additional coverage but you will not.  It does not matter how guilty the driver feels and how much they want their insurance to protect you, the policy does not change.

Some Special Considerations For Permissive Drivers

If you have a company vehicle or if they are using your vehicle for business purposes you have to dig deeper through your policy as additional restrictions may apply.  Also, if the permissive driver has regular access to your vehicle they may need to be added as a driver on your policy to avoid any issues.  It is important to realize the liability you are assuming before you hand your keys over to anyone and the best way to get personalized advice on your specific situation is to consult your insurance partner.

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