Most of us have loaned our truck to a friend who’s moving between apartments, or our car to someone whose own auto is in the shop. Perhaps your boyfriend or roommate routinely help themselves to your keys to do their errands. But next time someone starts to close in on your driver’s seat, take a moment to reflect.
If your friend gets in an accident, you will probably be liable. Car insurance generally follows the car, not the driver. So when you loan your car, usually you are also loaning your car insurance.
Even if your friend has car insurance, their policy won’t kick in until yours is exhausted. In Texas, basic insurance to meet the state’s financial responsibility law is 30/60/30. That means $30,000 per injured person, up to $60,000 total per accident, plus $30,000 for property damage. More than two injured people and a newer car, and you’ll max out 30/60/25 pretty fast.
Who does your insurance cover?
Basically, your insurance policy usually includes family members and people driving your vehicle with your permission. “Family members” means people living in your house and related to you by marriage (including your in-laws), blood or adoption. Your policy probably also covers family members who are living away from home while going to school, or separated spouses living elsewhere. But check with your agent to make sure you understand your insurance. Some policies only cover specifically named household residents.
If you’re listed as the primary or only driver on your policy, your premium is based on you and your car. The insurance company will want to know if somebody else drives your car regularly. If your insurance company learns you’re no longer the primary driver, they could accuse you of providing false information and deny your claim when you need them most.
Policies vary, but some limitations are fairly common. These include:
- Excluded drivers. These are specifically named people on your policy who are not allowed to drive your car. Do not let an excluded driver drive your car!
- Named driver. Some policies require household residents to be specifically named on the policy in order to get coverage.
- Business or commercial use. Don’t loan your car to your friend who has a paper route. Not only do you risk liability, it’s a lot of wear and tear on your vehicle. Same for pizza deliveries.
- Racing. The dangers are obvious.
- Intentional acts. Most insurance policies will not cover damage to the auto if it is done intentionally.