It's a noble thought to want to help a friend in need, but letting your friend borrow your car could turn out to be a costly mistake. Depending on the terms of your auto insurance policy, your friend might not be covered if he causes an accident.
How Permissive Use Affects Your Coverage
As the named policyholder, your car insurance should cover you, members of your household who are licensed drivers, and any additional people you've specifically added to the policy. Most policies, but not all, also allow for permissive use to provide coverage when someone borrows your car.
Permissive use can come with significant restrictions such as a higher deductible and/or reduced coverage limits. Other factors to consider include:
- You can't let someone use your car for business purposes. Permissive use generally won't cover the use of your car if a friend uses it to make deliveries, meet clients, or go to a work-related business conference.
- Unlicensed and/or inexperienced drivers aren't covered. Permissive use policies can sometimes exclude unlicensed and/or inexperienced drivers, which means you shouldn't lend your car to anyone who doesn't have a license or only recently became a licensed driver.
- Intoxicated and/or impaired drivers aren't covered. Lending your car to someone who is under the influence of drugs or alcohol will result in your claim for coverage being denied.
- Permissive use is only intended to cover short trips. Permissive use is meant for brief tasks like picking up milk from the store or moving furniture to a new apartment. If you're letting someone borrow your car for several weeks or more, this type of use may not be covered.
Since terms and restrictions can vary widely by insurer, the best course of action is always to refer any questions to your insurance agent. Do not let anyone borrow your car until you're positive that you're appropriately covered in the event of an accident.
If you're unable to get in touch with your insurance agent and a friend needs immediate transportation, consider offering a ride instead of handing over your keys. As long as you're the one behind the wheel, you can be confident you have the coverage you need.
Regular Drivers Must Be Named Policyholders
Permissive use is intended to cover accidents caused by someone who occasionally borrows your car with your permission. This type of coverage isn't intended for anyone driving your car regularly. If your friend borrows your car on a regular basis, he should be listed as a named driver.
Know What Your Friend's Policy Will Pay
Before you lend your car to a friend, it's a good idea to ask about his own insurance coverage. In the event of an accident, your own insurance will typically be what pays for damages. However, the driver's insurance may be needed to cover part of any applicable personal injury or medical expenses. It can also be used to supplement your plan if the collision caused property damage and/or injuries that are severe enough to max out your policy.
Understanding Your Liability
Since insurance generally follows the car and not the driver, lending a car to a friend can be an expensive mistake if an accident occurs. If your own insurance won't pay for the damages and your friend doesn't have sufficient coverage, you can be held personally liable for accident-related expenses.
If your friend is only partially at fault for the accident, you may be able to collect a settlement from the other driver to cover part of your property damage and other related expenses. Louisiana law allows partially at-fault drivers to collect from others, with the stipulation that settlements are reduced by the driver's assigned percentage of fault. Contact the attorneys at Neblett, Beard & Arsenault to learn more. Appointments are available at six convenient office locations.