Who Does My Auto Insurance Policy Cover?Posted on Sep 30, 2015
Fewer questions are as confusing and come up as often as this question on who is covered by an auto insurance policy. The best answer might be to call us or a local insurance agency in your state to ask questions about your specific situation. Because types of car insurance and state rules vary so much, answers found on the Internet often seem complex and contradictory. We will explain who is covered by typical auto policies and give some common examples. Of course, we are also eager to answer your specific questions by phone or email.
Who is Covered on Typical Car Insurance Policies?
Does liability auto insurance follow the driver or the car? Even many agents will automatically say that car insurance follows the car, but the answer might depend upon the type of coverage, the terms of the unique policy, and who the driver is. There are laws of financial responsibility in every U.S. state that mandate all vehicles have liability insurance.
You might expect typical policies to cover another licensed driver that you choose to lend your vehicle to; however, there are exceptions to this. If other drivers reside in your home or are members of your family, insurers will expect to have them named on your policy.
Many parents of teen drivers would love to enjoy lower car insurance rates by not mentioning that their son or daughter has a license and takes a family car to high school every morning, but this is not a good idea. If the young driver gets into an accident, an insurance company might have the right to refuse to pay a claim if the policy holder did not inform them of a family member becoming a family driver within a reasonable amount of time.
Does Car Insurance Follow the Car or the Driver?
If you plan to lend your car to somebody outside of your family, it’s wise to find out if the borrower has a liability insurance policy. If not, it’s time to make a call to your insurance agent just to be sure. People who borrow frequently can purchase non-owner policies that are usually much cheaper than coverage for owners. Just remember, you could be lending out your car and your car insurance. Even if an accident is covered, you might have a claim on your record that could impact your future rates.
On the other hand, people who rent or borrow cars for short-term use can usually be assured that their own coverage will follow them. Typically when you rent a car, you have the same coverage as if you owned the car. If the driver only has liability, that’s what he will have on the rented car. If he also has collision or comprehensive, that will follow as well. Again, this is easy enough to verify with an agent before renting or borrowing.
Comprehensive and collision insurance are different because they cover damage to your car. As such, they are more likely to follow the car. If your vehicle gets damaged in an accident or a hail storm, and your car is covered for such hazards, you should be covered even if your friend borrowed it for the day.
Of course, if your car was stolen, so you obviously didn’t give permission for another driver to use it, you’re not liable for damages or injuries. Meanwhile, your comprehensive insurance should still cover any damages to your car.
At Otterstedt Insurance Agency, we want to provide our clients with the best value by making sure they know exactly who and what is covered by their auto insurance policy. The exact answer to your questions really could depend upon your unique circumstances.