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Does Car Insurance Follow the Borrowed Vehicle or the Driver?

person driving, how insurance works on a borrowed car

Here’s how insurance works on a borrowed car.

If you are lending out your car to a friend or family member, then you might assume that their insurance will cover them in the event of an accident or other loss.  However, this isn’t really the case.  In most states, including the state of Texas, insurance coverage follows the vehicle, not the driver.  Here’s how insurance works on a borrowed car.

  • Lending Out Your Car

Because the car owner is financially responsible for the damages caused by their vehicle, it’s important that you know your coverage limits before you lend out your vehicle.  In some cases, your auto insurance policy may impose lower coverage limits when your car is being operated by a driver not listed on your policy.  Depending on your policy, your insurance may not cover the other driver at all.  For instance, if you regularly lend your car out to someone who is not a member of your household, or if you are lending your car out for business purposes, then your auto policy might deny the driver coverage.

  • Adding a Driver to Your Policy

If you frequently lend your car to someone that you do not live with, then you should add this person onto your auto insurance policy as an additional insured.  You should also take this step if you are lending your car out for an extended period of time.  This way, you can ensure that the driver has the coverage that they need.

Here’s how insurance works on a borrowed car.  Do you have additional questions about your auto insurance in various situations?  If so, then contact the experts at Mike Leonard Insurance Agency.    Our dedicated team is eager to find you the right coverage from one of our many carriers including: Kemper, MetLife, Nationwide, Travelers, The Hartford, Safeco Insurance, Progressive, and American Strategic Insurance.