Loaning your car- a good idea? It seems harmless enough when you hand your keys over to someone who asks to use your car, until an auto accident occurs. That’s when the confusion sets in and you may reconsider whether that was a good idea after all. If you aren’t clear on the coverage issues that may ensue when someone else drives your car, you may want to read on.
Assume for a moment that a friend or neighbor asks to use your car for the day to pick up children from school and run a few errands. If that person causes an auto accident you may not realize that coverage typically follows the car and not the driver. So, before you readily hand over the keys, be aware that your insurance will typically be the one to absorb the claim for any injuries and property damage claims even though you weren’t operating your car at the time.
Loaning Your Car is Not Risk Free
Giving someone permission to operate your vehicle means you are assuming a risk of an accident happening so what does that mean for you? Below are some common scenarios that could potentially happen that could put your financial standing in jeopardy:
- Your friend asks to use your car while her car is being repaired when she causes an auto accident involving two other vehicles. The other two cars are totaled and the drivers have suffered extensive injuries that required hospital admission. Your auto limits of liability under your N.C. auto insurance policy have been exhausted as a result. Now you learn you may be responsible for any expenses above and beyond your limits of liability.
- Your daughter, who resides in the home, occasionally uses your car and allowed her boyfriend to drive the car without your knowledge. Although she is considered a “named insured” under your N.C. auto insurance policy since she is relative residing in your home, the boyfriend is not and you did not give him permission to operate your vehicle. Anybody who drives your car without permission is not covered so what does that mean for you if he has an auto accident? This is where “permissive use” is not always black or white and further investigation would be needed to determine coverage
Know the Facts Before You Hand Over Your Keys!
It is recommended that you communicate regularly with your local N.C. independent insurance agent to discuss those people residing in your household and those who regularly drive your car(s) so that your insurance can adequately reflect those who are a “named insured” and/or listed drivers under your auto insurance policy.
Twin City Insurance Agency is here to assist you with any questions you may have concerning coverage when loaning your car, permissive use, or any other insurance questions regarding your N.C. auto insurance policy. Call us TODAY at 828-464-2643. So, do you think loaning your car is a good idea?