Insurance When Borrowing a Car

Your friend Steve is inebriated and asks you, the sober and responsible friend, to drive his car home for him. Considering Steve was your ride to the bar and lives on your street, you agree, deeming it the smart move. On the drive back, Steve’s brand new Mercedes is badly rear ended by another vehicle, causing damage to the car and minor injury to all parties. While you are very glad everybody is alright, you can’t help but worry about who will be responsible for financial damages.

Fear not, we have answers! Car insurance typically follows the car, not the driver, so when you drive somebody’s car you are also borrowing their insurance. In this case, because there is injury involved, your insurance policy would pay for your medical expenses while Steve and the other driver’s policies would cover them, but that is the extent that your insurance policy is involved. For all damage to the vehicle, Steve and the other driver’s insurance policies would pay and (if they opted for it) cover the cost of a rental car while the damaged vehicles are repaired. Steve would also be held responsible in the event of a lawsuit arising from the accident.

In this scenario, you luckily would not be held financially responsible for doing the right thing and driving your inebriated friend home, but it makes you think twice in the event of loaning your car to someone else. Let’s say you’re having a family barbecue and you realized you ran out of ketchup, so you send your nephew/niece to drive your car to the store and pick some up. Well, your nephew/niece ended up in an accident. Your car is totaled, and the other driver is injured. This time, your insurance is on the hook, and in addition, you will be the one sued in any lawsuit because it was a vehicle under your insurance policy involved in the accident.

When it comes to borrowing a car, or lending your own, make sure you weigh the consequences to you and those involved if there is an accident and ask yourself, is it worth it?