It’s usually okay to let someone else borrow your car, but it’s important to understand what happens with your insurance if they get in an accident and it’s their fault. It’s also important that you trust the person who is driving to help you pay if they cause an accident.
Whose insurance pays?
The driver who is determined by the police to be “at fault” in the accident is responsible for paying for damages, or, more precisely, their insurance company is. If you loan your vehicle to someone who is not on your policy and they are at fault in an accident, you are responsible. If you’ve got collision insurance, you’re usually fine, but, if you don’t, then then you’re responsible for paying the deductible.
That’s where the issue of trust comes in. If your friend, or whoever you loaned the car to, helps you pay the deductible for the damages they caused, that’s great, but they aren’t legally obligated to. You are responsible.
Liability insurance covers you in the event that you are sued. If there’s an accident with your car with a driver you loaned the vehicle to, your liability coverage will protect you up to a limit. After that limit, the driver’s liability insurance kicks in.
Your rates in the future
Even though someone else was driving your car in the accident, it’s likely that your insurance rates will go up in the future because of the incident. The insurance company views the situation as you having made a poor decision to lend your car to whoever caused the accident, and they will charge you more in the future. This may not seem fair because you may have been nowhere near the accident when it occurred, but it’s standard practice in the insurance industry.
How about traffic tickets?
The good news is that if you loan your car to someone and they get a traffic ticket, then that will not affect your own insurance situation. The record of the driving offenses, whatever they are, will be shown to the driver’s insurance company but not to yours. What a relief!
At the end of the day, it’s best to be careful about who you loan your car to. If it’s to a good driver, wonderful, but think twice if it’s to someone who doesn’t drive well.