Most people have an idea of what’s covered and not covered under their various insurance policies. But at Budget Insurance in Tucson & Sahuarita, we get a lot of questions about borrowing or loaning a car.
Now that the weather in Southern Arizona is beginning to change, you might be looking to borrow your neighbor’s truck for a home-improvement project or a trip to the local landfill, we thought it was a great time to provide a little more information about your insurance coverage.
Generally, insurance coverage follows the vehicle rather than the driver. So in most instances, as long as the owner of the car has insurance, it’s covered even if someone other than the owner is driving it — as long as they have the owner’s permission. However, this is not always the case so check with your local insurance agent before lending out your car.
The borrower’s insurance is considered secondary, meaning that in the event of an accident, it could apply if the owner’s liability insurance is insufficient to fully cover the damage.
It’s important to note that there are some exceptions to what is called “permissive use” coverage. For example, permission must be given by the owner, unless the borrower has a reasonable belief that they are allowed to use the car. However, the borrower cannot give permission to someone else. So if your teenager allows one of his or her friends to drive your car to Phoenix or even down to the local grocery store, your coverage likely won’t apply.
Some Arizona insurance policies are "named driver" policies . This means that the only people covered to drive the vehicle are persons specifically listed on the policy as drivers. Anyone that is not listed as a driver is not covered to drive the vehicle, no matter the circumstances. Some policies even exclude coverage for unlicensed drivers so think twice before you allow your unlicensed child to drive your vehicle, even if it's for practice. Often times drivers with a learners permit are required to be listed on the policy before coverage is provided.
Coverage might also be denied if the borrower operates the vehicle in a negligent or criminal manner. And if the borrower is using your car for business purposes, your personal auto policy likely won’t cover that.
If you have a regular long-term arrangement to either borrow or lend a car, the borrower should probably be added to the owner’s personal auto policy. Those who don’t own a car, but often borrow one, might also consider “Arizona named non-owner coverage,” an endorsement that provides bodily injury and property damage liability, uninsured motorists coverage and more. Budget Insurance offers this type of policy and the price is similar to a typical liability only Arizona insurance policy.
Ultimately, it’s usually safe to loan your friend your car for occasional errands or projects but we always recommend checking with your local insurance agent. And the same goes for borrowing a car. Just make sure it’s for “normal” use. You’ll want to confirm that the car has coverage and that your insurance, whether you’re the owner or borrower, will apply.
Feel free to give Budget Insurance a call if you have any questions — after all, you don’t want to wait until after an accident to get answers!