Insurance against an accident from the person to whom you loaned your car

I had to feel empathy for my friend. Poor boy: out of the goodness of his heart, the man slows down his vehicle to a relative. And then his relative was in a major accident, resulting in two vehicles totaled: the car I had borrowed from my friend and the truck he collided with!

For those uneducated, when you loan your car to someone else, the insurance industry refers to that driver as a permissive driver. If a permissive driver causes an accident, this is how insurance companies will respond.

Car insurance and accident caused by a permissive driver

If you gave permission to someone who is not listed as a driver on your auto insurance policy and that person causes a car accident, the procedure is generally as follows.

1. In case the driver and the car owner have individual car policies, the car owner’s insurance will pay for the damages under the collision coverage part, after the policy holder pays out of pocket any required deductible.

2. If there is significant property damage, as well as bodily injury to the other driver or their passengers or pedestrians, the car owner’s insurance will cover the damages and legal fees of an associated lawsuit filed against the car owner. Insurance payments are subject to policy limits. If the car owner’s policy limits result in an outstanding balance, the driver of the loaned car can seek compensation from his own insurance company to receive the remaining funds owed for the damages. If the borrower of the car is injured in an accident that he caused, the related payments will generally be covered by the Personal Injury Protection portion of his car policy. In case the driver does not have this insurance protection, but the car owner does, the coverage will go through that.

3. What if the person who borrowed the car was in an accident but did not have a valid driver’s license? In this case, it is very likely that you will be denied coverage. Many insurance companies exclude coverage for unlicensed drivers. If this occurs, the car owner, you, and the permissive driver will be responsible for paying all damages, as well as court fees, if any.

But aside from the related aggravation and possible wallet depletion, policyholders may find that their premiums go up at the time of policy renewal.

Of course, anyone dealing with an experienced independent agency designated to do direct business with many of the leading underwriters has the advantage of working to market advantage to locate the lowest premium available under the circumstances.