Does Insurance Follow the Car or the Driver?

Sometimes accidents happen. And, sometimes, they happen to your friends, when they’re driving YOUR car. So when your college roommate bumps a stranger’s car with your vehicle, who does the insurance company fault? Does insurance follow the car or the driver? Let’s start with a few general rules.

First, state laws require drivers to have insurance that covers minimum liability standards. If your college roommate is a driver, then he must carry minimum liability protection for his state.

Second, as the owner of the car, you may choose to carry comprehensive or collision coverage in addition to the mandatory liability coverage. Collision and comprehensive are coverage for any damage incurred to your vehicle, no matter who’s driving it.

So when your college roommate causes that 5-car pileup, where does this put you? If your friend is driving your car and is at fault for the accident, then your insurance kicks in first. That’s assuming, of course, that your friend didn’t steal your car or use it without permission and that you didn’t explicitly exclude him as a covered driver from your policy. A clause in your policy called the “omnibus clause” covers your vehicle if anyone borrowing your car damages it as long as you gave that person permission to drive your car.

If your roommate has insurance, his policy will kick in as secondary coverage. His insurance may cover medical expenses, personal liability, and any damages or expenses left over if your limits are exceeded. However, if your college roommate isn’t an insured driver, meaning he doesn’t carry his own liability insurance, you could be in trouble.

In the case of the 5-car pileup, the total cost of damages incurred by all other vehicles except yours may exceed your liability insurance limits. If this happens, YOU could be sued for the unpaid damages since your roommate is uninsured.

But what happens if you don’t give permission? Are you still liable?

Let’s say your college roommate took your car for a joy ride, without your consent, when the 5-car pileup happened. You are not responsible for damages so long as your friend is an insured driver. His insurance will provide primary coverage; though, your insurance may kick in to cover the damage to your personal vehicle. If your friend is not insured, YOU assume primary liability. In sum, insurance usually follows the car.

There are a few exceptions when it doesn’t such as when the driver of your car uses it without your permission and causes an accident. Also, personal liability and medical expenses may be paid out by the driver’s insurance, not yours. To protect yourself, make sure you don’t give someone you don’t trust or someone you’ve excluded from your policy permission to drive your car.