You’re headed out of town on a road trip with a group of friends. The often-asked question then comes up: Does car insurance follow the car or the driver?
One person remembers insurance sticking with the vehicle and says everyone is okay to drive. Another thinks insurance stays with the person, and only people who have auto insurance should take a turn behind the wheel.
Turns out — they both might be right. Generally, auto insurance follows the car. However, some types of auto insurance also follow the driver.
Does car insurance cover other drivers? Generally, yes
It’s easy to think of car insurance as one thing. After all, you probably only pay one bill each month. But auto insurance can be made up of several different types of coverage:
Comprehensive and collision
Comprehensive and collision insurance are called full coverage, although they don’t actually cover everything.
Generally, collision coverage is for damage to your vehicle while you’re driving. Comprehensive coverage is for damage to the vehicle during other circumstances.
The two coverages often come as a package, but people can always buy them separately. When they do, they often purchase comprehensive over collision.
Comprehensive and collision coverage are optional unless you have an auto loan or are leasing the vehicle.
Liability insurance pays for the other person’s medical bills and for repairing their vehicle or property after an accident.
It’s mandatory in most states, although the minimum required coverage varies across states. It’s not recommended that you purchase the minimum required amount. This will almost certainly not be enough to cover any costs after an accident.
If you are injured in an accident, medical payments coverage (MedPay) or personal injury protection (PIP) coverage may help pay for your medical bills, therapy, and lost income if you can’t work.
PIP is required in some states and MedPay is optional in all but a couple of states.
Does car insurance follow the car or the driver?
As for insurance following the car or driver:
- Comprehensive, collision, and liability insurance may follow the vehicle and cover drivers who aren’t on the policy.
- Liability, MedPay, and PIP may follow the driver and provide coverage when the insured person is driving someone else’s car, such as a rental car, a friend’s vehicle, or a dealership loaner.
Wait — perhaps you noticed liability is in both categories. Here’s why.
Liability coverage might follow a driver into another car as secondary coverage
When two similar insurance policies can cover the same situation, one policy may be considered the primary coverage. This means the policy will pay for everything up until its maximum limit, and then the secondary coverage may cover excess expenses.
Imagine you have a car and you pay for comprehensive and collision insurance, along with the minimum required liability insurance in your state.
Your friend is visiting from out of town and asks if he can borrow your car, and you agree as you have to work and don’t want him to be stuck at the house all day. He has a car at home and his own auto insurance policy.
Unfortunately, your friend gets into an accident and it’s his fault. While he’s okay, your car is wrecked and the other driver is injured.
Your comprehensive and collision insurance covers the cost to repair your vehicle. But if you don’t have a high enough coverage limit to pay for all the repairs you might be out of luck — your friend’s collision coverage didn’t follow him.
Your liability also helps pay for the other person’s medical bills, but your minimum coverage only goes up to $25,000. If the person’s medical bills are for more than that, your friend’s liability policy may kick in as secondary coverage.
One thing to note. Although your friend will hopefully offer to help out, you may be responsible for paying the deductible. Your insurance rates might increase even if you weren’t in your car at the time of the accident.
There are lots of exceptions
Naturally, there are lots of exceptions — we’re dealing with insurance after all. The laws vary depending on where you live. In fact, auto insurance rules are different in every state.
Here are some potential fine-print points to keep in mind:
The owner needs to give permission
The non-insured person will likely need the owner’s permission to drive the vehicle if he or she is going to be covered. You don’t need to write out a formal letter. Verbal permission is generally good enough.
Also, your coverage may stick with your vehicle if it’s stolen, even though the thief obviously doesn’t have your permission.
Regular drivers may be excluded
Insurance might not cover other drivers who regularly drive the vehicle, as the insurance company might think the person should be listed on your policy.
For example, your car might be covered while your sister from out of town drives it, but it likely won’t be while your roommate borrows your car for a weekly grocery run.
Some policies specifically name and include, or exclude, drivers
Some policies will only cover people named as drivers in the policy.
While others provide general coverage to occasional drivers. In some cases, you can have a list of named people who aren’t allowed to drive the vehicle and they won’t be covered.
Car insurance might follow drivers into a rental
Different rules may apply if you’re renting a car versus borrowing a friend’s car.
Generally, your auto insurance will follow you and cover your rental car. That includes your liability insurance, collision and comprehensive coverage.
Your insurance might not follow you out of the country
While your liability coverage might step in as secondary insurance if you borrow a car, there are still limitations to when this can occur.
Your policy likely won’t provide coverage if you’re in another country. But there are sometimes exceptions for driving in Canada or Mexico.
These are only some of the potential exceptions to the general rule of thumb that auto insurance follows the car and liability or medical coverage can also follow drivers as secondary coverage.
Before you come to a firm conclusion about whether you’re covered (or someone else is covered while driving your car) you should contact your insurance agent and review your policy.