Is lending your car to someone worth the risk?
Your roommate just needs to pop to the store and their car is in the garage. Your cousin is visiting from out of town and wants to drive around the city. Your new teen driver wants to visit their friend but they’re still waiting to save up money for a new vehicle. There are plenty of situations in which it makes sense to lend your car to someone you know. However, this doesn’t mean that you should do so. Letting someone borrow your car might seem harmless, but it could have serious financial implications.
Generally, car insurance does not follow the driver, it follows the car. Therefore, if you lend your vehicle to a friend or family member who crashes the vehicle, you might see a large increase in your car insurance rates. If you lend your vehicle to someone and it is not a regular occurrence, you do not have to notify your auto insurance company. However, if they borrow your car often, it is worth letting your insurer know and adding him/her to the policy. Failing to be transparent and neglecting to inform your insurer may result in the insurer’s refusal to pay in the event of a claim.
Before you let someone borrow your car, first determine if you trust them. Are you willing to take on the risk of someone else potentially damaging your vehicle and/or causing damage or injury to someone else? Because insurance follows the vehicle, it would be your insurance that would apply first in the event of an accident, which might mean that you have to pay your deductible and face a rate increase. Even if the person driving your car has their own car insurance policy, their coverage wouldn’t kick in unless or until yours is first exhausted. If your friend/neighbor/family member already has a plethora of points of their license, it’s wise to think twice about lending your vehicle to them. It is also critical to mention that if you have minimum California required liability limits (15K/10K/30K) on your vehicle, you are placing your home, and other financial assets at risk in the event your friend has a bodily injury accident.
When you’re ready to get started on auto insurance for your needs, we can help. Contact Lou Aggetta Insurance Services in Pleasant Hill, CA. We will work with you to ensure you have the right policy at the right price.