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Does my car insurance cover someone who borrows my car?

By Insurance.com Posted : 01/01/2011

Yes, car insurance covers someone who borrows your car with your permission. Say, for instance, your brother-in-law asks to borrow your pickup. If he caused a fender bender, your car insurance liability coverage would pay for any damage he caused up to the policy's liability limit. Your collision coverage, if you had it, would pay to repair any damage to your pickup.

if the person who uses your car lives in your household, however, he or she should be listed on your car insurance policy. For instance, you should include on your policy your teenage children who drive and who live with you (unless they have their own cars and insurance). You can't assume your kids are covered just because you have insurance and they have permission to use your car.

Insurance works differently when you rent out your car through peer-to-peer car sharing services. These companies, such as RelayRides in San Francisco and Boston, let you earn extra money by lending your car to others when you're not using it. A portion of the rental fee that borrowers pay goes toward car insurance. The company's insurance policy provides liability protection and covers the car whenever borrowers are using the vehicle, and your insurance continues to cover you and the car whenever you're using the vehicle.

Check with your auto insurance agent or company before participating in a peer-to-peer car sharing service to learn the implications of renting out a car. State laws vary. California passed a law that lets insured car owners participate in peer-to-peer car sharing services without any impact on their own insurance coverage. The same may not be true in your state.

See, "Hello stranger! Here are the car keys."

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