A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products, including home, life, auto, and commercial, and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, mainly in the insuranc...

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Reviewed by Leslie Kasperowicz
Farmers Insurance CSR 4 Years

UPDATED: Oct 19, 2021

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Here's what you need to know...

  • Liability insurance is designed to go with the driver
  • Comprehensive and collision coverage will stay with the car
  • Named driver policies can help you save money

If you’re more than happy to loan your car to a friend in need, then it’s important for you to know how the insurance will work in this case. The last thing you want is for someone who’s not covered by insurance to get in an accident while behind the wheel of your car. If you regularly loan out your car, then you should use a comparison tool to look for the best rates on the right coverage. Start comparing car insurance rates now by using our FREE tool above!

Liability Covers You with Other Vehicles

Liability insurance is designed to go with the driver. Most states require liability coverage to protect other drivers and parties in the event that you cause an accident. If you borrow a friend’s car and rear-end someone at the light, your own insurance will cover the damage.

However, there are some exceptions with this type of carryover. Some companies will refuse coverage if your own car was available for use at the time, or they may deny the claim if the car was not a private passenger vehicle. This is why it’s important for you to shop around for your insurance coverage. The best companies will provide you with liability coverage even if you’re borrowing a car.

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Comprehensive and Collision are for the Car

The Claims Journal points out that collision and comprehensive coverage are designed to protect the car, not the driver. They’re in place to pay for damage that occurs as the result of accidents, vandalism or even theft. What this means is that all people on the policy are generally allowed to borrow the car, but the company may not give you permission to loan it out to friends or other people who aren’t listed on the regular policy.

Simply giving someone permission to drive your car is not enough; you also need to check the fine print in your contract.

Some companies have it in writing that any licensed driver will be covered, and other companies may say that only the insured drivers will enjoy these protections. If you’re often in positions where you want or need to loan our your car, then you should check the fine print before signing with any new policy.

Most people have a standard policy that will cover all driving members of the household, family members, and other people that have an owner’s permission to drive the car. When looking for different rates using a comparison tool, be sure to look at standard policies to better protect your interests.

Named Driver Policies

With a named driver policy, the insurance will only cover the people who are specifically listed on the plan. This may include:

  • Other people in the household
  • Family members
  • Friends who borrow the car regularly

Signing up for a named driver policy could help you save money on the overall cost of insurance, but keep in mind that you will not be able to loan your car out for any reason. These policies are highly restrictive, and states like Texas are now requiring insurers to specifically inform drivers if they are being quoted rates for a named driver policy.

Excluded Driver

In some cases, you may choose to sign up for an excluded driver policy. With this type of plan, most people would be covered provided they have your permission, but a specific person or persons will be excluded from coverage.

If you’re trying to save on insurance and you’re worried about paying for household members who will never drive the vehicle anyway, then it may be wise to look for this type of coverage using comparison tools.

You may see this type of policy if you have a young adult son or daughter living in your household along with your teenage drivers. The adult car owner could potentially save money on the insurance coverage by allowing the teen drivers in the home to be excluded from the policy.

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Making the Call

If you have a friend who borrows your car on any kind of a regular basis, then it may be worth your time to simply add them to your policy. In general, it doesn’t cost very much to put another driver on the policy, and it will give you peace of mind to know that you’re covered in an accident. If you decide to go this route, then there are a few things you should know that:

  • The insurance company will check the new driver’s record
  • Anyone who drives your car more than 25% of the time should be on your policy

If your existing company raises your rates drastically, then you can try shopping around to see if you can find a more accommodating provider.

Protecting Your Financial Interests

If you like to help out your friends, then you may have encountered situations where someone wanted to take your car out for an errand or two. This is particularly likely if you frequently have friends fly in from out of state.

With the right insurance plan, they’ll automatically be covered.

When pricing out different policies, make sure that the company is providing you with a standard policy if this is a concern. You can also look at the review on companies to see how good they are about paying claims for guest drivers. In order to find the best rates on your policy, utilize a comparison tool to find the features you want at a price that works for you. Enter your zip code in our FREE tool below to start comparing car insurance rates now!