Last week I shared the Potential Gaps in Homeowners Insurance for Unmarried Couples Living Together. Based on the number of questions and calls we received after that post, I realized I needed to quickly provide this follow up post on auto insurance. If you missed the previous post, be sure to check it out as soon as you finish reading this.

As the number of unmarried couples living together continues to rise, more and more individuals may be unknowingly at risk for an uncovered claim or lawsuit. Either of these can be financially devastating.

The typical North Carolina auto policy has specific language in it that can greatly affect unmarried couples living together and their use of each other’s vehicles. My first point is that in North Carolina, auto insurance follows the vehicle as primary coverage not the driver. This means if you borrow a friend’s car (who is not living with you), your friend’s car insurance policy will be responsible for your actions behind the wheel (with some exceptions).

With that in mind, let’s talk about unmarried couples living together using each other’s vehicles.

Your auto insurance policy provides liability coverage for bodily injury and property damage should you cause an accident and damage property or cause injury to others. The coverage is provided for the named insured, his or her spouse and other drivers listed on the policy. It also considers any other person an “insured” while that person is occupying a car (with permission) that is insured under your policy.

“So what’s the problem for unmarried couples living together?” you ask.

When you dig deeper into the North Carolina Auto Insurance policy, you’ll find that the policy excludes the named insured or spouse when driving another vehicle furnished or available for their regular use.

Here’s a scenario that illustrates how this can affect you.

Let’s say you are unmarried and living with your boyfriend or girlfriend. You were educated on the importance of carrying higher limits so your policy carries $250,000 per person for bodily injury liability. Your boyfriend or girlfriend didn’t know better and is only carrying $50,000. You borrow his or her car, cause an accident and seriously injure someone. Their medical bills are over $100,000 and they sue you. The insurance on the car will cover the first $50,000 and since the car is regularly available for your use, your policy doesn’t have to pay anything leaving you responsible for the balance.

Most people that carry higher limits would think their policy will step in and cover the difference. Not in the case of unmarried couples living together. Keep in mind, this also applies to roommates who are living together, yet not related as well. Do you have kids in college living with roommates? Think about the possible scenarios there.

So what do you do?

There are 2 options.

Add each other to the others’ car insurance policy as a driver in the household. Almost all companies require this anyway. You will have to provide proof of insurance for the other to your insurance company so you don’t get double charged for the insurance. Or better yet…

Combine the cars into one policy. Most insurance companies today will allow this. Not only will this give you the same liability limits, but it can also give you significant savings. Some companies will give up to a 25% multi-car discount!

Insurance policies are full of coverages, exclusions and limits and there are probably other gaps you don’t know about that may affect how you are protected. The best way to fill these gaps is to get a 21 point protection review from one of our protection team members. This usually takes about 15 minutes or you can download a copy of our protection review by clicking here. Of course, feel free to give us a call at 866-869-3335 whenever you have an insurance question.

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