Tom's Blog

Loaning Your Car- A Good Idea? 

Loaning your car – a good idea? It seems harmless enough to hand your keys over to someone who asks to use your car until an auto accident occurs. That’s when the confusion sets in, and you may reconsider whether that was a good idea after all. If you aren’t clear on the coverage issues that may arise when someone else drives your car, you may want to read on.

Assume for a moment that a friend or neighbor asks to use your car for the day to pick up children from school and run a few errands. If that person causes an auto accident you may not realize that coverage typically follows the car and not the driver. So, before you readily hand over the keys, be aware that your insurance will typically be the one to absorb the claim for any injuries and property damage claims even though you weren’t operating your car at the time. 

Loaning Your Car is Not Risk Free 

Giving someone permission to operate your vehicle means you are assuming the risk of an accident happening. So what does that mean for you? Below are some common scenarios that could potentially jeopardize your financial standing:

• Your friend asks to use your car while hers is being repaired, and she causes an auto accident involving two other vehicles. The accident totals the other two cars, and the drivers suffer extensive injuries requiring hospital admission. Your auto limits of liability under your N.C. auto insurance policy are exhausted as a result. Now you learn you may be responsible for any expenses exceeding your limits of liability.

• Your daughter, who resides in the home, occasionally uses your car and allowed her boyfriend to drive the car without your knowledge. Although she is considered a “named insured” under your N.C. auto insurance policy she is a relative residing in your home, the boyfriend is not, and you did not give him permission to operate your vehicle. People who drive your car without permission are not covered. So what does that mean for you if he has an auto accident? This is where “permissive use” is not always black and white, and further investigation would be needed to determine coverage. 

Know the Facts Before You Hand Over Your Keys! 

It is recommended that you communicate regularly with your local N.C. independent insurance agent to discuss the people residing in your household and those who regularly drive your car(s) so that your insurance can adequately reflect who is a “named insured” and/or listed driver under your auto insurance policy.

Paramount Insurance Agency is here to assist you with any questions you may have concerning coverage when loaning your car, permissive use, or any other insurance questions regarding your N.C. auto insurance policy. Call us TODAY at 336-869-3335. So, do you think loaning your car is a good idea?