You could be liable if someone gets into an accident with your car
Letting someone borrow your car might seem harmless, but it could have serious financial implications. Unlike what many might think, car insurance does not usually 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. To make sure you don’t have to pay for someone else’s accident, avoid lending your car out to anyone who isn’t on your insurance policy. Here are some more things you should know about lending your car out:
If there is someone who regularly drives your car, add them to the policy
Whether you let a child or sibling regularly use your vehicle, or you lend it out to a service provider like a nanny or nurse, you should let your insurance company know. In many cases, it may be best to simply add them to your policy. Remember, when someone borrows your car, they also borrow your insurance. For many, it makes the most sense to simply alter that policy to fit their needs. While this may result in a slight increase in your monthly premium, it may help you avoid a much more expensive disaster.
Another common method of car-sharing involves car-sharing apps, which have become much more popular in recent years. While it may seem like a good way to make money, most insurance companies would probably strongly warn its customers against lending their car out through an app. While some car sharing apps may claim to offer some level of insurance, lending your car out to strangers on an app is simply asking for trouble. Even if drivers from the app don’t get in an accident, simply having your car on an app could increase your rates by itself. This is especially the case if your insurance company finds out on its own (instead of through you) that you’ve been lending out your car via an app.
If you do lend out your vehicle, it’s essential (at the very least) to make sure that they have their own car insurance
While your insurance company will usually be first to foot the cost of any accident, if your policy runs out, the driver’s policy may supplement it. Therefore, it’s extremely important to make sure the other person has insurance. If lending your car out to an uninsured driver results in an accident, it could have serious financial implications. Depending on the situation, you could be forced to pay out-of-pocket costs for the accident in addition to dealing with a potentially significant increase in your insurance rates.
When it comes to lending out your vehicle, it’s essential to be honest with your insurer
By now you’ve probably realized that lending your car out in anything other than an emergency is probably an unnecessary risk, unless you go through the official process of adding someone to your policy. Some insurers may be more lenient than others, but unless you’ve made specific arrangements with your insurer, it’s safe to assume that letting others drive your car can be perilous proposition. Either way, it’s best to find out your insurer’s specific policy before making any choices that could affect your financial future. When it comes to letting others borrow your vehicle, what you don’t know can hurt you. However, just a little research could save you serious cash– and it’s better to be safe than sorry.
To learn more about how to protect yourself from a variety of common insurance risks that could seriously impact your financial wellbeing, contact Avante Insurance today for a free consultation.