Ask ERIE: Whose Insurance Pays When Your Friend Crashes Your Car?

If you own a car, there's a good chance you've let a friend or family member borrow your vehicle every now and then. Maybe they were running a quick errand, their vehicle was in the shop or, perhaps, they were picking up your children from school.

Whatever the reason is, did you know that in the event the person borrowing your car gets into a crash, it's your auto insurance policy that would usually have to pay?

"In general, it's OK if a friend or someone else is driving your car and you've given them permission to do so," says Bob Buckel, vice president of personal auto, Erie Insurance. "You're typically covered if it's an occasional use situation—for example, they're going to pick up dinner and you've allowed them to use your car.

For the most part, auto insurance typically follows the vehicle rather than the driver. That means your insurance will likely pay if your friend crashes your car.

There are some exceptions, however.

One exception is when the damage and/or injuries exceed the available limits on your policy. In this instance, it’s possible that your friend’s insurance would cover the outstanding balance.

Another exception can occur when someone drives your car without your permission.

For example, imagine a college roommate grabbing the keys to use another roommate’s car.

"This is where it could get confusing," Buckel says. "Some courts say permission was implied, while others say express permission was necessary. This can vary by jurisdiction."

Will the Crash Go On My Record or Their Record?

When you let someone else drive your car, you are taking responsibility for their behavior. So, the crash becomes part of your insurance history.

It’s also possible that your rate could increase. Your insurer bases the rate on your likelihood of filing a claim.

When you loan your car to someone who may not be as careful or have as much experience driving as you, your rate needs to reflect that.

If you’re with ERIE, you can help avoid a rate increase with the ERIE Rate Lock® feature.^[1] (Not available in New York or North Carolina. Limited to three years in Virginia.) Even if you have a claim, your rate won’t change until you make certain changes to your auto insurance policy, such as adding or removing a vehicle or driver from your policy or changing your primary residence. An Erie Insurance Agent can tell you more about ERIE Rate Lock®.

The crash could also show up on your friend’s driving record. This is especially likely if a police report is filed after your friend crashes your car.

If your car is involved in a crash, Auto Security^[2] from Erie Insurance could give you additional peace of mind. If you’ve had your car less than two years and it gets totaled, ERIE will reimburse you the cost to replace it with the newest comparable model year (minus your deductible).

If you’ve had your car longer than two years and it gets totaled, ERIE will pay the cost to replace it with a comparable model that’s two years newer (minus your deductible).

The Lesson

Buckel advises drivers to be selective when letting others use their car.

“When you let someone borrow your car, you’re the responsible party,” Buckel says. “You’ll be protected within the limits of your auto policy, but there’s always a chance of something happening that exceeds those limits.”

He also says it’s important to let your insurance agent know if someone else regularly drives your car, such as other members of your family or friends.

“If someone is a regular operator of your vehicle, you should add them as a driver on the policy,” Buckel says. “If you intentionally fail to disclose the person as a driver, the claim could potentially be denied if that person has an accident.”

To learn more about auto insurance and ERIE Rate Lock®, contact an Erie Insurance agent in your community.

^[1]ERIE Rate Lock® does not guarantee continued insurance coverage. Not available in all states. Limited to three years in Virginia. Insured must meet applicable underwriting guidelines. Premium may change if you make a policy change. Refer to our disclaimer for more information.

^[2]Coverage is not available in all states. Eligible vehicles must carry both comprehensive and collision coverage and replacement must be made with a comparable model. See individual policies for specific coverage details.