How Does Car Insurance Work if You Borrow a Car?

Does Car Insurance Cover the Car or the Driver?

In most cases, car insurance follows the car, not the driver. So if you allow another driver to borrow your car and they cause an accident, your insurance would likely cover the damages, even if they aren't listed on your policy. This is because of what's known as permissive use, which means your policy may cover someone not listed on your policy if you give them permission to drive your car. But since it's your policy, you'd be the one facing a rate hike.

The same idea applies when you're the one borrowing a car. If you borrow a friend's car and get into an accident where you're at fault, their auto insurance policy will typically cover the damages to their car, assuming your friend carries collision coverage. Once again, the car owner's insurance rates could go up, even though they weren't driving at the time of the accident.

While the owner's insurance generally covers damages if you borrow their car, that's not always the case, such as when:

• You live with the car owner but aren't listed on their policy. If you live in the same household but aren't named on the owner's policy, you may not have coverage. It's a good idea—and insurers often require it—to make sure all household members who can legally drive are listed on the policy.
• You borrow the car frequently. You may not have coverage if you borrow someone's car regularly. Some policies only apply for occasional drivers, so coverage may depend on the owner's policy and how often you drive their car.
• You're an excluded driver. You won't be covered if the owner's policy specifically lists you as an excluded driver, perhaps due to a poor driving record or inexperience behind the wheel.
• You borrow the car for business. You won't be covered if you borrow a friend's personal car and use it for business purposes, such as making deliveries or driving for a rideshare service.
• You're using a car from a paid car-sharing platform. You aren't automatically covered if you book a car through a peer-to-peer platform like Turo. Depending on the company, you may need to pay for additional protection.

Before borrowing a car, make sure you understand your policy and whether you have coverage through the car owner's policy.

Learn more: What Does Car Insurance Cover?

Will Your Insurance Help Pay for Damages?

If you borrow a car and get into an accident, your insurance may help to cover damages, but it depends. Remember, car insurance generally follows the car, up to the owner's policy limits. That means their coverage is the primary coverage that pays for damages before your policy kicks in.

However, if accident costs go beyond the owner's coverage limits, your policy could then serve as secondary coverage to pay for any remaining damage.

Example: If you borrow a car and are at fault for an accident causing $60,000 worth of damage, but the owner's liability insurance is capped at $40,000, your policy may cover the remaining $20,000. In this scenario, both your insurance rates and the owner's could go up.

Can You Borrow a Car if You Are Uninsured?

You can borrow a car if you're uninsured, but the vehicle's owner must have insurance that meets your state's minimum car insurance requirements. You also should have their permission to use their vehicle to help ensure you're covered under permissive use terms.

That said, borrowing a car without your own policy could put you in serious financial trouble if you're at fault in an accident. If the owner's policy limits don't cover the entire cost of the damages, you'd be responsible for the remaining costs. Using the previous example, if you cause an accident that results in $60,000 in damages and the owner's liability coverage is limited to $40,000, you could be liable for paying the remaining $20,000 out of pocket.

To avoid this risk, make sure you're adequately covered before borrowing a car. If you don't own a car but regularly borrow one from someone else, you might want to purchase non-owner car insurance.

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What Should You Consider Before Borrowing a Car?

Driving without adequate insurance coverage can lead to severe financial consequences, so it's crucial to consider the following factors before borrowing a car:

• The car owner's policy: Make sure you have explicit permission to borrow the car and if the car owner's insurance covers you under permissive use. It's also a good idea to verify the owner's policy is active, what types of coverage they have (liability only or full coverage) and that its coverage limit is sufficient.
• Your own insurance coverage: Check your policy or contact your insurer to determine whether your policy provides secondary coverage beyond the owner's policy limits. Make sure you understand what costs you might be responsible for if the car owner's insurance doesn't cover everything.
• Your driving record: If you're an inexperienced driver or your driving history includes multiple accidents or serious offenses such as a DUI, it could have severe consequences for the owner. They could be held liable and sued for allowing an unsafe or inexperienced driver to use their vehicle.
• The car's condition: Is the car in good working order? For example, if the car is running on worn-down brakes or bald tires, the safety and financial risk of an accident could be too great to risk.
• Your financial risk: If you're at fault in an accident, could you afford to pay for any damages not covered by the owner's policy? Would you be able to cover the deductible if the car owner files a claim?

The Bottom Line

When you borrow a car, the owner's policy typically follows the vehicle and is the primary coverage. If accident costs exceed their coverage limit, your insurance may serve as secondary insurance, but check with your provider to be certain. If both policies pay out on a claim, expect higher premiums for both you and the car owner.

Whether you're borrowing a car or driving your own, it's always wise to review your coverage periodically to make sure it's adequate for your needs and that you're not paying more than you need to. Getting rates from multiple providers can help you find the best deal and save money on your car insurance. You can also try Experian's free car insurance comparison tool to streamline the process. Enter a few details about yourself to get personalized quotes from several top auto insurance companies.