Does My Insurance Cover Me if I Am Renting or Driving Someone Else's Car?

When you're behind the wheel of a rented or borrowed vehicle, you might find yourself questioning the extent to which your insurance policy or the vehicle owner's policy protects you. The specifics can vary based on factors such as the terms of your insurance policy, the nature of the rental agreement, and the permission granted by the owner of the borrowed car. It's crucial to understand these details before you take the keys, as they will determine the extent of your protection in the event of an accident.

Permissive Use: Giving Permission to Others to Drive Your Car

Permissive use is when you give permission to someone to drive your car. Insurance companies are very aware that this happens often, so it is perfectly acceptable as long as permission has been granted. If a claim is made while someone who is not the owner of the car is driving (given they’re accepted under permissive use; see more details below), the policy that the vehicle is insured under will pay out for a claim. Keep in mind that this can vary by state and insurance provider.

Permissive use does have restrictions on who you can and can’t give permissions to. The following are examples of people you can give permissive use to:

• A family member who does not live with you and carries their own car insurance
• A coworker or friend who carries their own car insurance

These are all people who have their own insurance elsewhere and will not be operating your vehicle on a regular basis.

The following are examples of people you can’t give permissive use to:

• An unlicensed driver
• Someone who lives in the same home as you
• Anybody who has frequent access to the vehicle (more than once a month)

With car insurance, all licensed drivers in the household should be listed on your policy. Permissive use is not to be used for people who live in your household. They should either be included on your policy or excluded from driving the vehicle altogether.

Car Insurance Coverage When You Drive Someone Else’s Car

In general, car insurance will typically follow the car no matter who is driving it (assuming the driver has permission to drive it). The following coverage will apply if you cause an accident while driving someone else’s car:

• Comprehensive and Collision: These are the coverages that take care of damages to the insured vehicle. They will work as usual if you are driving a vehicle that you have permission to drive. If you crash and the vehicle needs to be repaired or replaced, the insurance policy that the car is on will typically pay out for this.
• Roadside Assistance: This coverage takes care of convenience issues pertaining to the cars on the policy. If the policy associated with the car has Roadside Assistance, you can use that coverage to have someone come out service the car.
• Personal Injury Protection/Med Pay: These are coverages that pay for the injuries of the driver and the occupants of the vehicle if you are in an at-fault accident. These coverages will typically cover you while you are driving someone else’s car, just as they would if the owner was the one driving it.
• Liability: This is the coverage that pays out in the event the driver of a car causes an accident where other people are injured or property is damaged. This coverage may be split between both insurance companies to pay for medical bills, property repairs, lawsuits, etc. The car owner’s insurance company may act as the primary coverage and pay for part of the claim, while your insurance may act as secondary and pay the remaining.

Car Insurance Coverage When You Rent a Car

Nearly all of the coverages on your personal car insurance policy will extend to a vehicle that you rent, as long as that vehicle is a similar vehicle class. If your policy covers a personal use vehicle, then you should have coverage extended to any personal use, non-commercial vehicle you rent. If you rent a U-Haul to move, you likely would not have coverage extend for physical damages to the U-Haul given that it is a commercial-use vehicle.

The three main types of coverage offered by rental car companies are a damage waiver for physical damage to the vehicle, extended liability, and a form of personal injury coverage. These apply whether you are renting a car in your state or across state lines.

Loss Damage Waiver

This is a waiver that grants the renter immunity from being responsible for any damages to the rental car. It is important to note that if you have comprehensive and collision coverage on your personal policy, this will carry over to the rental.

If you do not opt in for this damage waiver, any damages that are caused to the car will still be paid for by your car insurance company after your deductible.

If you opt into the damage waiver, the rental car company would pay for the damages, and you would not have to worry about paying a deductible.

If you are renting a car and you do not have comprehensive and collision coverage, you are solely responsible for any damages caused to the car, so you should look into purchasing the loss waiver to avoid being on the line for large repair costs in the event of a claim.

You might consider purchasing a damage waiver on top of your comprehensive and collision coverage if you are driving in an unfamiliar place where the risk of loss is higher. It also avoids any claim from hitting your driving history if you have an accident and the rental car company pays for it.

Extended Liability

This is additional liability in excess of the liability coverage that you have on your current policy. If you do not have any insurance, you should buy this coverage so that you have funds to pay for any bodily injury or property damage that you cause to others in the event of an accident. If you have a personal car insurance policy, liability from that policy will be carried over to the rental car.

Personal Injury Coverage

Just like liability, this will carry over from your personal policy if you have Med Pay or Personal Injury Protection on your auto policy. You can get some extra coverage here if you choose to, but it may not be necessary if you are comfortable with the limits on your current policy. Some states offer medical payments only, while others offer personal injury. Consult with your agent to understand the coverage that you have so you can feel comfortable rejecting this coverage when renting a car if you choose to do so.

Visit our Digital Agent or reach out to a Goosehead agent today to learn more about your car insurance options and coverages.