How does permissive use work?
Permissive use is exactly what it sounds like: someone else drives your car after you have given them permission to do so. We have all been in a situation where someone lets us drive their car, or vice versa, and insurance companies are very aware that this happens. This is perfectly acceptable as long as the owner of the car has given permission to do so. If someone has permission to drive the vehicle from the owner/insured, the policy that the vehicle is insured under can pay out for a claim. Keep in mind that this can vary by state and insurance provider, but the below applies to most situations.
Permissive use begins to get a little more complicated when we start thinking about who we can and cannot give permission to. Here are some examples of people who we can give permissive use to:
A family member who does not live with you and carries their own car insurance
A coworker who wants to take your new car for a drive
A friend that needs to borrow your truck to go and pick up a used sofa that they found on Marketplace
These are all people who have their own insurance elsewhere and will not be operating your vehicle on a regular basis.
Here are some examples of people who we can’t give permissive use to:
An unlicensed driver
Someone who lives in the same home as us
Anybody who has frequent access to the vehicle (more than once a month)
With auto insurance, you always want to be sure that all licensed drivers in the household are listed on your auto 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 vehicles altogether.
Does My Auto Policy Cover me for driving someone else's car?
In some cases, it can and will. In others, not so much. This is a topic that varies by the state, carrier, and situation.
In general, auto insurance will typically follow the car no matter who is driving it (Assuming the driver has permission to drive it). Here are the ways that some coverages 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. These two coverages will work as usual if you are driving a vehicle that you have permission to drive. If you run into something 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 and Rental Reimbursement: These are coverages that take care of convenience issues pertaining to the cars on the policy. Let's say you are driving your friend’s Tesla, and you end up getting a flat tire. If that friend has Roadside Assistance on their policy, you can use that coverage to have someone come out and change the tire or tow the car to a location where it can be prepared. The same applies to the rental car coverage. If you run into a pole in the parking lot, and that Tesla has to be put in the shop for a couple of days, the owner can still get a rental car to get around while the car is out of commission.
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 your friend’s car just as they would if they were the one driving it.
Liability: This is the major coverage on any auto insurance policy. This is the coverage that pays out in the instance that the driver of this car causes an accident where other people are injured or other’s property is damaged. This coverage will pay for medical bills, property repairs, lawsuits, etc. This coverage will usually follow the car as well. If you are driving your friend’s Tesla and you cause an accident, the policy that covers the vehicle will typically pay out to take care of bodily injury and property damage to the other person. This can change with factors such as recklessness or negligence. The insurance company can possibly pass the claim along to your insurance company if it makes sense to do so. This will likely happen if the insurance for the car has it’s limits reached.
How does my car insurance work when I rent a car?
Nearly all of the coverages on your personal auto 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. You may get a little shaken up with the process of accepting or neglecting the additional insurance coverages offered by the rental car company due to lack of understanding, but this should clarify it for you.
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! Let’s take a look at these.
Loss Damage Waiver: This can be really helpful but may not be nearly as necessary as the rental car companies make it seem. 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 auto 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 auto insurance company, you will just need to pay 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 definitely look into purchasing the loss waiver to avoid being on the line for large repair costs in the event of a claim. You might ask yourself why you would ever purchase this coverage from the rental car company if you have comprehensive and collision coverage on your auto insurance? Most of the time you likely wouldn’t, especially given the high cost of the coverage, but you might consider purchasing it 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 definitely want to have 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 auto insurance policy, liability from that policy will be carried over to the rental car. Another reason to carry high limits of liability on your personal auto policy, it’s inexpensive and will help you feel better about relying on it when renting a vehicle.
- 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 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.
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