Borrowed Cars - Is Your Friend Covered in a Car Accident? Insurance & Borrowing

If you borrow a friend’s car and crash it into a telephone pole, whose insurance will cover the damages - yours, your friend’s, or none of the above? What if instead of a telephone pole, you run over a pedestrian’s big toe? What if instead of you borrowing your friend’s car, someone you don’t know steals your car and hits the telephone pole and/or big toe? Who will foot the bill (no pun intended)? If you’re not sure of any or all of these questions, then you’re like the vast majority of car insurance policyholders. It’s a scary thought - we frequently let others borrow our cars without considering the insurance ramifications. Luckily, after reading this article, you will know the answers to the above questions, and you’ll be an authority among your peers.

Scenario #1 - You Borrow Your Friend’s Car When you borrow a friend’s car (with permission), your friend is taking on what is known in insurance-speak as “vicarious liability.” In other words, your friend will be responsible for both property damage (telephone pole) and bodily injury (pedestrian’s big toe), and his insurance will have to cover the damages. You? You’re off scott-free, although you might lose a friend if your accident causes his car insurance rates to go up.

Scenario #2 - Someone Steals Your Car If your friend is on the hook for damages you cause while borrowing his car, are you liable for damages caused by a thief who crashes your vehicle? The answer is no, and the reason is that there is no “vicarious liability,” since you did not consent to letting the thief “use” your car. If Sam the Carjacker sticks you up at a red light, kicks you out of your car, and proceeds to crash it into a Hardee’s, then your insurance company will not foot the bill. Who will? That’s up to Sam and Hardee’s. As for the damage to your car, that would be covered by your own collision and/or OTC coverage.

Scenario #3 - Uncle Roberto Borrows Your Neighbor’s Car Now imagine you have an elderly Uncle Roberto. He moved in with you a few years ago when he was recovering from a vicious bout with shingles (the roofing kind, not the disease) and has never left. One day when you’re away at work, Roberto asks your neighbor if he can borrow her car. She consents, and then Roberto proceeds to drive over a pedestrian’s big toe and bounce off a telephone pole directly into a Hardee’s. Whose insurance will cover this mess? In many states, you would be responsible for your uncle, and thus, your car insurance would be liable.

The reason: The “insured” does not have to own the auto involved in an accident in order for liability coverage to apply, and the “insured” is defined not only as the named “insured” and his or spouse, but also any child (including foster child) or anyone related to the named “insured” by blood, marriage or adoption who is a resident of the named “insured’s” household. The lesson: It’s important to understand just who and what is covered by your car insurance. Oh yeah, and friends don’t let friends drive over pedestrian toes.