Whose Insurance Pays in a Borrowed Car Accident?

Back in college, my roommate Stephen was nice enough to loan me his car to visit Trader Joe’s off campus. All was going well until I decided to top up the tank on the way home. I pulled into a QuikTrip and one of those concrete pylons just… snuck up on me. 

Crunch. 

When I got back to campus and confessed, we both proceeded to stare at his $1,400 bumper in total silence. Stephen, to his credit, wasn’t angry. We both just felt an overwhelming sense of… now what? 

So what does happen if someone else crashes your car? Will insurance cover it? Does it matter if they had your permission first? 

Here’s what to know before lending out your keys.

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A Quick Recap of Car Insurance 101

Before we go deeper, let’s do a quick recap of how auto insurance works. 

In a nutshell, car insurance helps to protect you from the various bills and expenses that can arise from an auto accident. 

There are multiple forms of coverage for different scenarios: 

• Collision insurance helps to cover your own repair bills if you cause an accident. 
• Liability insurance helps to cover the other driver’s repair bills (and their medical bills) if you cause an accident. 
• Comprehensive insurance helps to cover the cost of repairing or replacing your car after “incidents.” These are things that can happen to your car outside of an accident, including theft, vandalism, weather damage, animal-related damage, and more. 
• Uninsured/uninsured motorist coverage helps to cover your bills if the other driver caused the accident, but they lack sufficient insurance coverage (or any insurance at all) to cover what they legally owe you. 

READ MORE: What Is Liability Car Insurance (and How Much Do You Really Need)? 

Does insurance follow you or the car? 

Let’s pretend you have a roommate named Kayla who asks to borrow your Mazda CX-5. You don’t mind lending it to her since you know that she’s a good driver — her car is just in the shop right now. 

Still, as you hand over the keys, you can’t help but wonder: If Kayla gets into an accident, whose insurance would step in? Yours or hers? 

“It depends on the company, but most of the time, the insurance policy follows the car — not the driver,” says Connor, an agent we spoke to at a major insurance provider. 

That means that if Kayla gets into an accident while driving your car, it’ll typically be your insurance that kicks in — not hers. 

But the key word is “typically.” 

What Happens If Someone Else Crashes My Car? 

In most cases, if you loan someone your car and they crash it, your own insurance policy would apply. 

But sometimes there could be a totally different outcome, depending on several factors:

• Did you let them borrow your car? 
• How often do they typically borrow it? 
• Were they impaired? 
• Was it even their fault? 

Let’s explore each scenario before you consider loaning out your $25,000 asset. 

Scenario 1: They had permission and it was a one-time thing

If your friend had permission and rarely (if ever) borrows your car, most reputable insurance companies would treat the situation as if you were driving. 

“As long as they had permission to borrow your car and it’s not a regular thing, they’d most likely be covered under your insurance policy,” says Connor. “If they borrow it like three to four times a week, that’s a different story.” 

Scenario 2: They had permission but it wasn’t a one-time thing (and they aren’t listed on your insurance)

If someone borrows your car all the time and then crashes it, your insurance company may be far less understanding. They may deny your claim for the accident, raise your premium, or cancel your policy altogether. 

The reason is that your insurance company assumes you’re the only one driving your car 99% of the time. If it’s you and your cousin Bert, they’ll want to factor Bert’s driving history into your overall premium calculation. 

That’s why many insurance companies (and even some states) require you to list everyone who you live with on your auto insurance policy. They simply assume that if you share a roof, you may share a car from time to time, too. 

Scenario 3: They didn’t have permission to borrow your car

If someone took your car without asking and then crashed it, it would typically be their insurance covering the damage. 

However, if they don’t have insurance (or the funds to reimburse you), you may still have to file a claim with your insurance to help cover the accident.

Insurance companies call this “non-permissive use.” Policies may vary slightly by provider, but the situation mostly tends to play out in the manner above. 

Scenario 4: They were irresponsible, incapable, or impaired

Let’s say you go to a party, get drunk, and let your less-drunk friend drive you both home. If that person crashes your car, things could get real messy real quick. 

In that case, you could be liable for any injuries or damage they cause, depending on your state’s laws. 

“If an impaired driver caused an accident in your car, we might still cover it,” says Connor. “But it totally depends on the company.” 

Moral of the story? Lyft and overnight parking are always, always cheaper than drunk or tipsy driving. 

Scenario 5: It was the other driver’s fault

Let’s say someone borrows your car and becomes the victim of an accident caused by someone else. What then? 

“If they were hit by a bad driver, that would fall under the other driver’s policy,” says Connor. 

“So you’d file a claim with the at-fault driver’s insurance. If they don’t have enough insurance to cover your damage, you’d then fall back on your own uninsured/underinsured motorist coverage.” 

READ MORE: Here’s the Best Way to Shop for Car Insurance

FAQs

If someone else crashes my car, does my insurance go up?

Any time you file a claim with your insurance, your rates can go up — regardless of who was driving. 

What happens if I crash my parents’ car?

If you live with your parents and are listed as a driver on their policy, their insurance would typically cover it (up to their coverage limits, of course). 

If you live with your parents and are not listed on their policy, their provider may deny their claim and cancel their policy. 

If you don’t live with your parents and rarely ever drive their car, their insurance would probably cover it. 

Can I add a friend to my car insurance policy?

Insurance companies will only let you add friends to your policy if they live at the same address as you. 

Do you need your own car insurance to drive someone else’s car?

No. As long as you aren’t borrowing the same car with regular frequency (say, twice a week), you don’t need your own policy, since the vehicle owner’s policy will usually cover you. 

Wrapping Up

Even though Stephen’s insurance probably would’ve covered his $1,400 bumper, we decided not to file a claim to avoid sending his premiums to the moon. Instead, Stephen had a salvage bumper installed for $600 and I covered the cost. It stung, but it was fair to Stephen. 

So if someone else crashes your car, at best you’ll have to file a claim and watch your premiums go up. That, or ask your friend to pay for repairs out of pocket. 

Neither is an ideal scenario, so you may want to think carefully before loaning out your keys. You may want to give them a lift (or a Lyft) instead. 

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