Time for your favorite answer: MAYBE. While there are many black and white situations in insurance, there are plenty of GRAY ones too.
This is one of those questions where the answer will depend on the situation. So, let’s look at several common situations where you might need to lend your friend your car and whether or not your Ohio car insurance would cover this situation. Please note: these are just examples and general concepts. If you need a specific answer for your situation, ALWAYS contact your agent or insurance company for the final answer. There are 1000’s of insurance companies (and policies) out there and it’s impossible to know them all.
Situation #1- Your friend’s car is in the shop for repairs and he needs to borrow your car for a few days to get back and forth to work.
After reviewing several of our carriers’ policies, it appears this situation is not typically an issue. Providing “permission” to operate the vehicle is the big factor here. If you give permission to operate the vehicle, then coverage should apply. This is sometimes also referred to as permissive use.
One exception: some policies do not provide coverage to unlisted drivers (meaning not specifically shown on the policy as a driver). Again, when in doubt- contact your agent or company directly and get an answer so you’re not surprised.
Situation #2- Your friend knows where to find your spare set of keys and takes your car without asking.
Again, the idea of permission is super important here. If the person operating the vehicle does not have permission, then many insurance companies can (and will) deny a claim. This would be no different than if a total stranger stole your car. Both are operating without permission.
Situation #3- Your friend borrows your car with permission, but uses it for an activity that is excluded
Drag racing, demolition derbies or any sort of racing/speed contest is a big NO-NO. So even though the permission part is OK, what the car is being used for is not. So no coverage if the friend hurts someone or damages another’s property in the course of the activity.
This could also apply to delivery. For example, you loan your car to your friend temporarily and he or she uses the car to make deliveries (pizza is a common one). That’s a pretty big NO and could cause a claim denial.
Situation #4- Your friend has a fight with his girlfriend. He borrows your car with your permission and runs into her house in retaliation (this was a BIG fight)
So a pretty standard exclusion says damages caused intentionally are NOT covered. Ramming a house with a car is intentional. Not covered (yikes).
Situation #5- Your friend, who’s out of work temporarily, borrows your spare car with your permission, but unknown to you, starts driving for Uber as a way to earn money
Here’s a big exclusion- an “auto we insure” while hired by or rented to others for a fee or while available for hire by the public. “ Another big NO-NO.
Gee, do you get the idea that you may want to ask why your friend needs to borrow your car? Although we’re taught to trust our friends, it’s important to note that if your friend does something with your car that is excluded by the policy, YOU will be on the hook to pay out of pocket for any bodily injury or property damage to others. Depending on the situation, that could be big dollars. So, YES, you need to ask questions.
And you may be thinking “What in the world? Do these things really happen in the real world?” Sadly, the answer is yes.
And on for a final example that could EASILY happen….
Situation #6- The person driving the car is EXCLUDED from your auto policy
So, in the world of auto insurance, we have what’s called an EXCLUSION. Here’s an example: You have a perfect driving record. Your 18 year old daughter, who lives with you, does not. In fact her driving record makes her ineligible for your auto policy.
So in order to keep your auto policy okey-dokey, you EXCLUDE her as a driver. What this means is that the driver named in the exclusion is NOT covered on your auto policy, under any circumstance. So if the excluded driver drives the vehicle on your policy, has an accident and hurts someone or damages his property, the insurance company WILL NOT pay.
So although this situation stretches slightly beyond a “friend” it can certainly happen. So again, it bears repeating: if you let someone drive your car and he gets into an accident AND that someone is excluded, there is NO coverage. You get to pay for the injuries and damages out of YOUR pocket. Big yikes here.
Again, I can’t stress ENOUGH that although these are general examples, if you have a specific question about YOUR policy, you need to call your agent or insurance company to get the right answer for your situation.
Moral of the story
If you’re thinking of lending your car to a friend, you need to ask questions. Don’t make assumptions that he or she is covered. It may seem awkward, but could save you both a lot of trouble down the road (including a denied claim!)