Does insurance follow the car or the driver?

When another driver is involved in an accident while driving your vehicle with your consent, how your car insurance covers other drivers depends on the scenario.

If the other driver is at fault

If the person driving your car is responsible for an accident with another driver:

• Your policy’s liability coverage would typically pay for the victim’s injuries and repairs to their vehicle.
• Your friend’s insurance, if they have coverage, may act as secondary if costs exceed your limits. Otherwise, you may have to pay out of pocket.
• If you have collision coverage, it will cover repairs to your vehicle after you pay your deductible.
• Personal injury protection (PIP), or MedPay, if applicable, can help with medical expenses (including your friend’s medical expenses) and more, regardless of fault.

If the other driver is not at fault

If the person driving your car isn’t responsible for the accident, the other at-fault driver’s insurance would pay for repairs to your car. Who pays for medical injuries (and other injury-related expenses) depends on your state, your policy, and the other drivers’ coverage.

If the other driver causes damage to your car while borrowing it

If the person driving your car damages it (for example, by colliding with a tree) and no third-party is involved, collision coverage (if you have it), would help pay for repairs after you pay your deductible.

If the driver is a family member or someone who lives in your household

Generally, all family members living in the same household must be listed on your policy. Therefore, your policy would typically cover the members you identified. If you exclude a driver from your policy, and they get into an accident, your insurance won’t provide coverage. Some states and insurers also reduce liability limits for non-listed drivers or exclude certain uses.

In many states, your car insurance would be considered the primary insurance if someone else wrecks your vehicle, according to the Insurance Information Institute (III). That means the coverage you've chosen on your policy would help cover the injuries or vehicle damage the driver caused.

Keep in mind that laws vary by state, so it's important to read your policy documents carefully to understand what's covered. If you have questions about your coverage and how it helps protect another driver, ask your insurance provider to help clarify.

Whether your insurance will kick in when another person gets in an accident in your car may depend on if you gave them permission to borrow it. This is referred to as "permissive" or "non-permissive" use.

Permissive use

Most car insurance policies will cover drivers you've listed on the policy, or anyone whom you give permission to drive your car, says Nolo.com. This means your insurance will likely cover another driver in the event of an accident, if they had your permission to drive your vehicle. Remember though, some states may provide reduced coverage when other people drive your vehicle.

Non-permissive use

If a friend or family member takes your car without your consent, you may not be held accountable for damage if an accident occurs. For example, if a friend borrows your car without your permission and causes an accident, your friend's insurance may be considered primary coverage. However, if your friend doesn't have insurance, you may still have to file a claim with your own insurance company to help cover the accident. Or, if a thief takes your car for a joyride and crashes into another vehicle, you likely won't be liable for damage and repairs to the other vehicle. But you may have to file a claim with your insurer to cover your vehicle's repairs.

Be sure to read your policy's terms and conditions or talk to your insurance provider, so you understand what's covered in your state. You may also want to talk to your provider about whether you can exclude drivers from your policy.

If your insurance company will cover a permissive driver's accident in your car, you may find that there are additional wrinkles. For instance, what if the accident caused extensive injuries or damage, and the cost of the claim maxes out the limits —the maximum amount your insurer will pay toward a covered claim —on your policy?

In this case, your friend's car insurance policy may be tapped to help cover the remaining costs. So, if your friend causes an accident that results in $15,000 in vehicle damage and your policy's property damage limit caps out at $10,000, their policy might then be tapped to pay the $5,000 difference. Keep in mind, this is assuming the person driving your car isn't an uninsured driver.

It's also possible that, even when your policy limits are high enough to cover a claim, your insurance company may seek reimbursement from the driver's insurance. Your insurance provider might pay the entire accident claim, but then reach out to your friend's insurance company to recoup some of the costs. Whether this happens will likely depend on your policy's terms and conditions, coverages and your state's laws.

If you're a licensed driver who doesn't own a vehicle, you likely don't have a need for a long-term car insurance policy. But what should you do if you need to temporarily borrow someone else's car? Here are some points to keep in mind:

• The car owner's insurance policy may help provide coverage if you get into an accident.
• You may be responsible for certain types of damage, depending on the coverages the owner's car insurance policy includes. For instance, if their policy doesn't include collision coverage, you may have to pay for the repairs to their car if you cause an accident.
• You may be responsible for costs that exceed the coverage limits on the owner's car insurance policy.

If you're planning to lend your car to a friend or family member, or borrow one from someone else, remember that it's a good idea to review both of your insurance policies first. Your insurance provider can also help answer any questions about your policy before you decide whether lending your car makes sense for you.