Car insurance generally follows the car. When someone borrows a car with the owner’s permission, the owner’s policy usually pays first, and the driver’s own policy may cover what’s left. The Texas Department of Insurance says that if you cause an accident in a borrowed car, “the car owner’s insurance pays the claim,” and your own insurance pays if the owner’s coverage isn’t enough.
Excluded drivers, unlisted household members, policy wording and some state laws can change that order.
Key Takeaways
- With permission, the owner’s liability coverage usually pays first, up to its limits. The driver’s own policy generally pays only after those limits are used up.
- Repairs to the borrowed car usually depend on the owner’s collision coverage and deductible. A borrower’s own policy may add collision coverage, usually as excess.
- An excluded driver generally isn’t covered by the owner’s policy, and leaving a household member or regular driver off the policy risks a reduced or denied claim.
- The claim usually goes on the owner’s policy, which some insurers say can raise the owner’s premium. Policy wording and state law can make the driver’s insurance pay first.
How Permissive Use Works
Letting another licensed driver use your car is called permissive use. Wisconsin’s insurance regulator says a policy covers “anyone who has permission from the insured to operate the insured vehicle.”
Arizona’s insurance department spells out the order for a car borrowed from a friend or relative: “The policy covering the vehicle would be primary,” and “in most cases” the borrower’s own policy applies “on an excess basis,” after the primary policy’s limits “have been exhausted.” State Farm likewise calls the driver’s insurance “secondary.”
Example: a friend borrows your car and causes a crash, and the other driver has $70,000 in injury costs. Your $50,000 per-person bodily injury limit pays $50,000, and your friend’s policy may cover the other $20,000, up to its limits. RateFrog’s guide to car insurance liability limits explains how those caps work.
Who Pays in Common Borrowed-Car Situations
| Situation | Usually pays first | What to know |
|---|---|---|
| A friend borrows your car and causes a crash | Your liability coverage, up to your limits | Your friend’s policy may pay after your limits run out. |
| You borrow a friend’s car and cause a crash | Your friend’s policy | Your policy may pay if the owner’s coverage falls short. |
| Your unlisted teen who lives with you crashes your car | Depends on your policy and insurer | GEICO says leaving a frequent driver off can mean “reduced coverage or even a denied claim.” |
| A driver excluded from your policy crashes your car | Generally not your policy | Maryland says there is “no coverage of any kind” under your policy. |
Damage to the Borrowed Car
Repairs to the borrowed car usually come from the owner’s collision coverage, minus the owner’s deductible. Farmers notes that “if you don’t have collision coverage on your policy, damage to your car won’t be covered.” RateFrog also compares collision vs. comprehensive coverage.
The borrower’s policy can sometimes help. Progressive’s Nevada policy form extends the driver’s own collision and comprehensive to a “non-owned auto,” but that coverage “will be excess.”
Excluded Drivers and Unlisted Household Drivers
An excluded driver is someone a policy names as not covered. Maryland’s consumer guide to auto insurance says there is then “no coverage of any kind available under your policy for the damage the excluded driver has caused,” and GEICO says that holds “even if you allow an excluded driver to use your vehicle.” Exclusion rules vary by state.
Progressive says family members who live with you and drive your car, “including a teenager or your significant other, should be listed as drivers on your policy.” If you drive a relative’s car every day, note that Texas says most policies don’t cover a car that isn’t yours but “you could use regularly, like a company-owned car.” See RateFrog’s look at whether Progressive will insure a car that’s not in your name.
What Happens to the Owner’s Insurance
The claim usually goes on the owner’s policy. Plymouth Rock says such a claim “could increase your premiums,” and AAA’s Auto Club Group says a crash caused by a permissive driver “can result in a premium increase.” Progressive, State Farm and GEICO don’t address the owner’s rates on their lending pages, so ask your insurer.
When the Driver’s Insurance Can Pay First
Policy wording can flip the order. In Acuity v. Progressive Specialty Insurance Co. (2023), the Supreme Court of Ohio enforced a Progressive policy that covered permissive drivers only if they were “not insured for liability coverage by any other insurance policy.” The 16-year-old driver was listed on his father’s Acuity policy, so Acuity had to cover him. The ruling rested on “the plain language of the policies at issue,” so other policies and states can come out differently.
For liability claims, California law generally makes the policy that lists the car primary. But when a customer drives a car insured by a dealer or repair shop, Insurance Code Section 11580.9 makes the business’s policy excess over the driver’s own insurance.
Injury coverage can follow the person, too. Under Michigan law, a no-fault policy generally covers you, your spouse and relatives who live with you for injuries arising “from a motor vehicle accident,” including in someone else’s car. RateFrog’s personal injury protection guide explains PIP.
Rental Cars and Non-Owner Policies
Texas says most policies cover accidents while you’re “driving a rental car.” Arizona warns that “most personal auto policies do not provide any coverage for the rental truck” you rent to move. If you don’t own a car but borrow one often, a non-owner policy covers injuries and damage you cause to others. RateFrog’s guide to non-owner car insurance explains how it sits behind the owner’s policy.
Before You Lend or Borrow a Car
- Owners: GEICO says some insurers may reduce liability coverage for permissive drivers, “sometimes applying only the state’s minimum limits.” Check your policy, confirm the person isn’t excluded, and list anyone who lives with you or drives your car regularly.
- Borrowers: ask your insurer whether your policy covers cars you don’t own, including collision.
- Both: agree ahead of time on who pays the deductible if something happens.
More coverage explainers are in RateFrog’s car insurance guides.
Frequently Asked Questions
What If the Car I Borrow Has No Insurance?
Your own policy usually becomes the main coverage. Arizona’s regulator says “most companies will treat your policy as the primary coverage for the borrowed car.” If you don’t have a policy either, there may be no liability coverage at all.
Who Pays If Someone Drives My Car Without Permission?
Permissive use doesn’t apply. For non-permissive use, Progressive says “the driver’s insurance may be responsible for the damages and injuries resulting from the accident.” Ask your insurer how your own policy handles it.
How Often Can Someone Borrow My Car Before They Need to Be Listed?
Progressive, State Farm and GEICO don’t give a number. Progressive says anyone who regularly drives your car should be listed, and State Farm suggests adding someone who will drive it for an extended period.
Can the Owner Be Held Responsible for the Borrower’s Crash?
In some states, yes. New York’s Vehicle and Traffic Law Section 388 makes an owner “liable and responsible” for injuries or damage caused by the negligence of anyone driving the car “with the permission, express or implied, of such owner.” Owner liability rules differ by state.
Sources
- Texas Department of Insurance: Auto Insurance Guide
- Arizona Department of Insurance and Financial Institutions: Borrowed or Rented Vehicles
- Wisconsin Office of the Commissioner of Insurance: Frequently Asked Questions, Automobile Insurance
- Maryland Insurance Administration: A Consumer Guide to Auto Insurance (PDF)
- Progressive: Does Car Insurance Cover the Car or Driver?
- Nevada Division of Insurance: Progressive Nevada Auto Policy, Form 9611D NV (PDF)
- State Farm: Can Someone Else Drive My Car?
- GEICO: What Is Permissive Use Car Insurance?
- Plymouth Rock Assurance: Does Car Insurance Cover Someone Else Driving Your Car?
- AAA (The Auto Club Group): Does Car Insurance Cover the Car or the Driver?
- Farmers: What Happens if a Friend Wrecks My Vehicle?
- Supreme Court of Ohio: Acuity v. Progressive Specialty Ins. Co., 2023-Ohio-3780 (PDF)
- Court News Ohio: Auto Policy of Driver Must Pay for Damages in Accident When Driving Friend’s Car (2023)
- FindLaw: California Insurance Code Section 11580.9
- Michigan Legislature: MCL 500.3114
- New York State Senate: Vehicle and Traffic Law Section 388