If I’m driving someone else’s car and I have an accident, what happens?

This particular topic can have several different answers depending on what insurance company that you use.  Plus, these types of things are always changing so It’s a good idea to ask your insurance agent how it would play out with your current insurance company.  I’ll try to give you some different scenarios that I dealt with and how they played out.  I can’t stress enough, to keep in mind that this stuff is always being reviewed and constantly changing so double check with your agent just to be sure!

What Your Policy Reads:

Here are some important things that you will want to make sure you read on your policy.  All of these things help determine how the scenarios will play out.

Named Insured - The person named on the Declarations page.  A Spouse, if living at the same address, is given the same rights as the Named Insured.  If a spouse moves out, typically they remain a named insured for a specific amount of time (90 days)  unless they obtain coverage elsewhere.  In the simplified language of the Auto policy, the  named insured is simply You.

Resident Relative – A person related to the named insured by blood, marriage, or adoption (including a foster child) and living at the same address.  A student, although away at school, is still considered a relative.  It doesn’t matter if it’s a Brother, Aunt, Uncle, Cousin or 3rd cousin.  If they are related and live with you, they are a resident relative.

Spouse – means a person who is: 1). legally married to the first person shown as a named insured on the Declarations Page; and 2). domiciled in: a). the same household as that named insured; or b). a different household from that named insured but shares economic and non-economic burdens with that named insured.

Domicile – 1. A residence; a home.  2. One’s legal residence.  (dom·i·ciled, dom·i·cil·ing, dom·i·ciles) – 1. To establish (oneself or another person) in a residence. 2. To provide with often temporary lodging.  To reside; dwell.

At Fault Accident – Each state has it’s own definition, but basically it is an accident that you  are considered 51% or more at fault for.  An example would be driving too fast for road conditions (sliding on ice and hitting something), backing into another vehicle, hitting a parked vehicle, rear-ending the vehicle in front of you (following too closely), etc.

Household – A household usually means anyone living with the person named on the policy or any resident relatives.

General Auto Policy Exclusions and Guidelines:

If you have ever read your Personal Auto policy you will see that it does not contain a General Exclusions section.  Many of the exclusions are repeated two or three times and can get very confusing when your trying to read the policy.  So here are a few of the ones that tend to show up regularly.  Again, you would want to double check with your company as they are all different.

There is NO COVERAGE for:

  • War
  • Nuclear Energy or Radiation
  • Intentional Acts (done on purpose)
  • Using a vehicle without a reasonable belief that you were entitled to do so (stealing a car)
  • Vehicles with less than four wheels (no cycles, they have their own policy)
  • Vehicles used as public or livery conveyances (cars for hire, like a taxi)

Just like the exclusions above there isn’t a section that says General Policy Guidelines, so here are the ones that tend to come up over and over again:

  • Primary coverage goes with the car (except No-Fault States) – Assume I have an auto policy and you have one .  If I am driving your car, either policy can pay.  Whose policy pays first?  The rule is usually pretty simple.  The Car’s!  It’s your car; your policy is primary….for everything… damage done to the car or by the car.. for bodily injury sustained by those in the car or outside of the car.  If your limits are not enough (or your policy is expired), my policy can pay as excess coverage.
  • So basically from the above statement is sounds like  I should never drive my car, and you should never drive yours.  If you and I have equal policies, I have twice as much coverage (given the primary and excess discussion above) driving you car as I do driving my own and vice versa.  Obviously, insurance companies are not staffed with idiots.  Therefore, I have coverage driving your car as long as it is Not provided for my regular and frequent use. If I am putting 100,000 miles a year on your car, my policy provides no coverage.
  • Insurance makes you whole, not rich. If circumstances are such that you could collect under more than one section of the policy, you only get paid once.
  • No-Fault Insurance is different – It does two things: it makes automobile insurance mandatory, and it makes those states that have it a No-Fault state (like Michigan).  The intent of No-Fault is that if you and I collide at an intersection, my policy would cover my car and my body; and your policy would cover your car and your body.

Lets get to some scenarios!

A Family Member Drives Your Car and Has an Accident:

You have insurance on your vehicle and your family member drivers your vehicle with your permission and has an accident.  Lets say that for this scenario that your family member is a rated driver on another insurance policy and does not live with you.  They were driving down the road got distracted and hit a mailbox.  So What happens?  Does your insurance go up? Are you charged with an At Fault Accident?

Well, in this scenario because the family member does not live with you, and because they are rated on another policy then your insurance policy should not be charged with an at fault accident.  The accident will follow the driver.  Your insurance company will still pay for the damage if you carry collision coverage on your policy.  You will be subject to your deductible.   You might see your rates increase because of the claim, but you should not have an at fault accident on your policy because of this.   NOTE** An At Fault Accident, is considered 3 insurance points for the 1st one and 4 points for every one after that, Plus if you have an at fault accident you could lose your Accident Free Discount if your receiving one.

The Boyfriend/Girlfriend Saga:

In this scenario, the boyfriend or girlfriend is driving the boyfriend or girlfriends vehicle and they have an At Fault Accident.  There are probably a ton of what if’s that will arise out of this scenario.  You will want to check with your insurance company to find out how they handle boyfriend/girlfriend relationships.  As, most of them are all going to be different depending on the Insurance company involved.  At the company that I worked for, we would advise them to both be named on the policy.  The boyfriend the 1st named insured on his vehicle and the girlfriend the 2nd named insured on his policy, and the other way around on the girlfriends vehicle.  By naming each person on each others policy it also qualified them for the Multi-Car Discount.  Now, this was being looked and and could of possibly been changed, so again you would want to ask your Insurance carrier how the discounts would apply.

So if each person is named on the other person’s policy and they have an At Fault Accident, then the accident should be reflected on your policy.  So it doesn’t matter who is driving or who’s vehicle they are driving they are both named on the policy and therefore the At Fault Accident would apply.  If your both insured with the same carrier, then it will probably be listed on the policy of which ever vehicle was being driving at the time the accident occurred.  They should not charge you with an At Fault Accident on both policies as they would be charging you twice for the same thing.

If your not each listed on each others policy and you do not live together, then it could have a different outcome.  First, the insurance company is going to try to determine if the At Fault Party is an exposure to the household in question.  So if the boyfriend was driving the girlfriends car and had an accident, were talking about the girlfriends household.  The boyfriend is not named on her policy and does not live with her, but he does have his own insurance for his vehicle.  The first question they will probably ask is how often does the boyfriend drive the girlfriends vehicle?  If it’s more than 30 days out of a calendar year, then they are more than likely going to rate for the boyfriend on the policy and charge it with the At Fault Accident.  When I say they are going to “rate” for him, that means just list him as a driver in the household or a driving exposure in the household and rate him on the policy. (name him as a possible driver on that policy)  If he very rarely drives her vehicle then it’s possible they will not rate for the accident on her policy.  Again, it will depend on the insurance company.

The boyfriend/girlfriend saga is always a big issue.  I know when I was working in insurance it always came up.  Whether it was for Discounts, or for accidents or tickets, it’s constantly an ongoing topic.  It’s always changing too, so I would advise you to your Insurance carrier or Agent about it to find out how they handle boyfriend/girlfriend issues.  You do not want to get stuck with an accident just to have the relationship end and then get stuck with the points on your policy for 2-3 years!

The Vehicle Your Driving Doesn’t Have Insurance:

So, lets say that your driving someone’s car with their permission, and you have an At Fault Accident.  Lets say you rear-end the vehicle in front of you.  For whatever reason, they slammed on their brakes and *BOOM* you smack into the back of them.  Your obviously At Fault, because you were following too closely.  Well, if your in Michigan, typically your insurance company pays for you and the other driver’s insurance company pays for them.  But, you don’t have insurance and neither does the car that your driving.  So what happens? Lets say that the person you hit does have insurance, so their insurance company is going to pay for their damage.  So your out of the woods?  Nope, behind the scenes, the other insurance company will usually file suit against you and/or the owner of the vehicle.  The other insurance company will want to recoup the loss that they paid out.  This is called subrogation.  But your both going to be in trouble and are both at risk.  Your the driver, and you should always make sure that the vehicle your driving has insurance on it!

Basically, If you own a car and you drive it, or allow someone else to drive it without basic no-fault insurance, you can be sued and held personally liable.  You may also be convicted of a misdemeanor and fined from $200 to $500, or put in jail for up to one year, or both.  The court may also order your license suspended for 30 days or until you are able to provide such proof.  In addition, if you are uninsured you may be held liable for all damages that result from an accident while uninsured, including your own.

Well I hope you enjoyed this post.  Again, I can’t stress enough, to keep in mind that this stuff is always being reviewed and constantly changing so double check with your agent just to be sure!  That’s what they are there for!  Use them!

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