The new school year is quickly approaching and many students have already moved back into their college dorms and apartments. If you are living at college, it’s important to know the implications of borrowing a friend’s car or lending your car to others. If your son or daughter is at college, be sure he/she is also aware of the associated risks of sharing cars. It is a common misconception that the insurance follows the driver; however, insurance actually follows the car.
For example, your roommate needs to run to the grocery store to pick up a few items and borrows your car. On her way to the store, she rear-ended another vehicle. The primary coverage that would pay for damages to the other driver is your liability coverage. This means you’d have to:
File the claim with your company
Pay the deductible
Accept any resulting rate hikes
If the damages exceed your available limits, only then would her coverage step in as excess coverage.
Be sure to think twice before lending your car, otherwise you may be looking at a much higher premium and a strained relationship with your friend or roommate.