Does car insurance follow the car or the driver?

Car insurance usually follows the car, but the driver’s insurance might kick in if limits are too low or if they are listed as an excluded driver.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Written by Laura Berry
Former Insurance Agent Laura Berry

Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP® Joel Ohman

UPDATED: Jun 16, 2022

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Here's what you need to know...

  • Car insurance typically follows the car
  • The driver’s insurance may be involved if the car’s coverage limits are too low to pay for damages
  • Car insurance won’t pay for damages caused by an excluded driver or during commercial use

Like most insurance-related questions, whether car insurance follows the car or the driver isn’t cut-and-dried. Coverage depends on the situation and the driver.

In most cases, car insurance follows the car. However, if you didn’t allow the driver to use the vehicle, if the vehicle is used for commercial purposes, or if the driver can’t legally drive, your insurance might refuse coverage.

In addition, if your policy limits are too low to pay for all of the damages, the driver’s insurance may have to pick up the remaining costs.

Any accident in your vehicle can raise your rates, regardless of who’s driving. So think carefully about the people you allow to drive your car since they can affect your rates.

Keep reading to learn whether your car insurance follows the car or driver and when your insurance company might refuse coverage.

Does car insurance follow the car or the driver?

Car insurance generally follows the car, not the driver. So, for example, if you let your friend borrow your car and they cause an accident, your insurance should kick in. 

However, rules vary by state and the insurance company. In addition, some insurance companies include exclusions that don’t allow coverage for drivers who are not on the insurance policy. So, read your policy carefully before lending your car.

Many insurance companies require all drivers living in the same household to be listed on your car insurance policy since they have access to your vehicle. If one of the listed drivers causes an accident, your insurance kicks in, even if they aren’t the primary driver.

However, things get tricky when a driver not listed on your policy borrows your car and gets into an accident. If you have full coverage, your collision and comprehensive coverages pay for damage to your vehicle, regardless of the driver.

Typically, your liability coverage pays for property damage and bodily injuries to others in an accident. The same holds whether you’re driving or not.

If you allow another driver to borrow your car, it’s called permissive use. Insurance companies generally allow coverage to follow the vehicle unless it’s expressly stated in your policy that only named drivers are covered.

Most states require at least a minimum amount of insurance, but those limits are very low. So if you only have the minimum insurance, you may not have enough coverage to protect yourself or your vehicle.

So, even if your insurance covers damages, the driver’s insurance may come into play if your policy limits aren’t high enough to cover all of the damages.

Additionally, if someone takes your car without your permission, their insurance is the primary coverage. However, if they don’t have insurance, you’ll have to file a claim with your insurer for repairs.

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When does car insurance not follow the car?

There are several instances where your car insurance won’t offer coverage if your vehicle is involved in an accident.

First, if the driver doesn’t have permission or is an excluded driver on your policy, coverage won’t extend. An excluded driver is a person specifically listed on your insurance that can’t drive your car.

For example, if your spouse has a terrible driving record, adding them to your policy raises your rates. If your car insurance company requires all licensed drivers in your household to be added to your policy, listing your spouse as an excluded driver keeps rates low. However, you may then want to know when an excluded driver would be covered in the event of an accident

If excluded drivers are responsible for an accident and they have their own insurance, that coverage is used to cover damages.

If the excluded driver doesn’t have insurance, the other driver has a few options. First, since your insurance won’t cover the accident, the other driver’s uninsured motorist coverage kicks in. In addition, they can sue the excluded driver and your insurance for damages.

Next, car insurance won’t follow the car if used for commercial purposes. Most insurance policies only offer coverage for the personal use of a vehicle. If you want to use your vehicle for work, you’ll need extra coverage.

So, for example, if you want to drive for Lyft or Uber, you need additional coverage. If you’re in an accident working and don’t have the proper coverage, your insurance company may deny your claim.

Finally, car insurance won’t cover a driver who doesn’t have a valid license. If the driver’s license is suspended or revoked, insurance won’t pay for damages they cause. 

The driver also faces fines and other penalties like jail time for driving without a license. If you know they don’t have a valid driver’s license and allow them to drive your car, you can also face fines.

When is the driver’s insurance used?

Although the car’s insurance usually covers damages from an accident caused by the driver, that’s not always the case.

For example, if you borrow a friend’s car and cause an accident, their insurance foots the bill. However, your car insurance comes into play if your friend’s coverage limits are too low to handle the cost of damages.

Your insurance pays anything above your friend’s coverage limits, up to the limits on your policy. If those limits aren’t enough, the other driver can file a lawsuit.

If you rent a car, your car insurance typically follows you. While some policies require specific rental car coverage, your standard coverage allows you to drive the vehicle legally.

In addition, certain coverages follow the driver. For example, medical payment and personal injury protection follow you, not your car. On the other hand, collision and comprehensive coverages stay with the vehicle.

How does an accident affect your car insurance rates?

Whether you or someone else causes an accident, your car insurance rates increase. While some insurers don’t raise rates for your first minor accident, most companies will increase car insurance rates after an accident.

This table shows how much one accident raises rates from top car insurance companies.

Average Annual Car Insurance Rates with One Accident
CompanyAverage Annual Rates with Clean RecordAverage Annual Rates with 1 Accident
American Family$2,693.61$3,722.75
Liberty Mutual$4,774.30$6,204.78
State Farm$2,821.18$3,396.01

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One accident raises rates around $80 a month. If you have multiple accidents or tickets on your record, rates increase significantly.

Remember, it doesn’t matter if you’re driving or if someone else is behind the wheel of your car, an accident counts the same. Therefore, your insurance rates go up regardless.

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Car Insurance Follows the Car: The Bottom Line

Car insurance usually follows the car, but not always. For example, if you permit another driver to use your vehicle, your insurance pays for damages they cause in an accident.

However, the driver’s insurance may be used if coverage limits are too low to pay for damages or if they don’t have permission to use the car.

In some cases, such as commercial use, your car insurance won’t pay for damages unless you have specific coverage.

Your car insurance follows you if you rent or borrow a car. Additionally, some coverage, such as personal injury protection, follows you, not your vehicle. 

Your car insurance rates increase after an accident, no matter who’s driving. Filing an accident claim raises your rates by around $80 a month.

If you allow someone to borrow your car, make sure they are a responsible driver. Think carefully before allowing someone to drive your car if they have a poor driving record.

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