What Auto Insurance Actually Covers: Does Car Insurance Cover the Car, the Car’s Driver, or the Car’s Owner?

In general, when you purchase auto insurance, you are buying it to cover the car, not the person who is driving it.  If the car is involved in an accident, you’re covered.  If you are injured in that car, you’re covered.  If someone else is injured in that car, he or she is covered.  If someone is injured by that car, there is coverage.  There are some gray areas, but this is the general rule. 

Then what’s the driver got to do with it?
When you purchase an auto insurance policy, the application always requests information on all the individuals who will be driving the car before they give you their rate.  So you list all the drivers and tell the company how much they will be driving.  Many will hold you to that.  If there is a member of your household who is not a listed driver, and he or she drives the car and has an accident, the insurer may deny coverage.  For that reason, it is important to list every member of the household who is of driving age.

And the owner?
The owner is typically the named insured.  He or she will be covered and the rate is based mostly on his or her driving record, among other factors.  The company does, however, look at the records of the other drivers if there is anything noteworthy, such as moving violations and at-fault accidents.  And, if one of the potential drivers is a teenager, that will, undoubtedly, affect the premium…negatively, in case you’re wondering.  Teens are notoriously risky drivers and drive the rates up until they turn the ripe old age of 21, for many insurers. Putting them on the policy will increase your rates, but not putting them on, for most insurers, leaves them uninsured.  That’s taking a big gamble.

Lending the car
Strangely, if you lend your covered vehicle to someone else outside your household, there will be coverage if that driver has an accident, even though he or she is not listed as a driver on your policy.  The insurance company knows that you cannot possibly anticipate every potential driver when you apply for coverage, so those outside your household do not need to be listed on the policy.  They are considered “permissive” drivers and the company will provide coverage if they are driving and are involved in a collision. Even if that person has his own insurance on his own car, your car insurance will cover the damages resulting from the accident.  Why?  Because the insurance follows the car—not the driver!  These are friends, neighbors, relatives, all of who do not reside in your household, but whom you have given permission to drive your car occasionally.  Should they have an accident, whether or not they have coverage of their own, they are covered under your auto policy.

If you are planning to drive a car owned by someone outside of your own household, always be sure to check on whether or not they have insurance first, especially if you don’t carry your own.