Does car insurance follow the car or the driver?

In general, car insurance follows the vehicle rather than the driver. But what exactly does that mean?

Assume a friend borrows your Hyundai Accent and is involved in an accident. If you have collision insurance on your Accent, the damage will most likely be covered. However, because your insurer would be footing the bill, your insurance rates would almost certainly rise, not your friend's.

However, if you decide to drive your grandmother's Toyota Corolla and get into an accident, the insurance on the Accent is unlikely to pay out. Instead, any repairs to the Corolla would be covered by your grandmother's car insurance. And this time, your grandmother's insurance rates would almost certainly rise while you would be exempt.

However, there are exceptions to every rule.

Whether or not someone's car insurance follows the vehicle or the driver is ultimately determined by a number of factors, including:

• State.
• Insurer.
• Names on the auto insurance policy.
• Whether the borrower was specifically granted permission to drive the vehicle by the owner.

Make sure to carefully read your policy and speak with your agent about your specific situation.

Times when car insurance follows the car

In general, your auto insurance protects you while you drive your own car.

Your policy will usually cover someone else driving your car if they meet one of the following criteria:

• The individual is named on your auto insurance policy.
• You've granted them permission to use your vehicle under certain conditions. (This can happen in the car with or without you.)

However, the amount of coverage a person driving your car receives varies by insurer and state.

Your insurance will not cover someone else driving your car if:

• You expressly state that they are not covered by your policy. You may want to do this if you are concerned that a reckless driver will borrow your car and cause an accident.
• Your friend borrows your car without your knowledge. Remember that even if your friend does not have car insurance, your insurance may cover any damage.
• You're using a paid car-sharing service like Turo to rent out your vehicle.

Times when car insurance follows the driver

Although most car insurance policies cover the vehicle rather than the driver, there is one notable exception: if you rent a car for personal use. This means that if you have insurance on your own car, you generally don't need to purchase additional coverage from the rental company, despite salesperson pressure. The rental will be covered by your car insurance.

If your personal insurance only covers liability, you may want to purchase additional coverage that will pay for damage to your rental car if you are at fault in an accident.

Primary insurance vs. secondary insurance

In some cases, your insurance as well as the insurance of the person driving your vehicle may be used. This could occur if a friend hits your car and the damage exceeds your insurance limits. In this case, your coverage would serve as primary insurance, or the insurer that pays first, up to the limits of your coverage. The rest of the damage would be covered by your friend's insurance.

Alternatively, your insurer may pay for any initial damage and then request reimbursement from your friend's insurer.

In either case, your and your friend's insurance rates will almost certainly rise.