There are a few questions in life that are more confusing than their answers. The blanket query into whether or not insurance follows the car or the driver in a particular jurisdiction is such a question – one we see regularly. It isn’t a dumb question. It is more like a MENSA brain teaser than a legitimate insurance question, and it is usually the wrong question to ask.
The answer to whether insurance follows the car or driver depends on many variables, most notably the kind of insurance coverage being referred to. There are coverages that follow the car and coverages that follow the driver. In general, auto insurance follows the car instead of the driver, but the specifics of a claim can differ since insurance laws and coverage vary depending on the policy, coverage and state being dealt with.
Liability Coverage
Liability insurance coverage on a personal auto policy follows the driver no matter whose vehicle is being operated, provided it is an eligible vehicle. All states, except for one (New Hampshire), require at least liability coverage. Liability coverage protects the insured (i.e., follows the driver) when the insured operates a vehicle owned by someone else. In such a situation, they will still usually be covered under their own auto insurance policy. However, the best rule of thumb in looking for coverage under a policy is to begin with the exclusions.
While an “insured vehicle” may include a friend’s or neighbor’s vehicle or a rental car, if the vehicle was available for regular use, it might be excluded. A “replacement” vehicle will probably be covered, but in some cases only under circumstances where the insured’s vehicle cannot be operated for some specific reason, such as a repair. Coverage might not follow anyone if the insured is driving a vehicle other than a “private passenger vehicle not owned and listed on the insured’s policy.” There really is no such thing as a standard auto policy anymore and coverage for non-owned autos will be different under some policies and non-existent under others.
Comprehensive and Collision
Comprehensive and collision auto insurance coverage, on the other hand, are tied to the insured vehicle (they follow the car). These coverages pay for damage that befalls the insured vehicle as a result of an accident or vandalism. One could say that if you loan your vehicle, you loan your insurance. With comprehensive insurance which covers almost everything, it is the car rather than the driver that is covered. This, however, requires many stipulations to be put in place, such as who is allowed to drive the car. If someone other than the insured is driving a vehicle covered by comprehensive coverage and is not listed as a covered driver – even if the other person has permission – the other person might not be covered in an accident. Family members (such as children or a spouse) are generally already included in the policy definition of “insured.” However, rarely will insurance cover a driver operating a vehicle without the owner’s permission.
Other Drivers Driving the Insured’s Vehicle
When an insured allows other drivers to drive his vehicle, then, and only then, does the question of whether insurance follows the car or the vehicle become even awkwardly relevant. The right question to be asking is not whether insurance follows the car or the driver, but whether or not other drivers will be covered by the insured’s auto insurance.
Unfortunately, there is no bright line answer to the question, and it depends greatly on the language of the policies involved, the jurisdiction you are concerned with, and the specific facts involved. Permissive use is generally covered under the liability terms of an auto policy. As always, however, there are exceptions.
There are certainly insurance carriers and policies that will not cover any driver not specifically named in the policy. Other relevant facts include where the “other driver” resides and if they are related to the insured. In general, if someone is living in the insured’s household and regularly drives the insured’s vehicle, many insurance carriers expect you to have that person named on the policy. They will need to undergo the same underwriting and qualification process as any other policyholder.
In some cases, if a family member is visiting and has permission from the insured to drive the family vehicle, there will be coverage if there is an accident, but the coverage may be limited. All policies should be reviewed to determine if there are any excluded drivers and any limitations on coverage for anyone driving the car that is not specifically named on the policy.
When the policy of the vehicle owner and the policy of the permissive user have different limits, the matter becomes even more complicated. If the damages caused by the permissive user’s negligence exceed the owner’s liability limits, the policy of the permissive user might be tapped as secondary coverage, but usually only where the permissive user’s liability limits are higher than the owner’s liability limits.
The Insured Driving Someone Else’s Vehicle
In general, insurance coverage for an insured driving someone else’s vehicle is the coverage he carries for his own vehicle. The driver’s personal coverage will apply in most cases when driving a vehicle he does not own. This includes any uninsured motorist coverage he carries and the medical portions of his policy. The driver’s property damage coverage might carry over while driving another’s car as well, depending on the policy language, the respective limits of the two policies involved, and the facts. If a person drives his own vehicle without insurance, he should not expect that he is covered when driving someone else’s vehicle.
Certain factors must be considered in determining if an insured is covered when driving someone else’s vehicle, including the reasons for driving the vehicle, if the insured had permission or not, or if it was a rental or dealership loaner. In each case, the individual circumstances and state law involved will factor into the outcome, but another policy might be considered primary over the insured’s.
When an insured borrows a vehicle from a friend, the insured’s liability coverage usually steps in only when the insured’s policy limits are exceeded. Collision and comprehensive coverage do not apply to a borrowed vehicle. Medical Payments (Med Pay) and Personal Injury Protection (PIP) coverage, as we will see below, also follow the insured into a borrowed vehicle.
Med Pay and Bodily Injury Insurance
Med Pay and bodily injury insurance are two other types of coverage that usually follow the person, not the car. Med Pay coverage pays for any injuries that an insured or his passengers may incur in an accident, regardless of who is at fault. Such coverage usually follows the driver. It is based on people, not the vehicle. In fact, such coverage sometimes covers the insured when he is walking or biking. This coverage also usually follows the driver when he rents a car, because the rental vehicle is a substitute for the insured’s own vehicle. However, Med Pay coverage sometimes follows the car. If the passengers in a vehicle don’t have coverage of their own, Med Pay and PIP coverage can extend to their injuries.
Drivers from Other States
Auto insurance will generally cover a driver from any state as long as he has the insured’s permission to operate the vehicle. However, this isn’t always the case. In all instances, when someone else operates the insured’s vehicle, the auto coverage and policy terms may vary greatly depending on the carrier and insurance options selected by the insured. That said, if an insured is driving a company/commercial vehicle which has Med Pay/PIP coverage, that coverage is usually primary over the driver’s personal auto policy, which will be secondary in terms of coverage. There are some exceptions.
Insurance Coverage When the Insured Is Not Present
In order for insurance to cover an accident when the insured is not present, there will need to be comprehensive auto coverage. The facts of each such case definitely matter. If the driver is a relative, then most likely the absent insured’s insurance will cover the accident. The driver also needs to have had permission, express or implied, or the insured’s insurance may not cover the claim, unless the vehicle was stolen. Individual insurance companies and policies may vary in regard to these rules.
Sub-Standard Policies
Cheap, sub-standard auto carriers write insurance for insureds with bad driving records. They are able to do this by setting their own limited conditions under which they will provide coverage. These sub-standard carriers do not cover claims that would be covered under a more standard policy. These policies can contain “named-driver exclusions” which limit coverage to persons specifically named in the policy. “Step-down” policies often lower liability coverage to a state’s minimum limits for permissive users, even if the insured pays for higher limits. Deductibles can be higher and/or a policy won’t extend coverage to a rental vehicle. Therefore, policy terms vary and directly affect whether a particular coverage follows the car or the driver.
So Does Insurance Follow the Car or the Driver?
As we have seen, this is usually not the right question to ask. However, that won’t prevent inquiring minds from asking – over and over. An answer to the question that isn’t going to be universally correct, therefore, is that insurance that follows the car usually has the vehicle listed in the policy. If anyone who has your permission drives the car, that person is probably covered by virtue of the fact that the car is covered. However, as we’ve seen, this kind of insurance does not cover everyone. There are qualifications for the drivers covered. Other types of coverage such as collision or comprehensive insurance will usually follow the car. These coverages will usually not “follow the driver” to any vehicle which the “covered” driver operates.
Insurance that follows the driver will usually be limited to some form of liability coverage.
When an insured drives someone else’s vehicle, such as a rental car, a dealership loaner, or a friend’s car, he is usually covered for liability insurance. However, other policies which may be deemed “primary” over the insured’s personal auto policy may also come into play.
Therefore, a very basic and often incorrect answer to the wrong question is that auto liability coverage generally follows the driver, while auto physical damage coverage generally follows the vehicle. However, more often than not, you will be asking the wrong question. As long as a driver has the vehicle owner’s permission to operate the vehicle, the owner’s policy will provide coverage no matter who the driver is. The vehicle owner’s policy should cover injuries and property damage. However, exceptions do exist. In most cases, therefore, the right question to ask would be “Is there insurance coverage under these specific facts?”
Cost of Repair + Salvage Value > Actual Cash Value
Whether you have a set of shiny new wheels or a decaying rust bucket, cheap car insurance is a must for staying legal on the road. The good news? You have more control over factors that influence your car insurance rates than those that affect other types of coverage, such as life insurance or home insurance. In this guide, I’ll outline seven strategies that will help you save on car insurance.
In a nutshell, those strategies are:
The best way to begin, is just by getting a feel for different car insurance rates. Even if you don’t know what type of car insurance you need, it is beneficial to get a handle on how much insurance costs so you can budget. The online comparison tool below is the best place to start.
Once you’ve seen some rates, you need to dig in on discounts – the key to cheap car insurance rates.
Where to Find Car Insurance Discounts
Many car insurance companies have discounts that go beyond bundling or insuring multiple vehicles. There over 15 discounts offered by major car insurance companies and some of them are less obvious than you may think.
Driving Schools
Driving education is an often overlooked discount opportunity. Teen drivers are very expensive to insure but one great way to lower that burden is through defensive driving training. Drivers who have completed and passed and accredited driver’s ed class or defensive driving training are eligible for up to 10% discount according to DriversEd.com. Plus, if you’ve recently received a ticket, enrolling in a defensive driving course can prevent the premium hike on your insurance (though most companies only let you do this once every 12 months).
Defensive driving courses cover topics such as traffic laws, drug and alcohol impaired driving, and inclement weather driving and are often offered online or at commercial driving schools. Courses for defensive driving can be found through the DMV or through local community centers. In fact, defensive driving education is required in at least 15 states including Texas, Nevada, New Jersey, Virginia, Oklahoma, Oregon, New York, Iowa, Kansas, Nebraska, New Mexico, Louisiana, North Carolina, Illinois and Mississippi.
After completing a defensive driving course, participants will receive a completion certificate which can be presented to insurance companies in order to qualify for a discount. Depending on the insurance company, drivers may also have to re-take the course and be current on their certification in order to continue receiving the discount. Classes are flexible and offered on a consistent basis, however, and learning defensive driving skills is an easy way to save money and become a more comfortable driver. If you aren’t the only person covered on your auto policy, consider getting all the drivers on your policy to take a defensive driving and you can be eligible for additional discounts!
Good Student Discounts
These discounts are typically given to drivers under the age of 25 who are enrolled full-time at a high school or college/university and are maintaining at least a 3.0 grade point average or are on the honor roll or Dean’s List. In order to prove satisfactory academic achievement and receive the discount, students need a current transcript or a letter signed by a school administrator. Students that are homeschooled can present standardized test results, such as SAT or ACT scores, that within a desired percentile range depending on the insurance provider in order to qualify. Good grades can continue helping students save money even after school is out because some insurance companies extend this discount to post-grads for a limited amount of time.
Safe Driving Record Discounts
Drivers with a clean record, a standard that is determined by each individual insurance provider, are eligible for hefty discounts. Although there is no universal definition of safe driving, insurance companies generally mean avoiding collisions and accidents for which you can found at fault and avoiding moving violations such as speeding, driving under the influence, or reckless driving. Having a clean record can not only give you a discount on your insurance, it can save you a lot more money in the short term.
Resident Student Discount
Resident Student discount can be offered to students attending college more than 100 miles away from home. This discount is intended to be used exclusively by those students who are not planning to drive the insured vehicle while at school but may use it while they are home for vacations.
Other Discounts
The major types of car insurance
Though companies offer several more nuanced options and add-ons, the three major types of car insurance boil down to:
Liability coverage
Liability coverage, required by law in most states, covers the other driver’s personal injury and property damage in a crash where you’re at fault. Importantly, it does not cover your own injuries or property damage. Buying only liability insurance is always going to be your cheapest option, though not necessarily the wisest. Sometimes it makes sense to carry only liability coverage, and sometimes it doesn’t. More on this in a minute.
You’ll probably see your liability coverage written like this on your quote or car insurance policy: $50,000/$100,000/$50,000 (or 50/100/50). That means you have $50,000 in bodily injury coverage for each person, $100,000 in bodily injury coverage total, and $50,000 in coverage for property damage. Your state will require a minimum amount of liability insurance for you to stay legal.
Buying the bare minimum is tempting since it will keep your rates as low as possible. Unfortunately, that’s a bad idea — a bad crash can mean your costs will easily surpass low state minimums, and then you’ll have to pay up. If you don’t have the money, that will leave your other assets vulnerable.
Collision coverage
There is also collision coverage, which covers the damage to your own car sustained in a crash. Most commonly, this covers crashes when you’re at fault, but it may also pay in certain circumstances when another driver is at fault, or in scenarios not covered under your other policies. The cost of your collision coverage will largely depend on your car’s value, but you control the deductible — the amount you pay out of pocket before your insurance company picks up the rest of the tab.
Comprehensive coverage
True to its name, comprehensive car insurance covers almost any car-related calamity you can think of minus damage resulting from a crash. Instead, comprehensive policies pay for things like auto theft, damage from severe weather, or needed repairs after a late-night rendezvous with a disoriented deer. Comprehensive coverage is meant to complement collision coverage, not replace it. Like collision coverage, the cost will depend on your car but you control your deductible.
What type of car insurance coverage do I really need?
Comprehensive and collision coverage seem like a smart choice, but they come with a much heftier price tag than liability-only insurance. If you took out a loan to pay for your car, you probably don’t have a choice — your lender will require proof of comprehensive and collision coverage. And dropping comprehensive or collision coverage isn’t a good idea for anyone without the savings to pay for repairs out of pocket.
But there are situations when opting only for liability makes sense. For instance, if you drive an older, paid-off vehicle that you can easily fix or replace, keeping only liability coverage can mean significant savings. Comprehensive and collision coverage may also be overkill on any car you drive sparingly.
To see how much I would save on car insurance by nixing all coverage but liability, I plugged my own stats into a quote generator. I’m a married female in my early 30s driving a paid-off 2011 Hyundai Sonata. I live in a small southern city, have a clean driving record, and average 12,000 miles a year. A policy with 50/100/50 in liability, as well as comprehensive and collision policies with $250 deductibles, would set me back $45 a month. Dropping the comprehensive and collision policies would bring my bill down to just $24 a month.
Would I do it? No, since my car is still relatively new and would cost a significant sum to repair or replace. But let’s say I have a beat-up 2004 Nissan Altima with 150,000 miles on it. Replacing it would probably only cost about $2,000, a sum I could cover with my emergency fund if my car was totaled. Suddenly, potentially cutting my car insurance bill in half by dropping comprehensive and collision coverage makes a lot more sense.
Bottom line: Liability coverage is your cheapest option and will keep you legal on the road, but dropping collision and comprehensive coverage might be a risky move if it would be a major financial hardship to fix or replace your car.
Other types of coverage
There’s a number of other coverage types and add-ons. Of particular note is personal injury protection, which pays your own medical expenses after a crash. There’s also uninsured or underinsured motorist coverage, which means you won’t be left on the hook in a crash when an uninsured or underinsured driver is at fault in a crash with you and can’t afford to pay. Other add-ons pay for rental cars and roadside assistance.
If you’re trying to keep your bill low, personal injury coverage probably isn’t a smart buy as long as you have a good health insurance plan — there would be too much overlap between the two policies. However, uninsured and underinsured motorist coverage is a decent bet, especially in areas with a high percentage of uninsured drivers. It’s also fairly inexpensive: Adding both options to my GEICO quote boosted my monthly bill only a few dollars. As for other little add-ons, consider skipping them. If you can cover the cost of a rental (or borrow a car from a friend while you’re in a jam) rental-car riders are unnecessary, and an AAA membership is probably a better deal than roadside assistance coverage.