Why Do Insurance Companies Need to Know Who Borrows Your Car?

When you fill out paperwork to purchase a car insurance policy, you will be asked who will be operating the vehicle. This answer may be obvious to some: it’s your car, so obviously you will be driving it. But insurers ask this because drivers often don’t let the insurer know that someone else will be frequently borrowing the car. In these cases, the driver may wind up not covered for accidents they would otherwise be covered for.

Permissible Drivers

Permissible drivers are anyone you allow to drive your vehicle. They can be friends or family members who are occasionally allowed to borrow your vehicle. For example, if one of your friends asks to borrow your vehicle to go to work while their car is getting fixed after an accident, they should be covered under your car insurance policy. Permissible drivers are not necessarily listed on your policy but are given verbal permission to operate the insured vehicle. 

Named Insureds

You can also add other people to your policy by name. This can generally only be done for members of your household and should be done with great consideration. When you add another person on your policy, their driving record and credit score will affect the cost of your insurance. This is because they now add to the risk of insuring you. If you add a driver with a better driving record than yours, it can actually save you money on car insurance. If you add someone who has a poor driving record or low credit, however, you may see a spike in your car insurance.

Excluded Drivers

This brings us to excluded drivers. While insurance companies are lenient in some ways, there are still hard exclusions in certain areas. If you live in the same household as a driver who is considered “high risk” to insure, the insurer may only offer you a policy if you add this driver as an exclusion on the policy. This means that, if you allow the excluded driver to operate your vehicle, they will not be covered for damages or injuries they receive or cause. However, you will be covered under your comprehensive coverage if an excluded driver steals your vehicle.

Drivers are excluded to protect the insurer against financial loss in case they cause an accident while driving your insurance vehicle.

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