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By Diana T. Torres

It’s the most natural thing in the world to allow a friend or a family member to borrow your car, or for you to borrow theirs. Except things happen—a car winds up in a repair shop, someone is deemed the designated driver, an emergency occurs, or a quick errand needs handling.

The problem with letting someone else drive your car is that there could be an accident. Whether the driver is at fault or not, it’s still a hassle. In addition to trying to figure out how the insurance companies will handle the claim, you may discover that the person who borrowed your car, may not be properly licensed.

Usually the insurance coverage follows the car, so your policy would take care of any damages first. Yet, if the cost of the damages exceeds your policies limits, then the borrowers insurance will have to pick up the balance.

Unfortunately, the transaction occurs so quickly that most often lenders and borrowers do not bother to check licenses, vehicle registrations, or insurances. Let’s say you borrow a car that is not insured or properly registered. If anything happens, you will be liable for everything; whether it’s a ticket or an accident. On the other hand, the owner is not responsible when a vehicle is used without their permission.

Be wary of loaning your vehicle to the same person often, because you may have to add them as a driver on your insurance policy. It’s always a good idea to check with your insurance agent or company representative to find out about the rules.

Next time someone wants to borrow your ride, think about the following:

  1. No matter how uncomfortable it may be, you should always ask to see the person’s license.
  2. If they own a vehicle, ask to see a current insurance card. A smart driver usually carries a copy in their wallet.
  3. Make sure you have up-to-date copies of your registration and insurance card in the glove compartment of your car, along with instructions on what to do in case of an accident.
  4. Make sure your insurance portfolio includes an Excess Liability Policy (also known as an Umbrella Policy) for at least $1,000,000. When a claim exceeds the limits of your auto policy, the umbrella policy will take care of the balance.

Because laws vary from state to state, it’s always best to check with your insurance agent or company to find out how best to handle issues concerning auto insurance. Being prepared will prevent surprises should an accident or any other incident occur whether you borrow a car, or lend your own.

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