What Is Permissive Use Auto Insurance Coverage?
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Most people are unaware of the fact that auto insurance is not applicable to every type of traffic accident. There are some accidents that your auto insurance policy just won’t cover. For example, if an unauthorized party is using the insured vehicle and crashes it, insurance will not apply.
With “permissive use” auto insurance, you allow other drivers that are not listed on your policy to drive your vehicle. Permissive use can apply to neighbors, relatives, friends, and other people who are expected to frequently use your vehicle.
Permissive use insurance is meant for people who do not live at your address. Those living at your address must be listed on your auto insurance policy under “household members” or some other similar category. Permissive use drivers will be listed elsewhere. To give an example – your spouse or your children will not be listed under permissive use. Your babysitter who might drive your vehicle ten times per year can be.
Who needs to be listed as a permissive user? What can happen if you don’t list a driver as a permissive user and they get into an accident? Below, let’s take a closer look at what the term “permissive use” means.
Driver Listings on the Auto Insurance Policy
An auto insurance policyholder is always covered when driving his or her vehicle. Household members, especially those of driving age, are also covered and must be listed on the policy. But what exactly is a household member? Do only family members apply? Or can roommates and romantic partners also qualify?
Most auto insurance policies define a household member as a person living in the house related to the insured driver either by marriage, by blood, or through adoption. This means a housemate or roommate who drives the vehicle in question might not be covered by the auto insurance policy unless they are added to the policy as a named driver or a permissive use driver.
Usually, auto insurance follows the car, not the driver, so you are able to lend your vehicle to anybody you’d like and still remain covered. Roommates, neighbors, relatives, or anyone else who might frequently drive your vehicle, however, might need to be added to your auto insurance policy. It is best to check with your auto insurance agent to determine whether or not they are covered. The bottom line is if someone living in your house will drive your vehicle, he or she should be specifically listed as a covered driver on the auto insurance policy.
An Explanation of Permissive Use
Permissive use in the context of auto insurance is permission for another person to drive your vehicle. Permissive use is applicable to those who are not specifically covered as a household member to use the vehicle. As an example, consider a situation in which you permit a friend to borrow your vehicle. This is permissive use. Most auto insurance policies cover the car, not the driver, so you should be all set if you let your friend borrow your vehicle. However, there is no guarantee your insurance policy will cover permissive use.
Furthermore, some policies that cover permissive use might have limited coverage for those considered permissive users. Some such policies mandate the deductibles be increased in the event that a permissive use auto insurance claim is filed. Also, permissive use, for most auto insurance companies, generally only covers up to 12 trips per year, so if your permissive user drives more than that and gets into an accident, the claim could be denied.
Refer to your auto insurance policy or your auto insurance agent to determine the coverage it provides for a permissive use situation. If the policy lacks coverage for permissive use of the vehicle or only has limited coverage for the vehicle’s permissive use, do not loan out your vehicle to friends and others.
Consider the Worst-Case Scenario
If you loan out your vehicle to a friend and he or she ends up in an auto accident, that individual’s auto insurance policy might prove applicable to the damages. However, this coverage is not a surefire guarantee. There is a chance your friend’s auto insurance policy does not cover accidents involving a vehicle he or she borrows. This policy might provide very limited coverage. This is precisely why every driver should be aware of the facts of their auto insurance coverage prior to lending out a vehicle.
As stated above, auto insurance generally follows the car and not the driver, so chances are it will be safe to lend your vehicle to a friend. To be sure, however, ask your insurance agent or read over your policy in-depth before lending your vehicle to anyone not listed on the policy.
Permissive Use Coverage Exceptions
There is a good chance your auto insurance coverage is applicable to permissive users. However, this coverage might not be applicable when your vehicle is used for business purposes. It might be necessary to obtain an endorsement for business use on the auto insurance policy. These are common for Uber or Lyft drivers.
Even if you do not use your vehicle for work purposes, there is a chance you will eventually loan your vehicle to a friend who is self-employed and uses the vehicle to deliver something related to his or her business. If the auto insurance policy is not applicable to business use by the permissive user, you won’t be covered if the friend ends up in an accident while using your vehicle. In other words, it is in your interest to read your auto insurance policy from beginning to end to understand exactly what is covered.
There is another notable exception to permissive use coverage. If an inexperienced or unlicensed driver operates the vehicle and is involved in an accident, the insurance company will do everything in its power to deny the claim. Lending your vehicle to a driver with minimal driving experience or another household member might prompt the insurance provider to deny coverage. Though this is unfair, insurers have a good argument as auto insurance premiums are determined by the driver’s driving record. The premium would be significantly higher if the insurer knew someone with minimal or no driving experience was operating the vehicle.
Always Understand Your Insurance Policy’s Permissive Use Coverage
If you are a new driver or if you are on the prowl for a new auto insurance policy, do not move forward with a policy until you understand the permissive use portion of your auto insurance coverage.
Permissive use is a standard auto insurance feature in most policies of major auto insurance companies, so unless you purchase non-standard insurance or insurance from a smaller provider, chances are that you’ll have permissive use.
Companies like Allstate, GEICO, Progressive, and State Farm all allow permissive use, but you should double-check with your insurance agent to verify you have permissive use before you let a friend or relative drive your car.