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Loaning someone your vehicle is a typical exchange among family members and friends. The “terms of use” can last an hour or an entire day. Referred to as a “permissive user,” the borrower has access to the “regular user’s” car for a specific period of time. However, they are not listed on the insurance policy.
What is a permissive user?
Depending on the policy, driving an insured vehicle with the owner’s permission may or may not involve insurance coverage. Most car insurers mandate that family members and those using the vehicle regularly be listed on the insurance application. Permissive users are usually not a member of a household.
A majority of insurers will provide coverage for permissive use. However, if the permissive user lives with the owner or is a family member, they have to be added. Post-accident, insurers may deny the claim if it was a family member or co-tenant who had regular access to the vehicle, but was not listed on the policy.
Increased risks and premium costs
If a permissive user or listed driver causes an accident it could cause an increase in premiums. Traditionally, multiple motor vehicle operators are considered more of a risk to insurance companies. Policyholders should attend to every detail in reviewing documents, particularly the policy declarations page that lists who is covered. Insurance companies can deny coverage if they find out that “permissive user” had regular access to the vehicle, but was not listed on the policy.
Ultimately, vehicle owners can also be held liable in certain circumstances that involve negligent entrustment. This would involve allowing somebody to drive your vehicle who you know is an unfit driver. In other words, be very cautious when allowing somebody to use your vehicle.
