It’s a situation many parents find themselves in: your adult child is back home for a month or borrowing your car while waiting to buy their own. Naturally, you hand over the keys and think little of it. But then a question pops up—what happens if they get into an accident? Is your insurance still valid? Will this send your rates through the roof?

Recently, someone came to us frustrated about a huge increase in their rates with another insurance carrier. His son, who doesn’t live with him, had borrowed his car for a few months. The other carrier interpreted their policy to mean that unless the son was listed as a driver, he couldn’t use the car. Once they added him, the rates skyrocketed. But here’s the thing—this child carried his own auto policy throughout this entire timeframe. That coverage would have provided liability and personal injury protection, while the dad’s policy could have paid for any physical damage to his car.

This situation left them wondering: What are my options when my adult child borrows my car? So, let’s break down what you need to know.

1. Understanding How Insurance Coverage Works for Occasional Drivers

Most auto insurance policies include coverage for “permissive drivers.” These are individuals you allow to drive your car but aren’t listed on your policy. Think of friends, neighbors, or your adult children who don’t live with you. If your policy includes permissive use, these drivers are typically covered, but there are limits:

• Liability Coverage: If your child causes an accident while driving your car, your liability coverage will usually pay for damages and injuries to others.
• Physical Damage: If your car is damaged, comprehensive and collision coverage on your policy would pay for repairs, assuming you have these coverages.
• Personal Injury Protection: This medical coverage only applies to resident relatives and would therefore not apply to drivers who don't live in your household

But, if your insurance company doesn’t recognize “permissive use” or has restrictions on how often non-listed drivers can use the car, they might require you to add them to the policy—even if it’s temporary. This can cause rates to jump, especially if the driver has a limited driving history or a blemished record.

2. What If My Adult Child Has Their Own Policy?

If your adult child has their own auto policy, their coverage can transfer to a borrowed car in some situations:

• Personal Liability and Medical Coverage Transfer: If your child has a separate auto policy, it may extend to cover any liabilities they incur when driving your car. Their Personal Injury Protection (PIP) or medical payments coverage could also follow them, depending on the state.
• Physical Damage Exclusions: However, their policy won’t cover any damage to your vehicle because it’s not listed on their policy. This means if your child damages your car, it falls back to your insurance.

3. Why the Huge Rate Increase?

In my client’s case, the insurance company required his son to be added as a driver on the policy, which led to a significant rate increase. Why? Some insurers have strict rules on who needs to be listed on a policy, even if they’re not a household member. This often comes down to the duration of use and whether the company considers them a regular driver versus an occasional one.

Situations That May Require Adding the Child:

• If the child is using the car regularly
• If they are expected to use the car for an extended period (e.g., more than a few weeks)

Situations Where They May Not Need to Be Added:

• If they’re only using the car for a few days or weeks and the policy explicitly permits permissive use
• If they have their own auto policy, which provides sufficient coverage

4. What Are Your Options?

If you find yourself in a similar situation, here are a few steps to take before making a decision:

1. Review Your Current Policy Language: Look for specifics around permissive use, household member definitions, and regular versus occasional drivers. Some companies are more lenient, while others have stricter guidelines.
2. Check the Child’s Policy for Extensions: If your child has their own insurance, talk to their agent to see how it extends when driving other vehicles. This could make it unnecessary to add them to your own policy.
3. Communicate with Your Insurance Provider: Discuss your unique situation with yoru insurance provider.
4. Explore Alternative Coverage Options: Some carriers have more flexible policies for permissive use and temporary drivers. It might be worth considering a switch if your current insurer’s rules are too restrictive.

5. Final Thoughts

Navigating auto insurance when an adult child borrows your car can be confusing. Every company interprets policy language a little differently, and what’s considered “permissive use” by one may require a named driver on another. If you find yourself facing high rates or confusing requirements, reach out to an experienced agent who can help clarify your options and ensure that you’re not overpaying.

Need advice on your current policy or considering a switch? Contact us today, and we'd be happy to recommend the best solution for your individual situation!