QuestionI purchased a second vehicle about 9 months ago and recently loaned it to a friend to drive for one week. He is not an authorized driver under my insurance policy and he was in an accident yesterday evening where he alleges that he fell asleep at the wheel and ran off the road. I am hearing from the police that he was taken by ambulance to the hospital and that he refused treatment. He also refused a breath test for alcohol. (Interesting, eh?)
So long story short, the car is totalled and there is a balance still owed to the finance company whom I used to purchase the vehicle; therefore a claim may be inevitable.
I am concerned about being dropped from my insurance or having my rates skyrocket, etc. Any advice would be greatly appreciated. I have learned a horrendous lesson....one which I will NEVER repeat.
AnswerKeep in mind that I can only address "most" state laws and "most" insurance policies.
As long as this was a casual loan of your vehicle to a non-family non-resident of your household, coverage should apply with permissive use.
You do need to report the claim and have the insurance company handle. If you try to handle it on your own and later come back to them for help, they will then have the legal right to tell you to go and pound sand.
You are subject to full liability as if you were the driver. As you own the vehicle, you can only thank a higher power that your friend didn't hurt or kill someone.
When we loan a car to someone, we are putting our entire financial portfolio at risk no matter how large or small. You might as well go ahead and accept the part about rate increases or cancellation as being the best case scenario. The worse case would have been no coverage at all.
I hope it all turns out ok for you.
