Lending a car to a friend or relative is a common occurrence.  This friendly favor can be offered without fear of losing your insurance coverage, but there are some general guidelines to consider. And of course, you should never allow a stranger to use your vehicles.

To begin to understand how an auto policy operates, you first need to know that coverage is written to apply to a particular vehicle, not necessarily to a specific person.  The personal  policy covers the car and an “insured” driver, and defines this “insured” driver as “Any person using ‘your covered auto.’”

But there are many exclusions  which are designed to clarify this statement.  One of the most important relates to permissive use.  In order for someone to be covered while using your car, that person must have permission to use the car. However, if someone steals your vehicle and causes property damage, that would be covered, even though permission was not granted.

Do I Need To Notify My Insurance Company?

In most cases, a friend who allows another friend to borrow their car is a short-term arrangement.  It may be for just an hour to run errands, or it may be a few days.  Occasionally, the favor may last a very long time if you are helping someone that needs a car for regular use. Although uncommon, lending out a vehicle for long-term use is not recommended.

It is always a good idea for you to notify your insurer if someone borrows your car.  This will protect you in the event of an accident claim, as the insurer will already have information on file that would corroborate the chain of events that may have led to an accident. Notification is not needed for short-term use. This would only apply if the borrower will be using the vehicle for 24 hours or longer. However, contacting your agent over ANY use is the safest option.

If you are lending  to a friend for a longer period, it is most definitely recommended that you notify your insurer of this regular usage.  Your insurance company will want to obtain important information from your friend including name, address, driver’s license number, and their driving history.

While the policy covers the car, the insurance company’s underwriter is very interested in the driving record of the person who will be operating that car. Also, other members of the household may also have to meet underwriting guidelines.

Where Does My Policy Say That?

If you review your policy, you may not find any written requirement that you inform your insurance company of a friend who may be driving your vehicle.  However, if you attempt to deceive your insurer by intentionally misleading them as to who drives the car on a regular basis, this can be construed as insurance fraud under some circumstances, which will not only void your policy, but which is also a criminal offense.

Of course, sometimes people just forget to add a driver to a policy. But to “forget” for a few weeks (or a few months!) will cause some problems and a big financial mess if there is a accident involving the vehicle.

For long-term situations, it is best to contact your insurer and add the additional driver on to your policy.  This will give the insurer the comfort of knowing what type of risk they are actually accepting by covering your car, and it will give you peace of mind knowing that there will be fewer problems in the event that you have to make a claim under the policy for an accident. Also, if an uninsured motorist hits your vehicle, it will be very helpful to have all drivers properly listed and accounted for.

What Your Policy Covers

Drivers can take comfort in the fact that their personal auto policy will cover you and anyone who drives your car as long as they are doing so with your permission.  If you are lending your car to anyone for an extended period, be sure to notify your insurance company.  If that person has a poor driving record, be prepared for the potential increase in premium.  You may even find that your insurer will not accept the new driver if their  record is very poor.

Always approach your insurance company with full honesty, and never submit false statements to your carrier about who is driving your car or you may be looking for a new company at the most inopportune time!

Most drivers are concerned about safety whenever they get behind the wheel.  Much of this concern is concentrated on physical safety, but financial safety is something all of us should be concerned with also, particularly when it comes to the risk of getting in to an accident with another driver who may not have insurance coverage. Or, of course, they may not have enough coverage on their existing policy.

It is not difficult to imagine that those who suffer from a recent job loss or other financial pinch may neglect paying the necessary premium to maintain the required auto liability insurance coverage.  As the nation’s economy still struggles, the risk that uninsured drivers exist becomes more significant. And in some states, these numbers are rising.

Uninsured/underinsured (UM) motorist coverage is designed to provide protection to a policyholder when they are in an accident caused by someone who has little or no insurance available to pay the claims of those who are injured in that accident. As the owner of the vehicle, you can recover sustained damages for these injuries.

This benefit is necessary when the person who causes the accident has no current coverage.  Imagine a scenario that involves a crash with your vehicle caused by a person who drives through a stop sign.  If you were badly injured in this accident and sued the other driver, they would be personally responsible to pay any judgment in your favor if they had no insurance.

In many cases, collecting on this judgment would be impossible if the other driver had no assets.  UM coverage would step in under your own policy to pay such a claim, assuming the judgment was final. At that point, the insurer would then attempt to recover as much of the settlement as possible from the party that was at fault.

Uninsured motorist coverage also protects your family members if they are passengers in a car that does not have adequate insurance. Often, unfortunately, fatalities and serious injuries result to the passengers that are simply innocent victims in the accident.

Underinsured motorist coverage is similar to uninsured motorist coverage, except that it applies to scenarios where the at-fault driver has some insurance, just not enough to pay the entire cost of the claim.  For example, if the at fault driver had $25,000 in liability coverage and the injuries caused in the accident were $125,000, underinsured motorist coverage could pay the $100,000 difference. Again, this assumes there was a judgment and presumably the appeal process (if there was one) was over.

Nearly every state has a requirement that drivers carry liability insurance in order to operate a motor vehicle.  However, this does not guarantee that people will drive with the required coverage.  In many cases an auto policy will lapse due to non-payment of premium and some states will automatically be notified of such a lapse and suspend a driver’s car registration.

While it then becomes illegal to operate that car, drivers continually break the laws and drive anyway. And unfortunately, this trend will probably continue in the future no matter what future penalties may be imposed.

Even if someone is obeying the laws, they may not have adequate insurance.  In some states, the minimum required limits are as low as $25,000.  A serious fracture could easily incur medical expenses alone that are two, three or even four times as high as that amount.  This does not even take into account other costs such as lost wages, extra expenses associated with having a bad injury, as well as pain and suffering. A good attorney will probably point out a few additional items!

Remember that uninsured/underinsured motorist coverage is designed to protect you in the event of an accident.  So naturally, it makes sense to purchase as much coverage as you can reasonably afford.  The limits for this coverage are stated as coverage per person, and per accident.  For example, if you purchase $100,000/$300,000 there will be $100,000 available for each person injured and a total of $300,000 for all people injured in your car.

However, you can select a different limit of UM liability than you currently have for your standard coverage. In fact, often, the UM benefits are less than those amounts. Although you will save money with lighter limits, it may not be worth the benefits you are giving up, considering the large number of uninsured drivers on the road.

Driving a safe vehicle has many advantages, including peace of mind for the driver and owner, lower insurance rates, and lower likelihood of damage or accident in the event of a crash. While people select cars for many different reasons, buying a car is a long term and important purchase, and investing in a safe vehicle is a wise decision.

The safety of a car is divided into two categories: prevention of accidents and ability to survive a crash. Weighing these options is an important part of the car buying process, particularly for newer drivers or persons transporting other drivers. And of course, these two factors will greatly influence the rate that an insurer charges for vehicles. The safer the car, the lower the insurance costs.

Audi A6

An expensive luxury car, this Audi received high scores across the board in safety and accident tests. The Audi was named the Top Safety Pick from the Insurance Institute for Highway Safety.  This mid-size favorite is the offshoot of the old Audi 5000.

BMW 5 Series

This BMW has compact size combined with a variety of top of the line safety features, making it an excellent choice for those with safety concerns. There are actually seven models to choose from and all are 4-door sedans.

Infiniti EX 35

For those looking for more space and seats, this SUV model is also adapted with the newest safety features, including monitoring for blind spots, a common cause of accidents. As one of the best compact crossovers, it’s a fun car to drive although there is limited leg room compared to other similar vehicles.

Volvo S60

This vehicle holds higher interest for those looking for a midsize car with all the safety features of many other vehicles. With bold colors, this car offers a contemporary look with classic safety. Often, this vehicle is selected over the BMW and Audi for more budget-oriented buyers.

Honda Odyssey

The top winner for a family is the 7 seat Honda Odyssey, named the Best Minivan for Families by the U.S. News Best Cars for Families Award. This car has all the safety features that will please parents while providing enough room for the entire family. It gets great gas mileage and holds its resale value well.

Safety is determined through a battery of tests designed to simulate what cars might go through in dangerous conditions. A frontal crash test involves the vehicle traveling at 40 miles per hour and slamming into a barrier. What researchers are interested in during this test is what happens to the dummies inside the car. No…not those types of dummies! These dummies aren’t alive!

A side crash test simulates a common car accident by creating a scenario similar to a small truck or SUV impacting the side of a car. A rear impact test is also interested in determining safety and injury to vehicle passengers. This test examines a vehicles reaction to an impact from behind in order to measure likelihood of whiplash.

Finally, a rollover protection test does not use dummies and instead focuses on crushing the roof of the vehicle. To pass this test with a solid rating, the car must be able to withstand the pressure of four times the vehicle weight. In recent years, SUVs have made big strides on this specific test. Coupled with increased fuel efficiency, these test results are one of the reasons why SUV sales are still strong.

Driving a vehicle is something that most people do on a daily basis but there are risks involved that are important to remember. Especially if you live in a dangerous area with a lot of drivers or commuters on the roads at particular times of the day, a safe vehicle is one way to protect yourself in the event of a crash.

Crash tests and vehicle safety ratings are certainly one factor that all drivers should consider when purchasing a new or used car. Designed after decades of experience, these crash impact tests can provide valuable information about a driver or passenger’s ability to survive common crashes and the potential seriousness of injuries. Every category of car now has at least one highly-rated safety vehicle. Investing your time in evaluating options can be critical- in fact, your life may depend on it.

Adding a teen driver to an insurance policy is enough to cause grief in the parents of the most responsible adolescents. Due to high risk and an unproven driven record, premiums can spike as soon as the new driver is added to the policy. We will show you a few ideas that may reduce your car insurance costs and give you a few more hours of sleep!

Prepare In Advance

As your teenager gets closer to getting their permit, (such as a few months in advance), begin investigating policy options. Contact your current carrier and get an accurate quote, and then use that to compare other online prices from different companies. Do not wait until the last minute, such as the day they obtain their permit, because this is likely to result in a quick choice made for the sake of safety and compliance and may not be the best deal for you financially. Remember, comparing prices of other insurers will not cost you any money. And it might even reduce your rates.

Preparing ahead will also help you determine what discounts, if any, are available for teens. For example, many companies will offer a discount to new drivers with good grades. Have copies of recent report cards on hand for verification. This can also be an incentive for students to maintain good grades if they are partly responsible for the cost of their car insurance.

Usually, a “B” average will reduce premiums by as much as 10%-20% on the vehicle they drive. If they are currently college students, a rate reduction will still be available. You may also qualify for a “student away” discount, if they are more than 100 miles away from home.

Consider An Older Car

If your teen driver is just learning, an older car with high safety ratings is likely to be associated with lower premiums than a brand new car. Of course, teenagers just getting behind the wheel may argue that they are entitled to a new car, but it’s better to allow them to learn in an older vehicle and transfer those good driving skills to another car at a later date. If you’re looking at several different possible used cars, you’ll be able to get an estimate from the insurance carrier about the anticipated cost.

If you’re looking online or visiting a dealership, keep a list of all the vehicles you’re considering. You might be surprised about the potential differences in insurance among those cars and that can help inform your buying decision. And here’s a tip from a father of two teenagers: Don’t let your kids decide what type of car to get! Otherwise, you’ll end up with a bright red sports car just about every time.

Depending on the drivers and vehicles on your current policy, it may be less expensive to purchase an older car with only liability coverage, instead of assigning your son or daughter to a much newer vehicle already on the policy. Sometimes, this works best with males, who cost much more. But you would not want to title the vehicle in your child’s name. At least, not yet!

Play A Role In Driver’s Education

One of the best things parents can do is play a role in how the teen learns to drive and how responsible they remain as new drivers. An at-fault accident in the first few months can substantially increase premiums, and diligence in learning and preparation can be critical in developing the long-term safe driving skills. Obviously, it’s always a good idea to take advantage of any school-sponsored driving programs. And take the time to practice with your child. And when you’re done, practice some more! It will pay dividends for many years.

From the time of getting the permit until after the test is taken, as a parent you can help develop safe driving skills that allow teens to adapt to many unpredictable conditions.  As previously mentioned, many insurance carriers will reward you with discounts or reduced premiums in the future, for every period of safe driving.

Adding Them To Your Policy

And when your child finally purchases their own policy, their safe driving record will help them keep premiums low. One way to reinforce the importance of safe driving is to make the teen responsible for a portion of the car insurance payment, and perhaps the maintenance and gas too. That may reduce the number of hours they are on the road!

Regarding adding them to your policy, often, you are not charged until they actually have their permanent license, instead of the temporary permit. However, once they pass their exam, typically you should add them within a specific number of days. Although not often specified in the policy, adding them within 7-10 days is advised.

While adding coverage for your teen will certainly result in higher premiums, spending time to do the research and investigating options, as well as encouraging safe driving, can be beneficial for you in the short and the long term. Brokers and reputable websites (like ours) specialize in finding the companies that will help you lower the cost of insuring your young son or daughter on your policy. But of course, there’s no substitute for driving accident-free. That always helps your rate!

There are several misconceptions surrounding car insurance. Without educating yourself, you might fall into the trap of thinking you have coverage or that you don’t or misunderstand the rules about your policy. We will try to help you understand some of the most important aspects about your policy. By knowing more about your coverage, you’ll pay less by taking advantage of discounts and not paying for benefits you simply don’t need.

Your Valuables- Not Covered

If the valuables inside your car are damaged or destroyed as the result of an accident, your policy is unlikely to cover those items. The homeowner’s policy you have may cover those items, but not entirely. If you regularly travel with expensive items (like most electronics) insure them in addition to your auto policy to provide the protection you need.

Often, a rider may be able available on your homeowner’s coverage for cameras and other items (especially jewelry). The cost is typically fairly low, so it may be a good idea to create an inventory of items that you would want to consider insuring separately. You may be required to furnish appraisals so the carrier knows what amount to cover them for. Also, it’s always a good idea to periodically update the appraisals.

One Small Claim Won’t Hurt, Right?

A small claim submitted by you can have a dramatic impact on your premiums. If you’re driving an older car or experienced only minor damage, fully evaluate the damage before you file a claim. Unless the damage is significant enough to warrant that claim, think twice in order to save more money if at all possible.  But it is important to consider the potential liability issues if you caused damage to another vehicle. In those types of situations, it is usually important to contact your insurer, since failure to report a claim could end up being a huge mistake.

My High Risk Car Doesn’t Hurt, Does It?

If you drive what’s known as a “low risk” or “low profile” vehicle, you could pay smaller premiums. Although there’s no clear guide about which cars will help you earn this discount, investigating online can give you some type of idea about how your current or new car might be rated. For instance, investigating crash and repair reports would help.

Of course, you can expect to pay higher rates for a newer sports car or expensive SUV. Although there are many discounts that newer vehicles qualify for, they still will be much more expensive than much older cars or trucks. And if the vehicle is popular for thieves to steal, you’ll be charged a higher rate.

Your Credit Score Doesn’t Affect Your Policy

A good credit score can help you secure lower rates on your car insurance, although many people don’t realize it. The reason for this is that research has proven that those persons with lower credit scores are more likely to submit claims, which is why insurance providers can make the argument for higher premiums for these drivers. If your credit is strong, that can only help.

This is just one of the factors that companies use to determine your “risk score”. Obviously, those drivers with a higher risk score will be associated with a higher premium. The fewer accidents, claims, and overall risk factors you have, the better price you will receive. For that reason, it’s important to order your free credit report each year.

Different States Have The Same Rules and Requirements

This is not true. Although some states share characteristics, there are differences and unique situations in every state and particularly if you move (and especially if you move out of state). Keeping that information up to date could prove critical in the event of damage or an accident in addition to providing you with the comfort of knowing you are properly covered.

State minimum liability limits will also be different, depending on that particular state. So if you do move, it is important to be aware of the bodily injury and property damage requirements, so you are meeting (and hopefully exceeding) those limits. Typically, the minimum bodily injury per person requirement is about $12,500-$20,000, depending on the state.

Once I get my new policy, I can forget the old one?

Assuming that you have received written notification and you have checked the new contract for accuracy, you can safely terminate the older plan. But of course, it’s imperative to avoid any lapse in coverage and double coverage that results in unneeded extra payments being made.