Well, the leaves are falling, the smell of pumpkins and spice is in the air. Like all good Minnesotans we anticipate, or should I say fear, the coming of that white stuff that blankets our landscape each year.
With fall also comes thoughts of bountiful harvests and a time of thanksgiving. Whether it be produce, furniture, students to school, or upcoming large Christmas presents, (yes, gifts are welcome), we often find ourselves in need of borrowing a vehicle or being asked to lend a vehicle to help out a friend, neighbor, or family member.
This brings us to our question of the month:
“My friends and family members regularly borrow my pickup truck for hauling and moving things. Is this an insurance liability? Should I not allow them to borrow it?”
Well, my first thought on this is the common theme of liability. As long as your name is on the title, whether it is your home, your vehicle, or even a skate board, no matter who operates it, as the owner, you have potential liability exposure. In the event of an unforeseen event occurring, while someone else is operating your property, which results in personal property damage or bodily injury to others, you can be held liable or at least partially liable for the related costs and damages.
Therefore, the “common theme” here to remember, just like last month’s question about adult children, is the issue of opening yourself up to liability exposure. If you lend out your vehicle, and the operator is involved in an at-fault event, you could be responsible for some or all of the resultant damages. So before you say yes, to that “favor” keep in mind you are opening the door to a potential claim. In the event of such a claim, it will be reported as part of your loss history, for insurance purposes and you might not only have to pay to settle a resultant claim, but also, a claim, even if caused by this other person, could affect your premiums for years to come.
The good news is that as long as you carry vehicle liability insurance, and your friend or neighbor or family member is using your vehicle with your permission for a unique event such as moving or hauling of the falls leaves, they are covered for liability purposes under your insurance policy, for that usage. So in the case of a single usage or rare “borrowing” of your vehicle both they and you are protected by your insurance.
However, if this “borrowing” is done for the borrower’s business purposes or some other form of income generating activity, the protection may evaporate. Also, if the vehicle is taken without your permission and you are not aware of its being used by one of these third parties, they would not be protected. If the friend or family member is a regular user, who has “anytime” access to your vehicle, but is not a member of your household, both that user and you may be denied coverage by an insurance company. The reason being, you now have a driver of your vehicle’s, which is not listed as an “insured” person on your policy. Therefore, the insurance company has not had the opportunity to “rate” the risk their usage implies, nor have they had an opportunity to collect risk premium, for this unnamed driver’s usage. This gives an insurance company standing to deny a claim for an incident caused by this unnamed person whom has at will access to your property.
For sure do not loan your vehicle to an uninsured or unlicensed driver, for any event or reason. If they are uninsured or unlicensed, you will likely have no insurance protection for events they are involved in.
So in summary, if it is a friend or family member, who wishes to borrow your vehicle for a one-time, non-business use and you knowingly grant it, both you and the user are covered under your personal auto policy.
Just don’t let it be for business use or become a constantly available option for the “borrower” if it is, you need to explore adding different coverage endorsements to your policy such as naming the “borrower” as an insured or asking the borrower, to take out “drive other vehicle” coverage on their personal auto policy. For more information on this, as a reader, please contact me directly.
Hopefully, this information helps to answer the question of friends and family who wish to borrow your vehicles.
If I can be of any service to you feel free to contact me directly at duane.kriener@ fbfs.com or 651-707-4460
- Have a Happy Thanksgiving everyone.