Driving without insurance can be a nerve-wracking experience, not to mention illegal in most states. When you drive your car yourself, you can rest assured that the insurance policy will protect you in the event of an accident. But if you need a car on loan, while your car is being repaired or if you don’t have a car that borrows one temporarily, you need to make sure you have insurance from one of the many possible sources before you start driving.
Your auto insurance
Most auto insurance policies cover a lender that you drive. The insurance policy treats the lost as a temporary alternative. Even if your insurance doesn’t cover the cost of the rental, it can still cover any claims you make after an accident on a loan or rental car. One downside to coverage through your current auto policy is the fact that if you make a claim, you’ll likely see your rates go up long after you get your own car back.
Insurance of the Loan Company
Businesses that lend you cars, such as independent dealerships and auto shops, have insurance that can insure the bereaved person they provide to customers. These policies range from basic liability insurance that meets your state’s minimum requirements to more complete coverage that includes comprehensive and collision coverage. If you make a claim against a lender’s policy, the insurance company can replace the cost by asking your auto insurance to pay for some or all of the claims, which can affect your rate.
If the car lender is a friend or family member, then it’s possible that the owner of the car bought you insurance while you drove. Most standard policies apply not only to car owners but also to family members listed in the contract and anyone else who is allowed by the owner to borrow the car. In this case, you won’t have to worry about your own auto insurance rates, and you won’t even need your own insurance policy to drive. But any accident you cause will affect the owner’s rate.
One option to avoid any damage to your auto insurance or someone else’s while you have a loan is to purchase a temporary insurance policy. Temporary policies are available from most major insurance companies and charge on a daily basis, usually up to a maximum of 30 days. Temporary insurance costs more than a standard policy but your driving record won’t affect how much you pay, and if you make a claim, it won’t affect your insurance rate with your full-time auto insurance company.