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If I Loan Out My Car Is It Still Covered Under Insurance?

Mohammadi & Humayun, LLC Nov. 7, 2023

Insurance agent writing on clipboard while examining car after accidentSometimes in life, someone who you know may need to borrow your vehicle. You may feel unsure about loaning it to them, especially considering what might happen if they are involved in a wreck. If you find yourself in this situation, you may be wondering, “If I loan out my car, is it still covered under my insurance?” 

At Mohammadi & Humayun, LLC, we believe it's essential to understand your auto insurance policy thoroughly. If you have concerns about how far your insurance extends when you loan out your vehicle, reach out to us for clarification and answers. We proudly assist individuals and families in Rockville, Maryland, as well as Montgomery County, Prince George's County, Howard County, and Fredrick County. 

Overview of Insurance in Maryland 

In Maryland, the law determines minimum liability coverage requirements. These include a minimum of $30,000 for bodily injury per person, $60,000 for bodily injury per accident, and $15,000 for property damage. It's crucial to remember that these are the minimum requirements, but you may choose to have more extensive coverage to protect yourself further financially. 

In addition to liability insurance, Maryland drivers can also opt for additional coverage like collision and comprehensive insurance. Collision coverage assists in paying for repairs or replacement of your vehicle if it's damaged in an accident, regardless of who's at fault. On the other hand, comprehensive coverage aids in covering the costs of damage to your vehicle caused by non-collision events such as theft, vandalism, or natural disasters. 

Primary Insurance Coverage in Maryland 

We often get asked about the concept of primary insurance. In Maryland, primary insurance refers to the insurance policy considered the first source of coverage in an accident. Typically, the car owner's insurance policy is viewed as primary, providing coverage for the owner's vehicle and any authorized drivers.

When someone else drives your car with your permission, your insurance policy usually provides coverage. This means that if the person driving your car causes an accident, your insurance policy would be the primary source of coverage for any resulting damages or injuries. This includes scenarios such as lending your car to a friend or family member, allowing someone to borrow your car for a specific purpose, or even if you have a regular arrangement where someone else frequently drives your car. 

Permissive Use Coverage in Maryland 

Permissive use clauses are provisions in insurance policies that allow coverage for others driving your car with your permission. In Maryland, insurance policies often include permissive use clauses to extend coverage to drivers who have the owner's permission to use the vehicle.

Permissive use coverage in Maryland generally allows the owner's insurance policy to provide coverage when someone else drives the car with permission. However, there may be limitations and conditions associated with this coverage. For example, the driver must have a valid driver's license and be authorized by the owner to drive the vehicle. Additionally, the coverage may be subject to the same policy limits and deductibles as if the owner were driving the car themselves. 

Non-Permissive Use in Maryland 

Non-permissive use in Maryland refers to situations where someone drives a vehicle without the owner's permission. In these cases, coverage may be denied by the owner's insurance policy. If someone takes your car without permission or uses it in a way that exceeds the scope of the permission granted, the owner's insurance policy may not provide coverage for any resulting accidents or damages. 

How an Attorney Can Be Helpful  

A competent attorney can offer invaluable assistance when navigating the complex terrain of auto insurance policy coverage, particularly in cases involving borrowed vehicles. They can clarify the specifics of your policy, including permissive use clauses and their implications in the event of an accident. A lawyer can also advise on the potential consequences of non-permissive use situations and guide you on how to safeguard against such occurrences.  

Additionally, if an accident does occur involving a borrowed vehicle, an attorney can represent you in negotiations with insurance companies or in court, ensuring your interests are effectively represented. They can work to ensure that you receive fair compensation for damages and help mitigate any potential liability on your part. 

Seek Trusted Legal Guidance 

Lending your vehicle to someone else can have numerous implications for your auto insurance policy. It's crucial to thoroughly understand the specifics of your coverage and how it may be affected in such situations. For instance, different insurance policies may have varying terms and conditions regarding the coverage for borrowed vehicles. Some policies may provide limited coverage, while others may not offer any coverage at all.  

It is advisable to review your policy and consult with your insurance provider to ensure that you have a clear understanding of the extent of coverage when lending your vehicle. If you have any inquiries or require further clarification on these matters, please do not hesitate to reach out to us at Mohammadi & Humayun, LLC. Our team is here to provide guidance and support tailored to your unique needs.