Does Automobile Insurance Follow the Car or the Driver?

By Gary Wickert | June 5, 2014

  • June 5, 2014 at 2:52 pm
    W Eldon says:
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    “Cheap, sub-standard auto carriers” is a poor choice of terminology and a cheap shot against non-standard carriers.

    • January 11, 2016 at 10:37 am
      Bill says:
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      I agree…it’s usually not cheap.

    • June 18, 2019 at 11:59 am
      Ed says:
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      Does “sub-standard” and “non-standard” mean the same thing?

  • June 25, 2014 at 3:44 pm
    jay says:
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    This is so wrong. Liability Insurance (auto) follows the car, NOT the driver. I was adjuster for 8 years.

    • July 23, 2014 at 1:19 pm
      Sam says:
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      If liability insurance DOES NOT follow the driver, that suggests that one can NEVER skip the liability coverage offered by rental car companies. However it seems the generally accepted wisdom is that if you have your own car insurance, you need not buy the rental car liability insurance. So it’s either not as simple as you say or millions of people are going uninsured. Also, generally damage to the car, damage to another car, and loss of personal property are covered by many premium credit cards.

    • January 11, 2016 at 10:43 am
      Bill says:
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      When someone says “insurance follows the auto,” they are referring to whether the coverage is primary or excess.

      Using the ISO PAP as an example, named insured and resident relatives are covered for liability, med pay, UM, and physical damage in any non-excluded auto. For med pay and UM, they’re covered even if not in an auto, if struck by a vehicle designed for use on public roads (with UM variations based on state law).

      If these insureds are in another vehicle, they are covered but the insurance on the vehicle is usually primary (IF they are an insured on that insurance) and their insurance is excess. Twenty-something states have exceptions of one form or another on this, from operating dealer autos to rental cars.

      Frankly, this article if full of confusing and wrong information, too much so to elaborate on in this forum.

      • September 21, 2016 at 6:35 pm
        Elle says:
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        This article confused me.

  • July 26, 2014 at 11:18 am
    Bill Stanley says:
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    I believe we can all agree that Mr. Wickert is correct when he says the issue of whether insurance follows the vehicle or the driver can be very confusing. I agree with much of what he says, but he did get one thing wrong (at least the way he described it was confusing to me).

    First, Jay (the adjuster for 8 years) is correct. As a general rule, auto liability insurance does follow the vehicle. I suppose some auto policies for high risk insureds might have limiting language, but that would be the exception. By the way, in some jurisdictions, the courts have disallowed these coverage limiting provisions, considering them to be “against public policy” (this is “inside baseball” kind of stuff)

    Second, Sam makes a good point when he asks if there isn’t a serious gap in liability protection if liability insurance does not follow the vehicle in the case of a rental vehicle. Actually the general rule mentioned above still holds true. But, depending on the issues mentioned below, this can still be an area of concern for the renter.

    The liability insurance the rental car company has on the rental vehicle will be available in case of an accident. However, the insurance policy carried by most rental companies typically provides very high limits to protect the rental car company, but often only the state minimum limit to cover the renter! So, liability for the driver/renter does follow the vehicle, but it can be inadequate. So, in the event of a serious accident, the driver/renter’s own personal auto policy will provide excess liability coverage. If the driver doesn’t have a personal auto policy, the extra liability protection can usually be purchased (but the renter should always understand exactly what increased liability limits one is paying for).

    I think we can all agree that physical damage coverage (comprehensive and collision) does follow the vehicle. However, again an important note about rental car company’s insurance policies: Usually the rental car company’s policy will provide physical damage coverage, but with a high deductible (typically $1,000, but I’ve seen them at $2,500, $5,000, or in some cases, NO physical damage coverage). So, when the rental company asks if you want to pay an additional daily amount for physical damage coverage, what specifically are you paying for? Often, the daily fee only waives their deductible — and at a cost that is prohibitive. Also, if you damage the rental vehicle, the rental company also has a right to charge you for the loss of use of their rental vehicle (i.e., the number of days of lost rental income while the vehicle was being repaired).

    The good news is your personal auto policy will respond and pay the collision or comprehensive claim and you will only be responsible for the deductible that you have on your insured vehicle (that assumes you carry physical damage on your own vehicle). Finally, most personal auto policies (not all) will also pay the rental company for their loss of use costs.

    A final note: If you’re confused or not sure, always ask your personal insurance agent. All of these exceptions can be mind-numbing. Don’t hesitate to call. We want to help; that’s an important part of the service an agent can offer.

    • May 21, 2015 at 12:10 pm
      Ronda says:
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      I have to disagree with one thing you said the insurance company does not normally pay for the loss of use. That is the one thing we tell our clients as an agent to consider purchasing the rental insurance for.

      • January 4, 2018 at 8:04 am
        Koedred says:
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        N.Y. Ins. Law § 3440(b) in pertinent part states:

        (b) Subject to subsection (d) of this section, every motor vehicle liability insurance policy which insures less than five private passenger motor vehicles registered in this state shall by endorsement, provide coverage for the obligation of the insured for actual damage to, or loss of, vehicles (including loss of use)

    • January 22, 2018 at 7:07 pm
      Douglas Bostian says:
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      So, I have a question about liability isurance. I was hit head-on by a drunk driver. He was driving his wife’s vehicle (with a AAA policy in her name). The company is claming “no libility” in the crash for my injuries. When asked why, they claim he was not listed on the policy (and she was the passenger in the vehicle at the time of the crash). I argued that she had given implied concent for him to drive, seeing that she got into the vehicle with him. I asked if She had excluded him from the policy, since they are married and live togehter and they refused to answer, claiming “privacy with their client”. They told me to put in a claim with my insurance company since I have uninsured driver policy….This does not sound right/fair to me. any advise?

      • February 6, 2019 at 9:40 am
        johnny says:
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        that wraps it up for me. Insurance in America is a scam.

  • August 6, 2014 at 1:34 am
    Jeff says:
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    Other items to consider with non standard policies are length of rental. Some insurance companies will only insure the rental vehicle for upto 14 days.

    Also consider the facts of loss in accident, DUI may void the collision coverage

    Another consideration would be the driver of the vehicle, this person may not be listed on the policy which may reduce your coverages

    When purchasing insurance your main questions are not “What is covered by this policy” rather you should be asking ” What are the exclusion or What is NOT covered on this policy”.

    Once you understand what is NOT covered you will be protected.

    • August 7, 2014 at 9:04 am
      Bill Stanley says:
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      Jeff, thanks for this info. I write very little non-standard auto, and I have to admit I’m not familiar with the coverage limitations you mentioned. The only non-standard carrier I use is Progressive. I’ll check with them today about this.

      Also, you’re right; the emphasis should be on what is “not” covered. We never stop learning in this business.

  • November 3, 2014 at 4:12 pm
    Brian Sigmon says:
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    Questions like this are what make claims such an interesting business. Auto policies often exclude drivers under a certain age. There may be coverage for a permissive user but not if they are under age 21.

    Another point to be made is that forms vary by state and just because something is a certain way in California doesn’t mean it will hold true in Missouri for example. Often policies will require that they conform to other states’ requirements, for example liability limits may be low in one state but not meet the requirements for another state.

    When all is said and done, you must read the specific policy(ies) and endorsements and be aware of statutory requirements and in the case of rental cars also any contractural requirements.

    • June 30, 2015 at 11:41 pm
      Jack Thomas says:
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      Brian, would you mind sharing the insuring agreement language where it restricts the age of permissive users? Please specify the state and company as well if possible. I can’t seem to find such types of restrictions in policies we offer as an independent agency. Feel free to email me as well.

      Thanks

      Jack Thomas

  • November 7, 2014 at 2:37 pm
    Johnnie Ringo says:
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    I was rear ended by a 17-year old who was not on his Mom’s policy, and she was the registered owner of the car. National General (their insurance) is waiting to asses whether or not they are liable for the damage to my car & the related injuries (even though they sent out an estimator the very next day who assured me all was covered, gave me a written estimate, promised a comparable rental car similar to my SUV that was hit — but now that the repairs are done the dealer won’t release my car to me until the insurance company sends them (or me) a check — AND when I got the Enterprise rental car, I had to use MY credit card because the insurance still has not officially accepted liability for the accident. Oh, the 17-year old kid was “high as a kite” according to the police, and arrested at the scene of the accident – his car was totaled.

    Why is this so complicated? It seems like the company who insured the car would be liable and it is up to them to deal with the Mom who let her son drive it & hit me. It seems like National General is trying to find a loophole so they don’t have to cover the accident (that occurred 3-weeks ago).

    • July 28, 2015 at 6:45 am
      Guy says:
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      If the driver of car was “high as a kite” this will invalidate any insurance policy – named on policy or otherwise, I am yet to see a policy that will underwrite illegal activity. This includes speeding, racing, alcohol and/or substance abuse. While the other party are still liable their insures would wash their hands of it due to voiding policy. I feel you’re in for a legal battle or have to claim on your own policy against driver without insurance.
      I have experienced same; although not as extreme – it was purely fender bender in my case in the end they paid $400 personally, as insures wouldn’t touch it.

      • October 12, 2015 at 9:49 am
        Daniel says:
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        You’re not exactly correct there, Guy. The fact that someone is intoxicated or “high as a kite” doesn’t invalidate anything. Please quote an exclusion from any ISO form where impaired driving is an exclusion.

  • November 17, 2014 at 10:20 am
    Mila says:
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    We have just bought a new car. I am the owner and it is only me who listed as an insured. My question is: “If my husband, who from time to time would take the car had an accident, would there be is problem? We live in Canada. On my automobile insurance certificate there is a list of protections and coverages. One of them says ’44 family protection coverage’. Does it mean that my husband is automatically insured to drive my car as my spouse? Any advice would be nicely appreciated.
    Thank you.
    Mila

  • November 25, 2014 at 11:06 am
    R S says:
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    I think is time to change that concept, it is time insure the driver and not the car. By insuring the driver, all cars owned by that person will be insured as the driver aboard the car. Remember the driver will only be able to drive one car at a time, thus cheaper for that driver. It is time to be innovative.

    • December 7, 2014 at 4:36 pm
      rick says:
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      They have that they are called named owner policies

  • December 7, 2014 at 4:36 pm
    rick says:
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    The better way to ask this question would be do First and Third Party coverages follow the car or the insured. Another consideration is the state the loss happened in.
    Here in Texas if you loan your vehicle to someone who isnt an excluded driver and they hit someone your Third Party Coverage(liability, PD) is going to pay for the other persons vehicle. However, the vehicle owner has the choice of deciding if they will have their own 1st Party Coverage(collision) repair their vehicle or use the Third Party Coverage of the driver’s insurance to handle the repair.
    As far as rental vehicles thats also paid under liability as the liability coverage transfers in most cases where an insured has become legally liable for a vehicle.

  • January 26, 2015 at 2:48 pm
    Marcus Cato says:
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    For experienced, mature drivers with no claims for many years, it is absolutely outrageous that the DRIVER’S auto collision coverage does not extend to ANY car they drive with permission of the owner. The fat that this kind of policy is not available, is evidence that the auto insurance industry is nothing more noble than a venal, money-grubbing gang. They are not REALLY willing to be a shield against risk for PEOPLE. They care only about THINGS.



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