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Permissive use coverage seems easy enough to understand however its important to understand exactly how it applies to car insurance. Permissive use by definition is allowing someone to use your vehicle with your permission. While most car insurance companies automatically extend coverage to drivers permitted to use your vehicle there are many exceptions.
Almost every driver will come across a time when they loan car keys out to a friend. Whether its a quick run to the grocery store or showing off a new car by letting a friend test drive – it is almost impossible to own a car and never let someone else drive it at one time or another. Even though you have car insurance never assume all drivers are covered under your car insurance policy. The most important things you should know about permissive use coverage are:
Permissive use coverage only applies when another driver has the owner’s consent to drive a vehicle.
Never loan for Work
Permissive use coverage may not apply if you loan your vehicle to someone for work. If the car insurance policy is defined as for personal use then any claim may be denied should the insurance company find out the car was used for commercial purposes by the driver who had your consent to use the vehicle.
Other Drivers may have Lower Policy Coverage
Permissive use coverage often only extends the bare minimum state insurance requirements to anyone else driving the car. If your state requires only $10,000 in liability insurance but you have purchased $100,000 then anyone else driving your car may only have $10,000 insurance in the event of an accident. Always contact your car insurance company about how much insurance is extended to other drivers. Just because other drivers are covered does not mean they automatically have the same amount of insurance you have.
Exceptions to Permissive Use
Insurance companies always have a right to deny a claim if the terms of the policy are broken. If you allow an unlicensed or inexperienced driver to operate your vehicle then its possible the car insurer may opt to try and deny any claim for damages. While its sometimes hard to avoid lending out your keys try to limit who operates your vehicle to people who have the same or more experience as you do with a valid driver’s license.
Who offers Permissive Use Coverage?
Permissive use coverage is standard with almost all car insurance policies however it’s important never to assume every driver is insured. Car insurance is fairly simple to understand but can also be complex when it comes to having un-named drivers operating your vehicle. Speak with your car insurance company about how they cover other drivers and make sure to understand your policy details well before handing the keys off to someone else.
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