I had to empathize with my friend. Poor man: out of the goodness of his heart, the man lent his vehicle to a relative. And then his relative was in a serious accident, resulting in two totaled vehicles: the car he had lent my friend and the truck he hit!

For those uneducated on the subject, when you lend your car to someone else, the insurance industry refers to that driver as a permissive driver. If a permissive driver causes an accident, this is how insurance companies will respond.

Car insurance and an accident caused by a permissive driver

If you gave permission to someone who is not listed as a driver on your auto insurance policy and that person causes a car accident, the procedure is generally as follows.

1. In case the driver and the owner of the car have separate auto policies, the auto owner’s insurance will pay for damages under the collision portion of the coverage, after the policy holder pays the deductible required.

2. If there is significant property damage, as well as bodily injury to the other driver or their passengers or pedestrians, the car owner’s insurance will cover the damages and legal fees from an associated lawsuit filed against the car owner. Insurance payments are subject to policy limits. If the car owner’s policy limits lead to an outstanding balance, the driver of the loaned car can seek compensation from their own insurance company to receive any remaining funds owed for damages. If the car borrower is injured in an accident he or she caused, the related payments would generally be covered by the Personal Injury Protection portion of your auto policy. In the event that the driver does not have this insurance protection, but the car owner does, the coverage will go through that.

3. What if the person who borrowed the car was in an accident but did not have a valid driver’s license? In this case, there is a good chance coverage will be denied. Many insurance companies exclude coverage for an unlicensed driver. If this occurs, the owner of the car, you, and the “permissive driver” will be responsible for paying all damages, as well as court fees, if any.

But in addition to the related aggravation and potential wallet depletion, policyholders can find their premiums at policy renewal.

Of course, anyone working with an experienced independent agency designated to do direct business with many of the leading underwriters has the advantage of working to the advantage of the market to find the lowest premium available under the circumstances.