Does Your Car Insurance Cover Special Situations?

Car insurance: You know you’ve got to have it. The penalties for not carrying it vary from state to state, and enforcement of the laws requiring it vary as well. For first-time offenders, the fine is generally about $500, with increasing fines for each time after that. When you shop for insurance, whether you’re a new driver or an old pro, here are some old and new situations to consider and whether they apply to you.

Lending Your Car

Have you ever loaned your car to a friend or family member? If so, you’ve probably also wondered whether you’re covered by insurance should they have an accident. The good news is yes, most insurance companies will cover this. The bad news is that your insurance might be raised afterward.

Because insurance policies vary from state to state and company to company, double-check with your carrier about what’s covered before you lend your car. Be sure to also ask about the borrower’s insurance; if he or she is covered, you can ask the insurance carrier to cover all or part of the damages.

If you lend your car out often or want to loan it to someone for an extended period of time (such as a houseguest or family member), it’s likely that your insurance covers that as well. In these situations, however, it may be helpful to list your guest on your policy, too.

Renting Out Your Car

New apps have created new ways to make money today, just by owning a car. One is to rent out your car when you’re not using it. Sites such as act as the middleman between car owners and car renters, setting up rentals for tourists and business people with the use of a car from local owners.

Typically, these businesses offer up to a $1 million in liability, comprehensive and collision coverage for each car/driver. For uninsured motorists, they may pay only the minimum required in each state, which can be between $20,000 and $50,000. That leaves you and your insurance company to cover any amounts over that minimum.

Providing Taxi Service

Another way to make money is to provide a type of taxi service, with the website again acting as the middleman. Car owners sign up at sites such as and select times they will be available to work. On the other end, site members can log on to ask for a car to take them from the airport to their hotel, a restaurant across town, or a ride home after a night of partying.

In general, these businesses may offer up to $1 million in liability coverage for riders and an additional amount of up to $1 million in coverage for uninsured motorists. They may, however, also rely on the driver’s personal insurance to cover some of the driver’s claims.

If you’re considering renting your car or offering taxi service, you may want to contact an insurance company first and discuss the pros and cons of these situations. For help finding an insurance company, visit  

New Drivers

One of the most dreaded events in a parent’s life is turning the keys to the family car over to a son or daughter. Industry estimates put the increased premium payments for adding a teen to your policy is between 50 and 100 percent?that’s double what you’re paying now. Most states require proof of insurance before a teen can even take the driving test.

Some things you can do to defray the cost include encouraging your student to get good grades in school and enrolling him or her in a driver’s education course before applying for a license. Most insurers will give you deductions for these things. Remember to remove the student from your policy when he goes to college. Don’t worry, he will still be covered as an occasional driver when he comes home to visit and borrows your car to visit friends.

New ways to make money have created new driving situations for insurance companies. It’s always a good idea to discuss your options for coverage before you jump into one of them. For those facing more familiar situations, such as coverage for your teen, it’s still a good idea. Be sure to ask about ways to save, too.


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