Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer

UPDATED: Jun 19, 2018

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In a nutshell...

  • It is mandatory for every vehicle to have an auto insurance coverage to be driven on U.S. roads, and failure to adhere to state laws results in hefty penalties, fines, loss of license, registration suspension, or vehicle being impounded
  • Under the state law, the owner of the vehicle is held liable when they don’t keep the minimum auto insurance cover
  • If you’re driving a borrowed car, your personal auto insurance policy may cover you temporarily while using the vehicle
  • If you drive an uninsured car that belongs to you or a car you regularly access, you may not get automatic coverage from your policy
  • Only liability coverage, uninsured motorist protection, and medical payment protection may extend to non-owned vehicles

Driving an uninsured car can have dangerous repercussions on your financial status. In case you get into an accident without policy coverage, you won’t have any compensation for damages caused to the vehicle.

Furthermore, if you cause any damage to the third party, you will face legal suits to compensate the losses. This can have a severe financial toll.

This financial impact is the primary reason why many states have made it a requirement to have some minimum insurance coverage for third-party damages.

If you’re driving a car rented from a company, the vehicle may be covered in case of damage. You should talk to your insurance provider to see the specific areas your policy covers.

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A Personal Auto Policy May Cover More than One Listed Car

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You will find several terms used in your auto insurance policy. You need to understand the meaning of these terms to know what you are really signing up for.

One of the misunderstood terms is “covered autos.” Many policyholders assume it’s the listed vehicle you stated on the declaration form, but as you’ll realize, it covers more than that.

Here is a list of unlisted vehicles that the policy will cover you to drive:

  • Vehicles you newly acquired after the policy began
  • A vehicle replacing one of the listed cars on the policy
  • Policy cover while driving a rented car
  • A temporary car that you’re using when your vehicle is being repaired, stored, or service
  • Trailers that you own and can be towed or driven on public roads

The personal auto insurance policy provides that covered autos include owned vehicles and any other private passenger vehicles that meet specified conditions.

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Does an insurance cover follow the driver or the car?

As you’ve noted so far, your personal auto insurance policy covers more than you’d imagine. Going through your policy definition of terms and provisions helps you understand your policy.

It’s not obvious what the insurance follows, but it all depends on your particular case.  The nature of loss also affects what the cover will focus on.

You need to understand those different scenarios if you have to borrow and drive an uninsured vehicle.

How Liability Coverage Work

Liability insurance pays for medical bills and third-party damages in case of an accident. This coverage will always follow the driver regardless of which car they are driving.

The coverage will not be afforded under the following scenarios:

  • You regularly drive the car, and you’re not a covered driver
  • The trailer is not registered in your name
  • The vehicle is registered in your name but not under your policy
  • The car is owned by someone living in the same home

The only requirement is that the vehicle in question must be considered eligible under the covered vehicle category at the time of the accident.

Why the Liability Insurance Follows the Driver

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Liability insurance will follow the driver because it is designed to cover your assets. Your assets will still be at risk even if you’re driving a different car; borrowed or rented.

In such cases, your liability coverage will be considered secondary while the vehicles liability coverage will be regarded as primary.

It basically means that your liability coverage comes into play only when the primary insurer denies the claim, or if the vehicle was never insured at all.

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How the Physical Damage Coverage Work

Physical damage coverage is not as straightforward as the liability coverage, especially when you’re driving a borrowed vehicle.

When you’re loaning out your car to someone, it’s important to note that you’re also loaning out your physical damage coverage. But if you’re driving a different car, your full coverage will not apply.

Some insurance firms will use different wording in the policy to indicate that your physical damage coverage will be transferred to someone else’s vehicle if the car is listed in the plan.

If the borrowed car is not insured, the comprehensive and collision coverage won’t apply. However, if you’re renting a car under your name, the collision and comprehensive covers will apply.

Just like liability coverage, both the uninsured motorist coverage and the medical payments follow the driver and nor the car.

Penalties for Driving Without Auto Insurance Cover

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The penalties for driving a car without the minimum liability insurance are quite steep in many states in the U.S. As many people are caught on the wrong side of the state laws, the fines have been made even harsher.

Here are the common penalties throughout the country:

  • Imprisonment terms
  • Fines of up to $1,000
  • License suspension
  • Suspension of car registration
  • Vehicle impoundment
  • Reinstatement fees
  • Community service

It’s your responsibility as the car owner to acquire the necessary auto insurance covers for your vehicle.

If you get involved in an accident, your liability insurance coverage will cater for your assets and wages, but the physical damage may not be covered.

Review your policy and see if you are covered for such scenarios. If not, make several online quote comparisons and find an insurance policy that will offer maximum cover at affordable rates.

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