How Borrowing a Friend’s Car Can Wreck Your Credit
Borrowing a car may seem like a harmless habit between friends, but it could lead to long-term credit and financial risks. Before you ask to drive someone else’s car, consider the potential implications.
Inadequate Auto Insurance
The state of California imposes minimum auto insurance standards on all licensed drivers. Drivers must carry liability insurance of at least $5,000 for property damages, $15,000 for injury or death to one person, and $30,000 for injury or death to multiple people. While these minimums help protect drivers in a plethora of accident situations, they may not be adequate to cover a driver who borrows another person’s vehicle – if your friend or relative even has car insurance.
Always ask your friend if he or she has active automobile insurance before borrowing a vehicle. Driving without insurance is illegal in California, but that doesn’t stop hundreds of drivers from shirking the law and driving uninsured. Even responsible drivers sometimes make mistakes, allowing their coverage to lapse or failing to ensure their policies meet the law’s minimum required standards. It may feel awkward to ask about your friend’s car insurance, especially when he or she is doing you a favor, but it’s the only way to avoid a damaging situation due to inadequate auto insurance.
Damages to Your Credit
If you borrow someone else’s car and get into a car accident in San Diego, your credit may be at risk. If the owner of the vehicle doesn’t have adequate car insurance, or they’re “in between” policies, you may find yourself having to foot the entire bill for the damages. A simple fender bender can easily amount to $10,000 in damages with newer vehicles or minor injuries. If you’re at fault for the accident and there’s no insurance company to pay for it, you can bet it won’t be your friend willing to take the charges. It will come out of your own pocket.
Whether you’re driving your own car or someone else’s, you are responsible for your own actions. If you drive distracted or negligently, causing a crash, you are the one the law pinpoints to pay for subsequent damages. This is why it’s imperative to carry adequate and up-to-date car insurance in California at all times. Without this safety net, you may have to take out loans you can’t afford or opt in for credit cards with high interest rates. One moment of bad judgment could lead to a lifetime of combating bad credit.
How to Handle a Complex Insurance Issue
Car insurance policies can be complicated, especially if more than one company is involved in an accident. There may be many different scenarios:
- You have permission to drive your friend’s car, but you are not listed on the policy. In this case, the car owner’s insurance will provide primary coverage in an at-fault accident. If you have insurance, it would provide secondary coverage.
- You have permission to drive your friend’s car, but one or both of you don’t have insurance. In this case, you would personally have to cover part or all of the expenses in an at-fault accident.
- You borrow a friend’s car without asking. If you don’t have permission to drive the vehicle, your own insurance would become the primary coverage. If you don’t have insurance, the costs come out of pocket.
The lesson here is to always carry adequate insurance and to make sure your friend has insurance before borrowing a vehicle. The safest course of action is to not borrow someone else’s car at all, but if you must, do so wisely. Consider renting a vehicle with coverage or taking a taxi/Uber/Lyft to your destination instead. Protect yourself, your assets, and the integrity of your credit by covering all your bases before operating a borrowed vehicle.