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What is Permissive Use Auto Insurance?

Education | 07/08/2023 16:47

Have you ever let a friend or family borrow your car and wondered if they were covered under your insurance policy? The answer is yes–in most cases–under permissive use auto insurance. So what exactly is permissive use auto insurance and what does it cover?

Here’s everything you need to know about permissive use auto insurance.

What is permissive use auto insurance?


Permissive use auto insurance allows a person who does not live with you and is unlisted on your car insurance to drive your car legally. Permissive use is a feature of most auto insurance policies but it is always a good idea to ensure that it is outlined in your policy.


Permissive use insurance allows for people who drive your car infrequently to use it from time to time. A big part of permissive use insurance is that the use is infrequent, typically defined as less than 12 times per year. 



Does all of my insurance coverage transfer to the permitted driver?


If someone is driving your car who is not listed on your policy, does all of your coverage transfer to them? In short, yes, as long as you are abiding by the guidelines in your policy. But there may be exceptions to this.


Most states require that a driver be insured to some degree. The most common type of coverage is liability insurance, which pays for injuries and/or damages from a car accident, including those of the other driver and their passengers. But some states require other coverage, such as:

  • Uninsured/underinsured motorist coverage: Covers the cost of injuries to you and your passengers, and damage to your car and other property, if you're hit by a driver who is uninsured or underinsured.

  • Personal injury protection: Covers medical expenses for insured drivers and their passengers. It can also cover lost wages and other expenses that result from the accident.

  • Medical payments coverage: Covers medical expenses due to injuries from a car accident. It is similar to personal injury protection but does not cover lost wages or other expenses. 

  • Comprehensive and collision coverage: These are not required by any state but can offer additional coverage for collisions, theft, vandalism, and acts of nature.

Most insurance policies transfer all of your coverage to the permissive driver. But it’s important to note that not all policies do. It’s important to check your specific coverage to see who is insured for what.

How do I know if I should add someone to my insurance policy?


Permissive use is specifically for people who do NOT reside at your address and only use your vehicle infrequently. Drivers are covered for 12 “uses”, and every time a driver enters and exits the vehicle it counts as one use. So if a friend is going to be using your car for a few days or weeks, or is taking a road trip with your vehicle, it’s a good idea to add them to your insurance policy to ensure you don’t have a problem. You can always add a driver temporarily, which means that you will not have to pay for them for an extended period.

Are household members covered on my insurance policy?


Spouses are generally covered on auto insurance policies, even if they are not specifically named on the policy. This also extends to other relatives who are living in the same house. They can be related by blood, marriage, or adoption. 


If you have a roommate or foster child the rules are less clear, so it’s a good idea to check with your insurance company if you are not sure. If someone else uses your car a lot and does not reside with you, you will need to have them specifically listed on your insurance policy.

Who is not covered under permissive auto insurance?


Permissive use is just that–permissive. This means that if you do not authorize someone to use your vehicle, they are not covered under your insurance. Here are the the instances where permissive use will not cover a driver under your policy:

  • Unauthorized drivers. If someone takes your vehicle without your permission they are not covered.

  • Unlicensed drivers. If someone who does not have a license uses your car they are not covered under permissive use.

  • Excluded drivers. If someone is specifically named on your policy as an excluded driver, permissive use will not apply. 

  • Business use. If someone borrows your car for business use, such as driving for a rideshare, permissive use will likely not apply.

  • Criminal activity. If a person uses your car for criminal activity, permissive use will not apply. 

  • Intentional acts. If a person uses your car to cause intentional damage, permissive use will not apply.


What is a named driver policy?


A named driver insurance policy means that only those who are specifically named on the insurance policy will be covered by that policy. There is no permissive use. Most standard auto policies include permissive use, so a named driver policy is somewhat non-standard. People may opt for named driver policies however because they can be cheaper. The insurance company knows exactly who will be driving the car, including their ages and driving histories, so they can give more accurate coverage rates. Standard auto policies must inflate their premiums slightly to account for the permissive use of people that they are not vetting beforehand. 


Named driver policies can be problematic however. Even if your car is used by someone else in the case of an emergency (and you are in the car with them), an insurance company can deny coverage. Many states are currently trying to pass legislation to make sure drivers are aware of all of the limitations before signing a named driver policy.

How much does permissive use auto insurance cost?

Permissive use comes standard with most auto insurance policies. This means that it is already built into the cost of your auto insurance premium. Your car insurance premium is based on a number of factors, including the following:

  • The insurance coverage you select. Insurance requirements vary greatly from state to state and can vary greatly from person to person. Some people like to have more coverage for the sake of security, while others prefer to keep their coverage on the more affordable side and take their chances. 

  • Your driving record. The better your record is, the less likely they are to have to pay out, therefore the less you will have to pay for insurance. Accidents, moving violations, and DUIs will all increase your insurance premium significantly.

  • How often you drive. The less you drive, the less chance there is for an incident.

  • Where you live. If you are located in an area with heavy traffic or higher rates of vandalism you will pay more for car insurance.

  • Your credit score. Your credit score is another indicator that insurance companies use to predict your chance of being in an accident. Having a poor credit score will significantly increase your cost of insurance. According to a LendingTree study, those with poor credit scores pay 72% more than those with excellent credit scores. 

  • Your gender. Women tend to get in less accidents than men and therefore will generally pay less for insurance.

  • Your age. Older drivers tend to have more experience driving and will get lower rates.

  • Your car. There are a lot of variables that your car has that will affect the insurance premium. The cost of repairs, likelihood of theft, and the general safety of your car will all affect your premium. Some features of your car may reduce your premium, such as certain anti-theft devices. 

There are a lot of discounts that you may be eligible for that can help reduce the cost of your insurance. Good student discounts, good driver discounts, and military discounts can all help to reduce your premium. Having multiple vehicles and/or multiple policies with one insurance company can also help you to save money overall. Paying your policy in full and upfront can also give you a significant discount. 

Can I still be held liable for damages or injuries caused by someone driving my car under permissive use?

If someone is using your vehicle and gets into an accident, permissive use will likely cover the damages. But if there is something that is not covered by your policy, you may be legally responsible for the damages. It does depend on the situation however. You can also expect that your premium will increase in the future.

That’s everything you need to know about permissive use auto insurance.

If you are unclear whether or not someone is legally allowed to use your car you should check with your insurance company. You don’t want to risk having an insured person driving your car, as the damages will most likely be your financial responsibility. If a friend frequently uses your car, consider adding them to your insurance policy to ensure that you are both covered. 


Paying for insurance can add a lot of stress to your finances, and so can overpaying on your car loan. Contact Auto Approve today to see how much you could be saving with a car loan refinance!


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