As a general rule, if I give you my car keys, you have my insurance coverage protecting you. My insurance coverage, referred to as the security covering the vehicle, is generally primary and your insurance coverage is secondary in that it only comes into play if my coverage becomes exhausted. So if you drink too much alcohol one night and ask your significant other to drive your vehicle, your insurance coverage effectively protects the both of you.
However, where people get into trouble is when that significant other drives your vehicle on a regular basis and you have not informed your insurance company of that fact. With some regularity, I will see situations in which a boyfriend and girlfriend are living together but only the girlfriend, because she qualifies for a cheaper rate, has car insurance. The problem is that the insurance company, because they did not know about the boyfriend, may not owe insurance coverage to the boyfriend.
By failing to inform the insurance company of the regular and ongoing use of your vehicle by another, you have basically provided the insurance company with a defense wherein they can claim they do not owe coverage for personal injury from the car wreck. In essence, they can claim that they did not insure the risk involved with the other person, who may have had multiple car wrecks, so they do not owe him insurance coverage for the wreck. If the insurance company succeeds in denying coverage for the wreck, the driver is then exposed to the claims arising from the car wreck unless he/she has other insurance they can fall back on to provide the necessary coverage.
This is why rental car companies always ask you who is going to be driving the vehicle. The legal duties owed by the rental car company are to the renter and the authorized users of the vehicle only. So if you let your Aunt drive the rental car to the grocery store that night and she causes a car wreck, there may be a good chance that the rental car company does not have to provide her with insurance coverage for the wreck.
Please don’t misunderstand me. Denying insurance coverage for a car wreck is not easy and contrary to several of the arguments I advanced above, I can cite some case law that state insurance companies owe coverage for at least the state minimum. However, we all lead busy lives and the last thing we want to do is be involved in litigation over a car wreck much less litigation with an insurance company over whether they owe the coverage we have paid for.
