In most instances, your car insurance company will pay the claim if you let someone drive your car and they are in an accident, even if you’re not in the car. That’s called permissive use, basically it just means that your car insurance will extend to cover anyone who borrows your vehicle.
However, there are some instances where another driver might not be covered under permissive use, and some states allow insurance companies to reduce coverage levels for permissive use drivers.
What is permissive use in car insurance?
Permissive use just means that you have given someone else permission to drive your car, so your car insurance company will cover them while they are behind the wheel of your vehicle, even if you’re not in the car with them.
The same also applies in reverse — you are covered if you have permission to drive someone else’s car. There are two types of permissive use:
Explicit: Explicit permissive use is when you tell someone, either verbally or in writing, that they have permission to use your car.
Implied: Implied permissive use is when it is assumed that someone has a right to drive your vehicle, like when you give a friend a spare car key.
Each state has its own laws and regulations around insurance coverage for permissive use drivers, so it is important to read your policy carefully and reach out to your insurance company if you have questions about the permissive use laws in your area.
What is non-permissive use in car insurance?
If a driver does not have permission to use your vehicle but they are driving it anyway, that is considered non-permissive use. There are several types of non-permissive use, like:
A friend or family member borrows your car without your permission.
You give someone permission to use your car in a very specific circumstance, like allowing a valet to park your car, and they use it in ways that you did not agree to when you gave them your keys.
Your car is stolen and the thief takes it for a joyride.
A driver who has specifically been excluded from your policy borrows your car.
If someone has taken your car without your permission and causes an accident, you likely will not be held responsible for any damage they cause to other people or their property (although it can sometimes be hard to prove you didn’t give permission when the person who was driving your car is a friend or relative).
However when it comes to damage to your own car, you’ll have to file a claim with your own insurer to repair or replace your car if you have full-coverage car insurance.
What is a permissive use statute?
Some states have a permissive use statute that places responsibility in an at-fault accident on the owner of the vehicle, not just the driver.
For example, California Vehicle Code 17150 states that a vehicle owner that gives permission to someone else to drive their car is still responsible for death or injury to a person or damage to someone else’s property if the permitted driver is at fault in an accident. 
Basically, that means that you could be held financially responsible if your friend borrows your car with your permission and causes an expensive accident.
What does it mean to be a listed driver on a car insurance policy?
A listed driver is someone who is not the policyholder but is included as a covered driver on an auto insurance policy.
The policyholder on a car insurance policy is the person who owns the auto insurance policy. In some cases, like with partners or married couples, there may be two policyholders on a car insurance policy.
Anyone who is not the policyholder but lives in the household or is otherwise included on an auto insurance policy is considered a listed or named driver. Listed drivers are covered by the policy the same way the policyholder is covered, but a listed driver is not responsible for making changes to the policy or paying the insurance premium.
Does all of a car insurance policy apply to the permitted driver?
Yes, in most cases your car insurance policy covers anyone who drives your car just like it covers you. However, some states have laws in place that limit the amount of coverage available to a permissive use driver.
Referred to as drop down limits, some states reduce the amount of available coverage for permissive use drivers down to the state minimum required levels of coverage. This means that, depending on the laws in your state, a friend who borrows your car could potentially have much less insurance coverage than your auto insurance policy would provide to someone who is actually listed on the policy.
What happens if you let someone borrow your car and they get into an accident?
If you gave someone permission to drive your car they are covered under your policy, but the specifics of what happens if they’re in an accident depends on who was at fault.
If someone hits your car while it is being driven with permissive use, the at-fault driver is responsible for any damage to your car and any medical costs incurred by your friend.
If the person who borrowed your car is at-fault for the accident, your car insurance will cover them up to the limits of your policy.
If the damage they caused goes beyond the limits of your car insurance coverage, they will be responsible for the rest of those costs. If they have car insurance of their own, whether it's a standard car insurance policy or a non-owner policy, their insurance will pick up where your insurance left off. If they don’t have coverage of their own, they’ll be expected to pay any additional costs out-of-pocket.
But keep in mind that auto insurance rules and regulations vary from one state to the next. Some states have laws that limit the amount of liability coverage an insurance company can provide to a permissive use driver, while no-fault states require drivers to carry personal injury protection (PIP) coverage for their own medical expenses, so exactly how (and how much) an auto insurance policy will pay after an accident may vary by location.