Driver's test in a borrowed car: Whose insurance?

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Question: I want to get a driver's license, but I don't have a car. I think I need to show proof of insurance for this. Do I need to buy insurance to cover my friend's car that I am borrowing to take the road exam? She already has insurance on it herself.

Answer: State laws vary, but typically before being allowed to take a road test to qualify for your driver's license you'll indeed be required to show proof of car insurance. However, a policy of your own may not be needed since you're borrowing an insured vehicle - as long as that insurance extends to you and your state doesn't specifically require insurance to be in your name.

When you don't own a car or have an insured household vehicle available for the driving test, your options usually are to rent a car or borrow a vehicle. You have chosen the latter. ( Teens will normally use a parent's car and should be covered by the household policy by this point in the licensing process)

When borrowing a car, it's important to know that auto insurance follows a car and not driver. So, while you could purchase a non-owner policy , it would provide only secondary coverage to the car owner's primary auto insurance coverage.

The car owner's policy is what would cover a car accident that occurred during the road test, thus making it vital for the car owner to make certain that her auto insurance policy extends to you.

Most car insurance policies will cover permissive drivers , but your friend should review her policy to verify this.  She should confirm that her policy doesn't have any exclusions or restrictions that could prevent her insurance from covering you. (See "Gotchas of a cheap car insurance.") 

Also, if you're going to be regularly driving her car, she should check with her agent to see if she's required to add you as an occasional driver to the policy for you to be properly covered.

Making sure that the car owner's policy extends to you for the road test is one step. The next step is to find out what exact proof of insurance you need to show for the road test.  (Find a link to your state's licensing office department here.)

Many states are similar to California, which requires that before your driving test begins you must prove the car is property insured by one of the following means:

  • A document with the liability insurance policy or surety bond number.
  • An Assigned Risk insurance card with the name of the assigned insurance company, file number, and current coverage dates.
  • Current insurance binder or copy of an insurance policy signed or countersigned by an insurance company representative.
  • Rental car contract if the driver is listed on the contract as the insured.
  • DMV-issued certificate of self-insurance or acknowledgment of cash deposit.
  • Written confirmation from the insurer that the person is insured.

And then there are other states, such as North Carolina, where to obtain a license you need your own car insurance.

In North Carolina, when you're applying for an original license -- or restoring a license after a suspension or revocation or obtaining a limited driving privilege license from the court -- the law requires that you submit proof of auto insurance by means of an original liability insurance policy with your name on it (or form DL-123 can be used by an insurer to verify information).

This state does allow that if you don't own a car that you can obtain a certification of exemption (form DL-123A), but then you're restricted to driving only fleet vehicles.  If you plan to borrow cars to drive, it's better to obtain a non-owner's policy and file a DL-123 with the state than claim an exemption.

For your driving test, confirm with your state's licensing office what type of insurance is needed.  If you find that you must have insurance on yourself to obtain a license, then a non-owner's policy would be necessary. Otherwise, it's not essential - but could come in handy if you plan on borrowing cars from time to time to get around.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Personal Finance , Insurance

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