You may have a problem when your no-good, beer-swilling brother-in-law swipes your car keys without your permission. Or your 14-year-old goes for a joyride. Or your neighbor borrows your car with your blessing and then lets his goofy nephew drive it. Hope and pray these people don't get in accidents, because car insurance coverage can be tricky at best and nonexistent at worst in cases like these. You could be on the hook not only for the damage to your own car but the damage the driver causes others. And if you live in a no-fault state, personal injury protection for the driver could be in jeopardy. Car insurance policies generally cover you and the licensed drivers in your household who are listed on the policy and any other licensed driver to whom you give occasional permission to drive the car. Details can vary by policy or state law, but in general, when someone drives your car without your permission, coverage "depends on whether it's going to be classified as a theft or unauthorized use," says CarInsurance.com consumer analyst Penny Gusner. If your car is stolen, then any damage to your vehicle would be covered under comprehensive insurance, an optional form of coverage. If you carry only liability insurance, the damage to your car isn't covered at all. Even if the thief has his own car insurance coverage, it will not cover his criminal actions. Meanwhile, your insurance will not cover the thief's liability. The thief could be sued for any damage or injuries he causes.
Stolen or taken without permission?
The distinction between theft and unauthorized use is murky. You might tell your insurer that the car was stolen, Gusner says, but that becomes questionable if the person who took the car was a family member or friend who had ready access to the keys.