Recently I was asked if someone were to let their friend drive their car, one that has no insurance coverage, and the driver had an accident, then who would have to pay the damages.  I had to do a bit of a double take on the question of course since I would never advise anyone driving an uninsured car in the first place.  But on reflection, I suppose it is a question that bears at least some consideration and an answer.

Now I’m not an attorney so I don’t want to even pretend to answer a legal question but let me start by giving you my opinions and thoughts on this unusual question.  My first thought is that you should never, ever, go one day with an uninsured vehicle on the roads in North Carolina.  Now, having said that, I also recognize that there are up to 15% of the cars on our NC highways every day that have no insurance in force.  This can happen inadvertently when people forget to pay their car insurance bill or the payment gets lost in the mail or the check that they use to pay their insurance bill bounces.  And of course there are also a number of drivers out there that simply choose to be uninsured.

With those thoughts out of the way, what will probably happen if you loan your car to a friend and your friend has an accident that is his fault.  Who will pay for the damages?  I’m sure that different circumstances may generate different results but in general both the person driving the car and the person who owns the car can be held liable for the damages.  Can you demand that your friend pay for the damages and leave you out of the matter?  Of course you can but whether or not you succeed will probably depend on if your friend knew the car was uninsured when he borrowed it, as well as the nature of what caused the accident and the degree to which your car’s condition had an impact on the accident happening in the first place.

Your friend may have some protection that derives from his own personal auto insurance policy, assuming he has one in place on his own cars.  In that case he has protection for himself, but not you.  If he relies on his insurance company to step in and pay the first dollar damages, then it is very likely that his insurance company will turn around and sue you for the damages that they paid for on his behalf.

Now, if you are uninsured and loaning out your vehicle to others, you must understand that you are increasing your risks by adding another driver and his or her skill to your list of uninsured liabilities.  The way that I answered this question when asked in the first place is that if you are taking the time to worry about this before you loan out your car, then you should take the time to buy an insurance policy for your car because the law says you must and the risks to your assets are too great to ignore.

If you find yourself without insurance on your car, please don’t drive it until you are insured.  If you would like help with your auto insurance policy, or if you just have questions about car insurance in North Carolina, please call us, toll free, at 877-687-7557 or visit us on the web at www.ClinardInsurance.com.

It’s one of those discounts that almost everyone gets on their auto insurance and is often not thought about much, the multi-car discount.   This discount can run in the range of 20% to 25%, varying by insurance company but one thing is sure, you don’t really notice it until it is gone.  And for some families out there this discount will disappear very soon, leaving you with a large increase in your auto insurance costs.

The multi-car discount is not just some marketing idea to help attract business and cut your rates, it is founded in underwriting logic.  The logic is that if you have more than one car in the household, then some of the time both of your drivers will be riding together in the same car.  That fact means that the other car is not being used as often as it would have if both drivers lived in separate households with their own cars that they drove every time they needed to travel.  The 20% to 25% thing is an average of course but over time this seems to accurately reflect the underuse of the second car.

In our more modern world of separate household finances we have more and more situations where a family might have several cars and also want to have separate auto policies.  This is usually the case when the spouses want to keep their finances separate.  The old I pay for mine and you pay for yours approach often creates the need for two different auto policies.  Of course even when this happens, the theory that I described above is still in play and so this household still deserves a multi-car discount on both auto insurance policies.  Insurance companies for the most part have acquiesced and applied the multi-car discount to both policies even though each policy only had one car listed on it.   Now that has all changed.

Effective March 1, 2012, the NC Rate Bureau has issued a revision to Rule 4.D clarifying the intent of the multi-car discount.  The Rate Bureau now requires that there be two or more cars listed on the policy in order for the discount to be allowed.  So those two budget households out there with two different auto policies are in for some sticker shock when their auto insurance policy renews again.  Losing this discount will generate an additional rate cost of up to 25% on each policy!  I’m guessing there is nothing that shouts togetherness more loudly than seeing a steep increase in auto insurance costs.

There are some exceptions to this new rule change.  In NC, there is a limit to the number of cars that you can list on a personal auto policy.  That number is 4, so for households with a 5^th car, you will have to purchase a second policy.  In this case, the multi-car discount is allowed to be applied to both policies.  The other exception is where one of the cars is co-titled in another name of a policyholder in the household.  If this exception exists, then the multi-car discount can be allowed on both policies.

If you think you may fall into the category of policyholders who will lose the multi-car discount at your next renewal then you should give your agent a call and let them know that you want to discuss options for keeping this discount in your household.  If you are unable to reach your agent or still have questions about this change, please feel free to call us toll free at 877-687-7557 and we will try and help advise you on your options.