“Insurance follows the driver.”

This is one of the most common misconceptions my team and I encounter. And I understand why people believe it. It seems logical. But after more than 40 years in this business, I can tell you that's not how California auto insurance actually works.

Here's what most people don't realize when they hand over their keys: your insurance follows your car, not the person driving.

What Actually Happens When You Loan Your Car

Here's how this typically plays out:

Let’s say your adult son is visiting from out of town. He borrows your car to pick up coffee. At a red light, he isn't paying attention and rear-ends the car in front of him. The accident was relatively minor, but the other driver decided to go to the ER to get checked out, which, frankly, happens more often than it used to.

Although the accident is charged to your son's driving record, you—as the vehicle owner—are the one whose insurance pays the claim and who may be held legally liable.

That's permissive use. When you give someone permission to drive your car, you're also extending your insurance coverage to them. Most people don't know this until they're already dealing with a claim.

Here's Where Carrier Choice Really Matters

In the event of a permissive use accident, your policy is the first line of defense. That much we've established.

But here's what catches people off guard: not all policies provide the same level of coverage in these situations.

Some insurance carriers in California will reduce your coverage limits when someone who isn't listed on your policy is driving your vehicle. So, even if you carry $100,000 in liability coverage, it can be reduced to the state minimum limits when a permissive driver is involved.

In California, those minimums are: 

• $30,000 for injuries to one person

• $60,000 total for injuries to everyone involved in the accident 

• $15,000 for damage to other people’s property

(*Note: In severe accidents where these limits are exhausted, the driver's insurance might provide secondary coverage. But that depends on their policy and the circumstances.)

Fortunately, the auto policies I write maintain full coverage for permissive use with infrequent or non-resident drivers. Your limits don't get decreased to California state minimums in the event of a permissive use accident.

What I Recommend

I'm not suggesting you should never loan your car. I've done it myself over the years. Though I'll be honest, I'm comfortable doing that because I know my coverage maintains full limits for permissive use. If it didn't, I'd think twice.

Before you hand over your keys, it helps to ask yourself a few questions:

• Do I know and trust the person driving my car?

• Can I handle the cost of the deductible if my vehicle is damaged and needs repairs? 

• Do I know whether my full coverage applies or just the state minimums?

If any of those questions give you pause, it's okay to say no. You can offer to drive them yourself or help them find another option.

I've been working with California drivers since the early 1980s, and people are still genuinely surprised when they learn how permissive use works.

"I had no idea. No one ever explained this to me."

I hear that regularly. And I believe it. This isn't something you're told when you buy a policy or renew your coverage. It's in the fine print that most people never read—until they need it.

But it matters. Considering the cost of medical care and vehicle repairs these days, those coverage limits don't stretch as far as they used to.

If you have questions about how permissive use works on your specific policy, I'm happy to walk through it with you. I'd rather spend ten minutes explaining your coverage now than help you navigate a claim later.