Is your neighbor who has a valid drivers license insured while driving your insured car?

Answer from a General Agent

No, your neighbor is not a covered driver under your Auto Policy. The good news is that any accident your neighbor has while driving your vehicle would be covered because "you", the policy holder are covered for any liabilities that may arise out of the ownership or operation of the scheduled vehicle. including liabilities that may arise when you loan the car to another person.

If you loaned it to your neighbor and had no insurance, the neighbor would have to seek coverage from his own auto insurance policy. The liability portion of your auto insurance follows "the driver" to another vehicle as secondary coverage.

Yes, as long as you have given permission to the neighbor to drive your car he is insured whilst driving a car, because the insurance is on the vehicle and not the person.

In case of an accident which involves your car, the vehicle damage portion will be definitely on your insurance policy. Thus your insurance cost will increase. Secondly, if the neighbor does not have an insurance policy than your car insurance policy will also be responsible for the liability damages if any - i.e. if some third party files a suit.