Who is responsible for damage when someone borrows your car
A friend borrows your vehicle. That person causes an accident. He or she damages your car. And, there is damage to another person’s car, too.
Who covers the losses?
In a situation like this, it can seem very worrisome to you, but most often, car insurance covers the vehicle. That is, your car insurance remains in place even when someone else drives the car. Here is what you need to know.
Damage to your car
Your auto insurance covers your vehicle. It also has liability damage for the incidents where you cause damage to another party.
In an instance like this, your policy applies to the car itself. If you have collision insurance, it pays for the damage to your vehicle. If you do not have collision insurance, you may not have any coverage for your own vehicle.
Damage to the other driver’s car
In this instance, the other driver suffered damage from your friend as well. Again, your auto insurance should kick in to cover the losses in most cases. The damage brought on by the accident likely falls under your liability insurance. It covers up to the maximum amount of coverage on that policy.
If the friend has auto insurance, his or her auto insurance may act as a secondary in a liability case. If you do not have enough coverage, the other driver may file a claim against the friend’s insurance to cover losses.
There are limitations
Some auto insurance policies exclude instances like this. In some situations, your car insurance may list certain drivers as excluded parties.
This means if that person is operating your car, your car insurance does not apply. In this case, you do not get help with your repairs or those to the other party’s vehicle. What’s more, you could have to pay these costs out-of-pocket. If the friend does not have a license or is a high-risk driver, he or she may also not have coverage under your policy.
Read the terms of your auto insurance policy. Be sure you know specifically what limits apply to it. This can make a big difference in the outcome of your policy in a situation like this. And, if you lend your vehicle to another party, be sure he or she understands those limits as well. You do not want to face significant loss here.