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Most aspects of your coverage are fairly straightforward. You’ve hopefully done your research before building your policy, ensuring that you opt for the types of insurance – collision, comprehensive, additional liability, personal injury protection, uninsured/underinsured motorist and medical payments—that will provide ample protection for your needs and lifestyle. Your coverage will pay out up to your policy limits. Ideally, you touch base with your insurance agent every year or so to ensure that your policy is still a good fit.
Unfortunately, the question of whether your policy covers you or your vehicle doesn’t have a straightforward answer. Generally speaking, the insurance follows the automobile, meaning that if you drive and wreck your friend’s car, they will file with their own insurance rather than yours. However, if you’re driving and wreck a rental car, your insurance will cover damages. There are numerous variables that influence whether your insurance covers you or your vehicle, such as what type of auto insurance you’re referring to.
Here’s an outline of which types of auto insurance follow your car and which types follow you.
These types of insurance cover your car, no matter who was driving it at the time of the accident.
If you loan your car to a friend and he is the at-fault driver in a collision, your liability insurance will cover the injuries and damages incurred by the other driver. If your liability limit is met, then the injured driver may attempt to pursue further compensation from your friend’s insurance company if his liability limit is higher than yours. However, unless he carries additional coverage for damage to non-owned vehicles, it’s unlikely that his insurance would pay anything out since your car is not on his policy.
In keeping with this scenario of your reckless friend, your collision coverage would also be used to cover any damages that resulted from that collision. Even if he has insurance, his own premiums are based on the costs that could arise from repairing or replacing his vehicle, not yours.
If this same unfortunate friend hit a deer while driving your car, it would be your comprehensive coverage – not his – that would cover the cost of repairs.
And here’s where things can get a little hairy. If you are renting (not borrowing) a car and are responsible for an accident, your insurance provider will pay for the repair or replacement costs. However, the coverage may be limited to the value of your vehicle. If you rent a car that is a more significantly expensive than the vehicle on your policy, your insurance may only pay a portion of the accident-related costs. In other words, if the quarter panel of your rented Lexus is damaged, your insurance may only pay out what it would cost to replace the quarter panel of your 1992 Corolla.
Because these types of insurance pay out regardless of who is at fault and the premiums are based on the person, not the vehicle, they follow the driver. However, if you have MedPay and PIP through your auto insurance, depending on the terms of your policy, these types of coverage may also cover the medical expenses of your vehicle’s passengers, provided they do not have medical insurance.
Because the issue of whether your unique insurance policy covers you or your vehicle is confusing and differs with different circumstances, it’s best to review your own policy with your insurance agent. Discussing your driving (and lending) habits with a professional can help you be confident that your policy provides adequate protection.