Will My Auto Insurance Policy Cover A Relative Or Neighbor?

Imagine this scenario: Your neighbor’s car is currently out of commission, and they need to run a quick errand. You trust your neighbor, you’re fairly confident that they have a good driving record, and you don’t mind lending them your own vehicle for the afternoon. Unfortunately, you get a phone call from your neighbor, telling you that they were in an accident while driving your vehicle. What happens now?

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Whose Auto Insurance Covers the Damage?

If your neighbor was hit by an insured driver, the process will be simple enough. The at-fault driver will file a claim with their insurance company, who will pay to get your vehicle back to pre-accident condition. If the collision was bad enough to cause an injury, the at-fault driver’s auto insurance could also cover medical bills, lost wages and any other expenses associated with the accident.

My Neighbor Wrecked My Car What Happens Next

However, if your neighbor was the at-fault driver, you’re going to be the one to file the claim and your insurance is going to cover the damage after you’ve paid the deductible. Who pays the deductible is between you and your neighbor, but your deductible will have to be paid. Your car insurance typically doesn’t cover any damaged items that were inside of your car, although many insurers are now offering personal property insurance, which would help replace personal belongings that were ruined in the collision. Also, you may want to check your homeowners policy or renters policy for your personal belongings to be covered if there is damage to personal property in your auto.

There’s an exception, of course, to who pays for what, and that is if your neighbor drove your car without your permission. If it can be proven that your car was borrowed without your consent, it’s possible that your claim would not be covered. Chances are, there will be attorneys and police involved. Because it can be hard to prove whether or not permission was given, your insurance provider may cover the damage and then decline renewing your policy.

As in all cases, it’s important to check your own policy or speak with your auto insurance agent to find out how situations like these are handled. Some policies provide different coverage for relatives living in your house. The State of Nevada may have minimums and maximums required of insurance companies.  Some policies may offer reduced coverage or high deductibles if your car is involved in a collision in which you were not the driver. Your policy is unique, so make sure you know exactly how an accident would affect you before you loan out your vehicle.

What If the Damage is Less Than My Insurance Deductible?

Maybe you have a $1000 deductible, and your vehicle’s repair costs tally up to $900. Obviously, unless your repair shop finds further damage once they disassemble your vehicle, there is no point in filing a claim. Hopefully your neighbor would recognize that because they are responsible for the accident, they should be willing to cover the cost, or at the very least contribute to the repair costs.

What If They Don’t Fulfill Their Financial Obligations?

While you’d like to think that a friend, neighbor or family member would acknowledge and take responsibility for the damage, you can’t be certain that this will be the case. They may not have the means to cover your insurance deductible or repair costs, or they may simply be unwilling to own up to the fact that they have a responsibility to return your vehicle to the condition that it was in before they borrowed it.

Obviously, this isn’t an ideal situation, but you are not without recourse. You could sue them in small claims court to recoup your losses. After all, the accident will be filed with your insurance and you may pay higher premiums going forward, so it is certainly not unreasonable to expect them to at least compensate for damages. Call your insurance agent for advice.

Depending on the extent of the damages and whether or not you want to remain on speaking terms with your neighbor, or family member, filing a lawsuit is a very personal decision obviously. You may simply choose to pay your deductible, or the $900, or whatever the case is, and count this a valuable lesson learned.

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