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Does Your Car Insurance Cover You, Or The Car?

Is Car Insurance Tied To the Car, Or The Driver?

So you lend your car to a friend, and he gets into an accident.Who's financially responsible -- you or the friend? 

What about a situation whenyou needto rent a car? Should you opt for the rental car insurance or will yourexisting insurance cover you in the event of an accident? Put another way, isyour car insurance tied to you or your car? The answer: It depends.

Who's responsible if your friend crashes your car?

Let's tackle the first scenario when yourfriend crashes your car. Personal auto insurance is attached to the vehiclein this case. If your friend is found liable, you would likely be responsibleand your car insurance would then apply.

Your friend's insurance would be secondary, and his providerwould only step in if the damage exceeds your insurance limits. If your friendis uninsured, however, and the damage is extensive and involves other vehicles,the affected parties could look to you for property damage reimbursement andmedical expenses. And note that even if your friend didn't have permission touse your car, this can be difficult to prove.

Do you need rental car insurance?

Now let's talk about the second scenario: renting a car. In this case, mostpersonal auto insurance policies go with the driver. If you have comprehensiveand collision coverage in addition to liability coverage, you maynot need rental car insurance.

If you damage a rental car, the rental car company could chargeyou for loss of use since a vehicle in repair isn't rent-able. This may not becovered by your insurance policy. And if you need to rent a car while travelingfor work, be sure to check your coverage with your employer.

Understanding thescope of your current coverage is key before lending out your car or booking arental. Make sure you're familiar with your policy and coverage and get intouch if you have any questions.

- Guest post by Shawn Iverson of The Insurance Center in Ogden, Utah.  Learn more about Shawn and coverage options here