If I let someone borrow my car, who’s auto insurance policy will pay if there is an accident?
Have you ever borrowed someone’s car? How about a pickup truck to move or haul something to the landfill? Or have you ever loaned your car to a friend or family member?
I am sure we have all at one time or another have either borrowed a vehicle or let someone borrow your vehicle. So the question is, if the person borrowing the car gets in an accident, whose auto insurance policy is going to be responsible to pay for the claim?
The simple answer is that the auto insurance follows the vehicle.
So, if you borrow your uncle's car, it will be your uncle's auto insurance that would be the primarily responsible to pay should you be involved in an accident while driving your uncle's car. (This example also assumes that you and your uncle are NOT residing in the same household.)
Will your auto insurance ever pay if you are in an accident while borrowing your uncle's car? Yes, your auto insurance policy can also pay out for the following reasons:
- Personal Injury Protection (PIP) – If you are injured in the accident, the PIP coverage on your auto policy can pay up to your limits for this coverage
- Medical Payments Coverage (Med Pay) – If you are injured in the accident, the Med Pay insurance coverage on your auto policy can pay up to your limits for this coverage
- Liability Insurance Coverage – Your car insurance policy can pay if there are Bodily Injury or Property Damage claims that are in excess of the auto insurance limits that are on your uncle's policy.
For an example, let’s use the following coverage for you and your uncle's auto insurance policies:
Uncle's Policy Your Policy
Bodily Injury per Person $30,000 $250,000
Bodily Injury per Accident $60,000 $500,000
Property Damage $15,000 $100,000
Personal Injury Protection $2,500 $10,000
Medical Payments $0 $10,000
In this case, your uncle has the Maryland State Minimum auto insurance coverage and you elected to have higher protection levels. So while driving your uncle's car, you cause an accident that causes the following injury and damage amounts:
- Bodily Injury to other driver - $70,000
- Property Damage to Other Vehicle - $40,000
- Injuries to you - $25,000
So in this example, based on the coverage listed above, your uncle's auto insurance policy will pay out $30,000 of bodily injury, $15,000 property damage and $2,500 in PIP coverage. Your car insurance policy will pay out $40,000 bodily injury, $25,000 in Property Damage, $10,000 in PIP and $10,000 in Med Pay. So you can see in this example that your car insurance policy acted as an excess policy to your uncle's car insurance policy.
If you caused an accident that were within the limits of your uncle's auto insurance policy, then his policy would pay the claim and your policy would not be used at all.
If you should have any questions about what happens with a borrowed car, please do not hesitate to give our office a call our one of our personal insurance team members will be happy to talk to you.
The advice given in this blog is in general terms. To determine the coverage for your specific policy, please refer to your auto insurance policy or call you insurance agent to discuss. There are certain situations where the coverage would not react as described, such as (but not limited to) borrowing a car from a family member who is in the same household, borrowing a car to be used in a business pursuit, etc.
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