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Whose policy pays when someone borrows your car and wrecks it?

Do you know the answer to this question?  Well it's kind of a trick question, because it depends on how your policy reads.  Have you ever tried to read your policy?  Most people take for granted that their policy will cover their car if there is an accident.  It used to be that insurance always followed the car no matter who was driving it.  

Well times are changing and so are auto insurance policies.  Some companies are changing their policies so that whoever is driving is responsible for the liability damage that they cause.  That means, if your friend borrows your car, has an accident his/her insurance policy will pay for any bodily injury or property damage.  What if they don't have insurance, then yours would kick in.  But if they don't have enough, whoever they injured is out of luck.  They can sue you and your company may defend you, but there will not be any additional coverage for them.  Of course if your vehicle is damaged, your policy will cover that.

Why are companies doing this?  Well in the long run, it saves them and you money.  They can adjust liability rates because they are insuring you and they know your driving record and claims history.  This will help keep costs down because they are not paying for liability losses that cannot be underwritten.

So, do you know how your policy reads?  You may want to pull it out and look at "who is an insured" under the insuring agreement or call your agent, they should know.

Would love to know what your thoughts are on this.  Feel free to leave a comment.

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