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Clarifying Auto Insurance Coverage

Brought to you by Terri Gesik - Gustafson Insurance - INSURANCE INSIDER

So you lend your car to a friend, and he gets into an accident. Who's financially responsible? What about a situation when you need to rent a car? Terri Gesik.

Should you opt for the rental car insurance? Put another way, is your car insurance tied to you or your car? The answer: It depends.

Let's tackle the first scenario. Personal auto insurance is attached to the vehicle in this case. If your friend is found liable, you would likely be responsible and your car insurance would then apply.

Your friend's provider would only step in if the damage exceeds your insurance limits. If your friend is uninsured, however, and the damage is extensive and involves other vehicles, the affected parties could look to you for property damage reimbursement and medical expenses.

Now, the second scenario: renting a car. In this case, most personal auto insurance policies go with the driver. If you have comprehensive and collision coverage in addition to liability coverage, you may not need rental car insurance.

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

Understanding the scope of your current coverage is key before lending out your car or booking a rental. Make sure you're familiar with your policy and coverage and get in touch if you have any questions.