Unfortunately, this can mean paying a large deductible and dealing with an increase in your insurance premium — even if you were not the driver involved in the accident. In Texas, the car insurance of the party at fault for causing the collision is financially responsible for damages. You will need to file a first-party insurance claim with your own insurance provider for coverage. How much your insurance company pays for the accident will depend on your policy. If you only have the minimum required amount of liability insurance in Texas, your insurance carrier most likely will not pay to repair the damage to your own vehicle.
The minimum required amounts of automobile insurance only pay for the damages of others in a crash. You must have an additional form of coverage, such as collision or comprehensive insurance, for coverage for your own car. If you do not have this insurance, the insurer of the person you let use your car should pay for your losses. If the person you let borrow your car was not at fault for the accident, you will seek financial compensation from the auto insurance carrier of the at-fault party.
In this scenario, your own insurance premiums should not increase, as your company did not pay for the damages. A car accident when someone else is driving your car may involve both primary and secondary insurance. It could be a family member who is already listed on your policy or simply a friend that you gave permission to drive. When a permissive driver is behind the wheel, your insurance is considered the primary insurance. This is the case regardless of whether you are in the car with that person or not, and whether or not the person has his or her own insurance policy.
Your collision insurance will pay for the damages to your own vehicle if your friend crashes your car, if you have that coverage on your policy, as collision is optional. The liability portion of your policy will pay for any damage that the driver of your vehicle did to another person's vehicle or for injuries to others in an accident he or she caused. However, the protection only goes up to your coverage limits. So, if your friend is in a serious accident, the damages may go beyond your limits and that is where it gets interesting.
Scenario No. In almost all situations, if you loan your car to a friend and he or she damages your car in an accident, your insurance will pay. Even if your friend has his or her own car insurance, the claim will need to be made under the collision portion of your policy. This also means that you or your friend will be paying your deductible and there is a possibility that your insurance rates will be headed up. It should be noted that collision insurance is never a required coverage and if you are not carrying this type of insurance, you or hopefully the friend that crashed your car will be on the hook for repair costs.
If your car is undriveable after the accident you may be looking at a rental for a few days or even a month which can get pricey. If you are carrying loss of use insurance on your policy it should cover the cost of a rental car while your vehicle is being repaired.
However, if you do not have this coverage you will end up covering the rental car costs. Let's say the accident your friend causes results in serious bodily injury to others and property damage. Liability coverage consists of two parts: bodily injury liability and physical damage liability. Liability insurance follows a car first and driver second.
That means the car owner's policy covers the driver and all passengers in the other vehicle for bodily injury. The car owner's liability also covers property damage caused by his or her car.
Liability insurance also covers the cost of your legal fees in the event that you are sued. Liability coverage is required in almost all states, but minimums vary dramatically.
This will quickly be eaten up by medical bills and possible legal fees. Most industry experts recommend carrying much higher limits. Here's why. If the damage exceeds your insurance liability limits, the courts can attach your personal assets, such as your home, to recover damages. Liability coverage won't pay for damages beyond the limit for which you are insured. If your liability limits are not enough to cover all the damages inflected on the other party, your friend's auto policy may be looked at secondary coverage.
Cases in which you and your friend's insurance policies share the cost of the accident are known as "pro rata. What happens if a friend borrows your car without your permission known as non-permissive use? But if your friend has no auto insurance, you may need to turn your policy to cover damage or injuries. Furthermore, if your friend was texting while driving or otherwise breaking the law, your insurance company could deny a claim for damage or injuries associated with your car.
The insurer will adjust the rates to properly reflect the drivers, or might pay the claim but cancel your policy. John Egan is a freelance writer, editor and content marketing strategist in Austin, Texas. His work has been published by Experian, CreditCards. John earned a bachelor's degree in journalism from the University of Kansas and a master's degree in communication from Southern New Hampshire University.
Jason Metz is a writer who has worked in the insurance industry since He has a B. Select Region. United States. United Kingdom. John Egan, Jason Metz. Contributor, Editor. Editorial Note: Forbes Advisor may earn a commission on sales made from partner links on this page, but that doesn't affect our editors' opinions or evaluations. Buckle up as we take you down the road of this potentially bumpy issue. Permissive vs. The best strategy is to be very picky about who borrows your car.
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