College students like to loan out their cars to their friends, probably because many of them don't own cars. Unfortunately, this isn't good practice because it jeopardizes your car-insurance coverage. Here are four disadvantages of loaning your car to friends.
Your Insurance Pays When Your Friend Damages Your Car
Since car insurance follows the car and not the driver, it's your insurance coverage that will pay for any damages your friend may cause to your car.
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Most states require you to have minimum coverage for property and personal-injury liability. But how do you decide where to go after that? There are so many different coverage options. This guide is designed to help you decide where to beef up your auto-insurance coverage and how much coverage to get.
Collision Insurance
One of the first things that you should look at is collision insurance. It seems one-sided that your minimum coverage only covers damage to other people's vehicles.
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One of the most confusing aspects of buying home insurance is the issue of add-ons. Add-ons are small additional riders that are attached to your main policy and they can cover an array of different potential losses. Most likely, your insurance agent will bring the subject up and offer to sell you different add-ons that he or she thinks might interest you, depending on your situation. The only problem with the add-ons is that they also add onto your final monthly bill, which can end up being more than you want to pay.
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Auto insurance doesn't always cover every aspect of a collision. It depends on your policy and coverage options. Even when you think you know what your insurance will cover, it helps to know a little about how collision coverage works.
Liability Coverage Has Nothing to Do With Your Vehicle
If your insurance consists mainly of liability coverage, then your actual car doesn't have much protection. Liability covers property damage and pays medical bills if there's an accident.
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A stolen car is not just a huge hassle. It can also be a devastating financial blow. It's important to make note of the fact that a standard basic collision coverage policy might not even reimburse you for a stolen vehicle.
Even comprehensive car insurance might not necessarily offer coverage on a stolen vehicle, so you need to read the fine print of your policy if you live in an area where vehicle theft tends to be a big problem.
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