6 auto insurance potholes

Lending or borrowing a car
4 of 8
Car key

Most of us have borrowed a friend's car or loaned one without wondering what would happen in the event of a collision. Rest assured that it's all spelled out in your insurance policy -- with plenty of room to deny coverage.

"In most insurance policies, coverage goes with the car, but most of them will have an exclusion if there is a loss to any nonowned auto," says McChristian. "So you wouldn't be covered unless the car's owner had coverage and you were entitled to use their vehicle."

If you borrow a car and the owner doesn't carry collision or their coverage is insufficient to cover the damage you cause while driving their car, the other party may go after you for the difference.

Likewise, if you loan your car to a friend, your policy may: a) cover them, b) not cover them, c) cover them only if you're riding along with them or d) limit their coverage. That's something to think about before you toss your buddy your keys.




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