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UPDATED: Mar 13, 2020
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There are several occasions where car insurance may be transferable to another vehicle. Depending on the details of your policy, you may not be able to transfer coverage in all situations, so it’s best to check with your agent in regards to how your policy works with any vehicle that you do not own.
Buying a New Car
Whether you’ve lost your previous car to an accident or simply traded it in, you can transfer your existing coverage to the new car on your policy. This is a fairly simple procedure. First, you contact your car insurance company and explain that you would like to replace one car on your policy with another and maintain the same coverage. You then must provide the VIN of the vehicle and any additional information the company might ask you about, such as the car’s mileage and any after-market improvements that have been made to the vehicle.
Bear in mind that even though the new vehicle carries the same coverage as the one it is replacing, your car insurance premiums may change. This is because some vehicles cost more to insure than others. For example, luxury vehicles cost more to insure than other types of cars due to the expense of repairs. Foreign-made vehicles may also cost more to insure as repairs are costly due to specialized labor or imported parts. Cars with high safety ratings might cost less to insure.
Renting a Car
Depending on your policy, your car insurance should be able to transfer to any rental vehicle that you drive. If you have full coverage, your damage will be paid under your collision coverage. Your deductible will apply in this case, so you will need to pay the deductible to the rental company in the event of an accident. Many rental companies will charge the full amount of your deductible to your credit card as a security deposit; if you return the vehicle without damage, the deposit will be returned to you.
Not all policies allow you to transfer coverage to rental cars, however, so be sure to check with your company to see if there are any limitations on this. The rental must also be obtained through a rental agency or garage in order for this policy transfer to occur; you cannot transfer coverage the same way if you rent a vehicle privately from a friend. Your car insurance company may also not be able to cover damage to certain types of vehicles, such as Uhaul trucks.
Some states handle rental cars differently. In New York and Minnesota, for example, damage to a rental vehicle is paid under property damage liability insurance rather than collision. This means that the damage your rental sustains will be paid fully by your insurance company without requiring a deductible from you.
When you drive a Friend’s car
In most situations, auto insurance followed the vehicle rather than the driver. This means that if you borrow a friend or family member’s vehicle and get into an accident, the claim will be handled through that person’s insurance rather than your own. The claim will also go on that person’s record rather than yours, so his rates may be affected by the accident even though he was not involved.
In some cases, your own car insurance coverage can be used to pay for an accident occurring in a borrowed vehicle. If the vehicle does not have sufficient coverage to pay for the accident, for example, your insurance may be able to pay the excess. This will usually only pay for damage to a third party that receives damage in the accident, not the car that you yourself are driving.
One state does allow you to transfer your own insurance to a borrowed vehicle, however: Texas. In Texas, you can choose whether to use your own property damage liability insurance to pay for damage to a non-owned vehicle. This only allows you to pay for damage to the vehicle itself, however; any damage caused to another person’s vehicle will still need to be paid under the liability insurance of the vehicle you were driving.
Car insurance laws can be complicated because they vary from one state to the next, and many are also policy specific. If you’re not certain about how coverage applies in a specific situation, you can contact your insurance company and speak with a customer service representative or agent. He or she will be happy to go over the details of your policy and how it will behave in any given situation. It’s especially important to understand the way that your policy works before you allow anyone to drive a vehicle that you own or borrow someone else’s vehicle so that you are not unpleasantly surprised by a claim.