Calling all those who know a bit about insurance!

[Mustang_Cougar]

Here's a scenario that I need help with:

Ted borrows his buddy John's car. Ted crashes the car into a wall, doing no property damage, but causes $2700 damage to John's car. Both Ted and John carry collision on their auto policies; John's deductible is $500, Ted's is only $100.

I understand that liability insurance carries with the insured, while collision and comprehensive do not. However, many insurance companies have "other sources of recovery" clauses in their collision/comprehensive sections of their auto policies. If Ted wanted to be a "good guy" and pick up some of the damages with his collision policy, how would it work out?

I'm thinking that John's policy will pay $2200 ($2700 minus his $500 coll ded) and that Ted's policy would pick up $400 (John's $500 coll ded minus Ted's $100 coll ded). Is that right?

Thanks for any help...I'm dying here and it's getting late!

M_C

 

[Evil Ron]

I'm an insurance adjuster (work comp) and it's been a long time since I've handled auto claims. Also, state laws may mandate how policies interact. My best guess is John's insurance is primary over any other coverage. Therefore, about all Ted could do is offer to pay John's deductible. I don't think Ted's insurance would want to pay anything at all.

 

[opus1]

Ah, but then throw subrogation into the mix.

My guess is that John's insurance will pay to fix the vehicle and then go after Ted and his insurance company to recover damages, including John's deductible.

At least that's what's going on with me right now thanks to the woman who hit me in '04 and who jerked me and State Farm around when it came time to pay due to her being at-fault.

 

[Evil Ron]

I don't think subrogation would come into this scenario unless Ted was driving the car without John's knowledge/permission. If Ted was a permissive driver, John's insurance would cover the accident as if it was John driving. If Ted used the car without John's knowledge, John's insurance would pay for the damage (less The $500 deductible) and then go after (subrogate) Ted for what they had paid.

 

[CBDFrontier06]

Ted's insurance should cover this under the liability clause of his policy, the same way his liability insurance covers whatever damage he does to a rental car.

 

[ediamiam]

I think Ron has it right. Ted's liability only covers rental cars by contract written into his policy - I doubt it covers someone else' car that already has insurance. Insurance follows the vehicle - not the driver - otw we wouldn't be having this discussion.

 

[D189379]

My friend just had this happen to him, and basically the insurance stays with the car. Eg: You crash my car, my insurance covers it.

 

[Mustang_Cougar]

Well I'd like to thank everyone for their input and answers on this question.

Now, here's the correct answer: John pays his $500 collision deductible and his insurance company pays $2200; then, John's insurance company gets $500 from Ted ($100 coll ded) and his insurance company ($400) via subrogation.

[Provision is typically found in Part D "Coverage for Damage to Your Auto" under the clause "Other Insurance" or similar].

In otherwords, what I orginally thought.

Insurance, what a racket!