Auto Insurance Claims: General liability question, funny statements, economy policy

Question
Hi,

This is a debate between me and wife (instant trouble here).  I have always been under this belief:  I have auto insurance for my car.  Someone else drives my car.  If he/she gets in an accident, their insurance will cover the claims up to the limits of their insurance.  If they don't have enough insurance or they have no insurance, I am on the hook for the amount of the claim.  If I don't have enough money to cover the claim, I could be forced into bankruptcy and be garnished wages to pay off the claim (particularly if medical injury is involved).  Am I ill informed or as my wife puts it - just making stuff up to scare her?

Thanks,

Jeff

Answer
Hi Jeff,
I wish that I could answer your question in a funny but accurate manner.  Unfortunately, I just don't have the proper writing skills to mix funny statements with serious legal matters, so you will just have to settle for a cold but hopefully clear answer.

A good debater has a thorough knowledge of his subject material.  It sounds like you have formed beliefs without studying your subject material.

You need to read your actual policy legal wording, not just the declarations page.

According to the legal wording of your policy, it follows your car when being driven by anyone who has your permission.  There are many exceptions to this rule and they can be found under the EXCLUSIONS portion of your policy.  I'll mention a couple, but you will have to read your own policy to learn all of them.  Your policy does not follow to a person living in your household who is not named as a driver on your policy, nor to a person that you allow to drive your vehicle even though you know that person is unlicensed.  Many states allow you to purchase a "super saver" economy policy that only covers the people who are actually named as drivers on your policy.  This policy is quiet popular in Texas.  I regularly get questions from people who purchased such a policy 8-10 years ago, now a child is 15 1/2 with a permit and has an accident and the claim is denied because the child wasn't on the policy.  They had purchased the policy so long ago that they forgot about that clause.  You should read your policy from cover to cover at least once every 2-3 years.  In many states, the insurance company can reduce your limits of liability and property damage to the state bare minimum for a driver who is not a resident of your household.

Assuming that you loan your car to a friend and there are no exclusions that deny him coverage or reduce your limits and he has a serious accident.

Your policy pays first and pays until your policy limit has been exhausted.  At that time, your friend's policy kicks in and pays up to his policy limits (assuming that he has insurance).  If the two policies combined are still not enough to cover the loss then both of you become liable for the balance and there is no limit to your liability.
Many parts of your friends policy could kick in immediately.  For example, if you don't carry collision and he does, then his collision coverage would kick in right away to repair your car.

I hope that I have been informative without being offensive.  Your feedback by rating my response will be appreciated.

Now, take your wife out for a nice dinner then come home and read your policy.

Sincerely,
Bennie
San Francisco Bay Area