Is it OK to Drive a Loaner Vehicle While Your Car is in the Shop?

February 2, 2016

insurance on loaner carOne of the benefits of doing business with Utica area garages is that they will often loan you a car while yours is getting repaired. It might be just for a day, but the loaner vehicle sure is convenient.

So you leave your car at the garage and drive off and go about your business in the loaner car. But then you get to thinking, what if you have an accident in a car that’s not yours? You tell yourself that the garage owner must have insurance. Thing is, it’s in his/her name. And how high are the liability limits on the garage’s policy?

Is there any way your auto insurance policy will kick in if you’re in a serious accident with the loaner car?

Let’s look at your Family Auto Policy for some answers…

You Hurt Someone in an Accident with the Loaner and/or Damage Their Property

Most people are mainly concerned with the price of their car insurance. We understand that. But they often don’t realize how broad their coverage actually is.

When it comes to liability, New York State Auto Insurance policies state that they will pay “…bodily injury or property damage caused by accident and arising out of the ownership, maintenance or use of your car or any non-owned car.”

It looks like maybe you would have coverage under the definition of a “non-owned” car. The important question to ask, though, is what is the definition of “your car” and “non-owned car” according to your auto policy.

So are you covered for the loaner vehicle as a “non-owned” car? You would think so, that seems obvious. But wait. There’s something in the auto policy that’s even better. And it’s not what you think.

Instead of finding coverage for our loaner as a non-owned car, we can find it in the definition of “your car”! Your car is obviously the car or cars listed in the policy. But get this…there’s another covered vehicle in the definition of “your car.”

Tucked away in the Definitions is this, “It also means a trailer which you own or a substitute car.” We’re almost there, but what is a “substitute car”?

“Substitute car means a vehicle which you do not own but are using temporarily with the owner’s permission. However, this vehicle must be used as a replacement for your car while your car is out of service because of breakdown, repair, servicing, damage or destruction.”

That’s it!

Your loaner car is specifically covered under your policy. However, your policy will only pay for damages that exceed the coverage on the garage’s loaner. So the loaner is primary and your policy would respond if needed.

What About an Accident and Damage to the Loaner Itself

So far we’ve talked about insurance coverage if you are sued because of an accident in a loaner vehicle. That’s your Liability Coverage. But what about damage to the loaner in an accident that’s your fault?

The deal is, if you have Physical Damage insurance on your car, you’ll have coverage for the substitute vehicle. Here again, your policy will only pay for that part not covered on the garage’s car insurance.

It’s nice to know that if you get a loaner from a Utica area garage because yours is getting fixed, you do have coverage. Look first on the substitute vehicle’s insurance and then on your auto insurance policy. Any questions, as always give us a call. We’re here to help!

Until next time,
Your SZW Team

Scalzo, Zogby & Wittig, Inc. is your New Hartford area independent insurance agent. Call us for a quote on insurance for your home, car, business, or life at 315.792.0000. Or request a quote here.