Auto Insurance Licens: Does It Extend To Your Home?

Auto insurance and home insurance are two distinct types of insurance policies that serve different purposes. Auto insurance covers damages to your car and other vehicles, while home insurance covers damages to your home and its contents. While there may be some overlap between the two, such as in the case of a car damaging a home, it is important to understand the specifics of each policy to ensure adequate coverage. In general, auto insurance does not cover damages to your home, but it can provide liability coverage if your car damages someone else's property. On the other hand, home insurance typically covers a broad range of possible damages to your home and personal belongings, but it may not cover certain high-value items or damage caused by natural disasters like earthquakes or flooding. Therefore, it is essential to carefully review the terms and conditions of your auto and home insurance policies to determine what is covered and what additional coverage may be needed.

If a car damages your property, the driver is liable

If a car damages your property, the driver is typically liable for the damages, assuming they are at fault. However, determining fault and liability can sometimes be more complicated than it seems. Here are some factors to consider:

Duty of Care and Negligence

To demonstrate liability, you must usually show that the driver or property owner breached their duty of care and acted negligently, resulting in the accident and causing damage to your property. This involves establishing the following elements:

• Duty of care: The other party had a responsibility to avoid putting you and your property at risk. For example, drivers have a duty to drive safely, and property owners are expected to maintain their property and address hazards.
• Breach of duty: The other party failed to fulfil their duty and acted irresponsibly, putting you at risk. For instance, a driver may have been speeding or driving under the influence, or a property owner may have neglected to fix a hazardous condition.
• Causation: The other party's irresponsible behaviour directly caused the accident and the resulting damage to your property.
• Damages: You incurred financial losses due to the damage to your property, which can be compensated financially.

Insurance Coverage

If the driver is found at fault and has liability insurance, their insurance will typically cover the damages to your property. However, if their insurance coverage is insufficient or they are uninsured, you may need to file a claim with your homeowners insurance to cover the remaining costs. It is recommended to get a repair estimate from a qualified professional to ensure the cost of the damage exceeds your deductible.

Negligent Entrustment

In some cases, the owner of the vehicle may also be held liable, even if they were not present during the accident. This can occur under the legal principle of "negligent entrustment," where the owner allows someone to drive their car when they know or should know that the driver is unfit to drive due to factors such as intoxication, a suspended license, or a history of reckless driving.

Vicarious Liability

Vicarious liability is another legal concept where a third party can be held "strictly" liable for the actions of another. This often arises when an employee causes an accident while driving a company vehicle, and the employer may be held vicariously liable. In most states, a vehicle owner can also be vicariously liable if there is a relationship between the owner and the driver, such as employer-employee, or if the owner negligently allowed an unsafe driver to operate their vehicle.

Uninsured Drivers

If the driver who damaged your property is uninsured, your homeowners insurance may cover the damage. However, you may need to pay your deductible, and you could consider filing a lawsuit against the uninsured driver to recover those costs. Keep in mind that taking legal action may result in court costs and a lengthy process with uncertain outcomes.

The driver's insurance should cover repairs

Whether the driver's insurance covers repairs depends on the type of insurance they have and the cause of the damage. Regular car insurance does not cover the cost of vehicle repairs or maintenance, such as oil changes or engine tune-ups. However, traditional car insurance will cover expenses associated with natural disasters and accidents.

There are different types of car insurance that cover repairs. Comprehensive coverage protects against damages caused by vandalism, theft, natural disasters, and other acts of nature. It also covers damage from hitting an animal or rodents chewing through wiring. Collision coverage protects against damage to your car from any accident, no matter who is at fault. It also covers damage from road hazards such as potholes.

Some auto insurance companies offer optional add-ons to cover a wide range of vehicle repairs, including parts and labour. This type of insurance is called mechanical breakdown insurance (MBI). MBI is similar to an extended car warranty as it covers the same components, but it does not cover the replacement of filters, tires, spark plugs, brake pads, or adding fluids. MBI is offered by some insurance providers and can be added to an existing policy. However, there may be limitations on when it can be purchased, and it may only be available for newer vehicles with low mileage.

When deciding whether the driver's insurance should cover repairs, it is important to consider the age and condition of the vehicle, driving habits and use, and the cost of replacement and repair. If the damage is caused by a covered incident, such as a collision or natural disaster, then the driver's insurance should cover the repairs. If the damage is due to routine maintenance or mechanical breakdown, then the driver may need to purchase additional coverage, such as MBI or an extended warranty, to have the repairs covered.

If repairs are costly, your home insurance may cover the rest

If you're wondering whether an auto insurance license covers your home, the answer is that it depends. While auto insurance typically covers damage to your car, some policies may also provide limited coverage for personal items stolen from your vehicle while it's on your property. This could include items like electronics or jewellery. However, it's important to carefully review the specifics of your auto insurance policy to understand what is and isn't covered.

On the other hand, if you're a homeowner, it's crucial to have home insurance to protect your finances in case of damage or loss to your home or personal belongings. Home insurance policies typically cover a broad range of possible damages, including damage to the physical structure of your home and other structures on your property, such as a garage or fence. They also usually provide personal liability protection if someone is injured on your property.

Now, let's focus on the topic of costly repairs and your home insurance. In the event that you need to make expensive repairs to your home, your home insurance policy may come to your aid. Here's how it works:

Understanding the Claims Process

When your home is damaged, the first step is to file a claim with your home insurance company. They will send out an adjuster to assess the damage and determine the settlement amount, which is the money they will give you to make the necessary repairs. The settlement amount can be based on either the replacement cost or the actual cash value of your home, depending on your policy provisions. Replacement cost gives you money to rebuild or repair your home using similar materials and achieving a similar quality, considering current prices. Actual cash value, on the other hand, takes into account the age and condition of your home and may not fully cover the cost of repairs.

Receiving the Payout

Once the adjuster has assessed the damage, your insurance company will decide on the settlement amount and initiate the payout process. If you have a mortgage, the settlement check is typically made out to both you and your mortgage servicer or lender. The money may be released in instalments as the repair work progresses, with a portion provided upfront to hire a contractor and the rest released upon completion of the job and a successful home inspection.

Dealing with Costly Repairs

If the repairs to your home are particularly expensive, your home insurance policy may cover the costs, depending on the coverage limits specified in your policy. It's important to carefully review your policy to understand what types of damage are covered and whether there are any exclusions or limitations. For example, basic homeowners insurance policies typically do not cover damage caused by earthquakes or flooding due to external conditions. In such cases, you may need to purchase additional coverage or a separate policy.

Preventing Premium Increases

It's worth noting that filing a claim may result in an increase in your annual home insurance premium. Returning any unused portion of the claims payout is unlikely to lower your premium, as the claim will still remain on your insurance history. However, if you receive an overpayment from your insurance company, it's best to contact them to determine the appropriate course of action. Using the claims payout for purposes other than the approved repairs may be considered insurance fraud.

If the driver is uninsured, your home insurance may cover damage

If an uninsured driver damages your property, you may be covered by your home insurance policy. In the event of an accident, the driver or owner of the vehicle is liable for any damage caused, assuming they are at fault. In most states, drivers are required to have a minimum amount of property damage liability coverage as part of their auto insurance policy. This coverage will help pay for any damage to your home or property. However, if the driver is uninsured or their coverage is insufficient, your homeowners insurance may cover the damage beyond the limits of their auto liability policy.

Standard homeowners insurance policies typically include vehicle damage as a covered peril. If an uninsured driver crashes into your home, your homeowners insurance will likely cover the damage, but you may be responsible for paying your deductible. Your insurance company may choose to seek reimbursement from the driver through a process called subrogation and use the proceeds to cover your deductible. If subrogation is unsuccessful, you could file a lawsuit against the uninsured driver to recover your costs, but this may result in court costs and a lengthy wait for any payout.

To ensure adequate coverage, it is recommended to get a repair estimate from a qualified professional to determine if the cost of the damage exceeds your deductible. It is also important to review your insurance policy carefully and consult with your insurer or agent to confirm that your homeowners policy will cover vehicle-related damage.

In addition to homeowners insurance, there are other types of coverage that can provide protection in the event of an accident with an uninsured driver. Uninsured motorist coverage, for example, is designed to protect you if you are hit by a driver with no auto insurance. Underinsured motorist coverage, which is often offered alongside uninsured motorist coverage, provides protection if the driver doesn't have enough coverage to pay for the damages or injuries they caused. These types of coverage are mandatory in many states and highly recommended for all drivers.

Your insurance may not cover repairs if they're less than your deductible

When it comes to auto insurance, a deductible is the amount of money you must pay out of pocket before your insurance coverage kicks in and pays the remaining cost of repairing or replacing your vehicle. The deductible applies each time you file a claim, and it's important to note that you have a choice between a low and high deductible.

Selecting a low deductible means you'll have a higher insurance rate, while opting for a high deductible results in a lower insurance rate. This is because a higher deductible reduces the potential financial burden on the insurance company in the event of a claim.

Now, let's consider the scenario where the cost of repairs to your vehicle is less than your deductible amount. In this case, you will be responsible for covering the entire repair cost yourself, as the insurance company will not contribute to the repairs. The deductible essentially acts as a threshold that needs to be exceeded for the insurance coverage to apply.

For example, let's say you have a deductible of $1,000, and the estimated cost of repairing your vehicle after an accident is $800. In this situation, you will pay the full $800 for the repairs yourself, as the cost is lower than your deductible.

It's worth noting that the specifics of insurance policies can vary, so it's always a good idea to carefully review the terms and conditions of your particular policy to understand how your deductible works and what situations are covered.

Frequently asked questions