The idea of primary and secondary car insurance coverage comes from the fact that you cannot double dip on insurance. If you have two separate policies covering the same risk one becomes the primary and the other secondary. They may end up paying for different losses suffered by the policyholder but never pay twice for the same damage. It is against the logic of insurance.
Depending on circumstances your own policy can be primary or secondary auto insurance. Also, you may have free secondary auto insurance you don’t know about depending on how you paid for a rental car. Do you care to guess when your auto insurance would be secondary and primary? You probably can guess what is primary but what is secondary car insurance?
Primary vs Secondary Car Insurance
There are certain circumstances that can make your automobile insurance secondary. For example, the insurance taken by the owner of the vehicle would be the primary coverage for whomever drives it. And your vehicle insurance would cover you for liabilities while driving any other vehicle. Hence, your friend’s insurance policy would be the primary when you are driving your friend’s car and your own one is the secondary.
If you crash your friend’s car and there are injuries and vehicle damages suffered by third parties, your friend’s insurance (primary) would be the one paying the damages. If the damages are more than the liabilities coverage your friend’s policy have, they may come after you since you were the driver. Then, your liability auto insurance coverage (secondary) comes into picture to cover the shortfall up to your policy limit. Until then, your policy sits at the background like a player on the substitute bench.
Some people buy non-owner auto insurance for this reason even though they have no cars. If they are driving other people’s vehicles at times they want to be protected against any liability action brought against them. Also, they can use non-owner vehicle insurance policy liability coverage while they are renting a car.
Primary and Secondary Auto Insurance with Credit Cards
There may be some confusions about vehicle insurance coverage provided by credit cards. Although some credit card companies provide primary car insurance, generally free auto insurance provided by your credit card issuer is secondary. They only provide coverage when there is no other insurance policy in force to pay for the damages. For example, they won’t pay if you already have your own insurance or bought insurance from rental company to pay for a particular damage. They will only pay unpaid losses you suffer like deductibles.
However, free coverage provided by your credit card becomes primary auto insurance policy; if you don’t have Collision Damage Waiver (CDW), Loss Damage Waiver (LDW) or Towing Coverage from any other source. Remember that this can change anytime in the future and vary depending on your card issuer. You should check with them first before relying on such coverage. Also, such free credit card rental car insurance provisions don’t offer any liability and luxury (usually over $50,000) or exotic car coverage. Few credit card companies may provide full coverage for a premium (not free). You can find out more about rental auto insurance with a credit card here.