The idea of primary and secondary car insurance coverage comes from the fact that you cannot double dip when you have a loss. If you have two separate policies dealing with the same risk one becomes the first in line and the other supplementary. They may end up handling different losses in the same incident but never pay twice for the same damage. It is against the logic of compensation that dictates a person cannot be made better off.
Depending on circumstances own policy can be one or the other or change places. Also, you may have free supplementary protection you don’t know about depending on how you paid for a rental car. Do you care to guess when it would be first or last in line to pay? They may sound like a trick right now but these definitions can play a very important role when determining who takes the claim and will see premium increase from next renewal.
Primary vs. Secondary Automobile Insurance
There are certain circumstances that determine main and supplementary. For example, the policy taken by the owner of the vehicle would usually cover whoever drives it. And the one you took out would be there to provide additional liability protection while driving someone else’s vehicle. Hence, the friend’s policy would be the primary when you are driving his/her car and your own one is the secondary.
If you crash it and there are injuries and vehicle damages suffered by third parties, the friend’s (owner’s) coverage would be the one paying them. If they are more than the liability limits the friend holds they may come after you since you were the driver. Then, your liability plan comes into picture to meet the shortfall up to its limits. Until then, it 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 plans while they are renting a car.
Primary and Secondary Vehicle Insurance with Credit Cards
There may be some confusion about what is included in such offerings. Although some credit card companies provide primary car insurance, generally free provisions like these are secondary. They only come into picture when there is no other policy in force. For example, they won’t pay if you already have coverage or bought from rental place. They will only settle unpaid losses you suffer like deductibles.
However, free coverage offered by your credit card becomes the main one; if you don’t have Collision Damage Waiver (CDW), Loss Damage Waiver (LDW) or Towing from any other source. Remember that this can change anytime in the future and vary depending on the issuer. You should check with them first before relying on such provisions. Also, such free credit card rental provisions don’t offer any liability on luxury (usually over $50,000) or exotic cars. Few credit card companies may sell full protection for a premium (not free). You can find out more about them here.