Question

An insured borrows his neighbor's trailer to pick up his new furniture. Which of the following best describes the insured if he has an accident?

1) His PAP will extend coverage if the proper endorsement is added
2) Only the liability of the PAP extends to the trailer
3) His auto is insured, but not the borrowed trailer
4) His PAP extends liability to the trailer and Part D-Physical Damage extends $1,500 coverage to the borrowed trailer

Answer 1

When an insured individual borrows a neighbor's trailer and experiences an accident, their Personal Auto Policy extends liability to the trailer with limited physical damage coverage, specifically $1,500 for the trailer. Option 4 is correct.

Step-by-step explanation:

If an insured borrows a neighbor's trailer and has an accident, the correct description of the insurance coverage would be option 4: His Personal Auto Policy (PAP) extends liability to the trailer and Part D-Physical Damage extends $1,500 coverage to the borrowed trailer.

This means that while the insured's auto policy primarily covers their vehicle, it can also provide limited coverage for physical damage to a borrowed trailer. The PAP typically includes liability coverage for trailers as long as they are towed by the insured vehicle.

In the context of auto insurance, coverage is designed to address financial risks associated with vehicle ownership and operation, such as accidents or theft. Just as insurance companies calculate premiums based on risk exposure across a pool of drivers, they also include coverage options to address situations where you may be using non-owned vehicles like a neighbor's trailer.

This is in keeping with how auto insurance works to protect against financial risks associated with various vehicle-related incidents.