Final answer:
In the case of hitting a tree with a borrowed car, the physical damage would likely be covered under the collision portion of an auto insurance policy. Collision coverage helps pay for repairs to the vehicle after colliding with another object. Coinsurance may also play a role, where the policyholder and insurer share the loss costs.
Step-by-step explanation:
If an insured has an auto policy that provides for physical damage and hits a tree while driving a borrowed car, the damage would probably be covered under the collision part of coverage for damage to your auto. Collision coverage is specifically designed to cover the cost of repairs to your vehicle if you collide with another object, such as a tree.
This type of insurance covers the physical damage sustained by the vehicle, regardless of the driver at the time of the incident, provided they have permission to use the car. In the event of such an accident, it's also important to remember the concept of coinsurance, where the policyholder may have to pay a certain percentage of the loss, with the insurance company paying the remaining cost.
A simplified example of how automobile insurance might distribute costs can be applied here. If 100 drivers are divided into three groups with varying levels of damages ranging from $100 for minor dings to $15,000 for large accidents, the pooling of risk and contributions by all insured drivers helps cover the expensive costs incurred by those few with significant damages. This illustrates how insurance reduces individual financial stress by spreading the cost among a larger group.