Question

A dealership loans a car to its customer to use while the dealership is repairing the customer's car. If the dealership has business auto physical damage coverage and a customer's automobile insurance does not cover damages to loaner cars, which of the following is true?

1) The loaner vehicle is covered by the business auto policy
2) No coverage is provided
3) Only coverage for damage to a third party's vehicle is provided
4) The customer is personally liable

Answer 1

If the dealership has business auto physical damage coverage, the loaner vehicle is likely covered under this policy, even if the customer's personal auto insurance does not cover loaner cars.

Step-by-step explanation:

When a dealership loans a car to a customer while their personal car is being repaired, the situation regarding insurance coverage can be a bit complex. The correct answer to the question posed is that if the dealership has business auto physical damage coverage, the loaner vehicle is likely covered under the dealership's policy.

This means that in the event of damage to the loaner car, the dealership's insurance would step in to handle the costs, as the customer's personal auto insurance does not provide coverage for the loaner vehicle. It is important to note that specifics can vary based on policy details, so it's crucial to verify the exact terms of the dealership's business auto policy and any applicable state laws pertaining to loaner vehicles and insurance coverage.