The insured is driving Robert Brown's automobile as a temporary substitute and is responsible for an accident causing $1200 damage to that automobile. Smith carries Collision on his own automobile with a $300 deductible while Brown carries no Collision. How much would Smith's insurer pay?

The insured is driving Robert Brown's automobile as a temporary substitute and is responsible for an accident causing $1200 damage to that automobile. Smith carries Collision on his own automobile with a $300 deductible while Brown carries no Collision. How much would Smith's insurer pay?

• A. $0
• B. $300
• C. $900
• D. $1200

Answer: (C)

When you’re driving a car you don’t own as a temporary substitute, your own collision coverage can apply to damage you cause to that car, with the deductible reducing the amount paid. Here, Smith is at fault for $1200 of damage to Brown’s car while using Brown’s vehicle. Smith has collision coverage on his own car with a $300 deductible, so the insurer would pay the damage amount minus the deductible: $1200 − $300 = $900. The fact that Brown has no collision simply means Brown’s own policy wouldn’t cover the loss, but Smith’s collision coverage would still respond to the damage to the non-owned car, subject to the deductible. Therefore, the insurer would pay $900.

When you’re driving a car you don’t own as a temporary substitute, your own collision coverage can apply to damage you cause to that car, with the deductible reducing the amount paid. Here, Smith is at fault for $1200 of damage to Brown’s car while using Brown’s vehicle. Smith has collision coverage on his own car with a $300 deductible, so the insurer would pay the damage amount minus the deductible: $1200 − $300 = $900. The fact that Brown has no collision simply means Brown’s own policy wouldn’t cover the loss, but Smith’s collision coverage would still respond to the damage to the non-owned car, subject to the deductible. Therefore, the insurer would pay $900.