Does Your Liability Cover Property You're Carrying or Borrowing?

Property damage liability is often described as "it pays for what you hit". It is more accurate to say it pays for what you hit that isn't yours to look after. The difference shows up on moving day, with a borrowed trailer, and every time you drive someone else's car.

The exclusion in plain terms

Insurance Code section 11580.1 lets a California auto liability policy exclude liability for damage to property owned by, rented to, transported by, or in the charge of an insured. It then adds one sentence that resolves a lot of arguments: a motor vehicle operated by an insured is considered property in the charge of an insured.

Put together, your liability coverage can decline four kinds of property: things you own, things rented to you, things you are carrying, and things you are looking after, including the car under you.

Item by item: what pays instead

• A friend's sofa that slides out of your pickup: not your auto liability. A homeowners or renters policy may respond, though property in your care is a common exclusion there too. This varies by insurance company.
• A borrowed trailer damaged in a jackknife: not your liability. Its owner's coverage, if any, or yours if your policy extends physical damage coverage to it.
• A rental car you scrape: not your liability. Your collision coverage, if it extends to rentals, or the rental company's damage waiver.
• A friend's car you borrow and dent: the owner's collision coverage, under their deductible.
• The bike on your rear rack: transported by you, so not your liability; if it is yours, a homeowners or renters policy may cover it.

Why the exclusion makes sense

Liability insurance is designed around claims by strangers. Property in your care is property you could insure directly, through the owner's own policy, a rental company's waiver, or a homeowners or renters policy. Knowing that tells you where to look before you load the truck.

A worked example, limits only

You borrow a neighbor's utility trailer to move. Turning into your new street, the trailer swings wide, hits a parked car and tips, smashing a friend's dresser you were carrying. You carry property damage liability of $50,000.

1. The parked car: someone else's property, not in your care, so your liability responds up to $50,000.
2. The trailer: in your charge, so your liability does not pay for it; your neighbor's coverage on the trailer, if any, or any extension your policy gives trailers, decides.
3. The dresser: transported by you, so not your auto liability; your friend's renters policy, or yours, may respond, depending on its terms.

Before moving day

Ask three questions: does my policy extend to the trailer or truck I am using, does my homeowners or renters policy cover things I carry for others, and is the vehicle owner's coverage in place. Ten minutes on the phone is easier than an argument with a friend afterwards. If you want your auto policy reviewed alongside the move, request a quote.