When a car crashes into your house: who pays and how

When a car or truck crashes into your house, two insurance policies can pay: your homeowners policy, because damage by a vehicle is a covered cause of loss, and the driver's auto liability policy, because the driver is usually legally responsible. You do not have to pick one in the first hour. Most owners with serious damage start with their own insurer, because you have a contract with it and it does not need anyone to admit fault, and then let that insurer seek reimbursement from the driver's company.

This guide follows the ISO HO-3 (form HO 00 03 05 11). Your insurer's own form and your state's rules control, so read your policy and call your agent early.

What your homeowners policy covers

The HO-3 covers the dwelling and other structures on an open-perils basis, meaning against direct physical loss unless the policy excludes the cause. Nothing in the 2011 ISO form excludes damage by a vehicle, whether it was a stranger's car, a delivery truck or your own, so the building damage is a Coverage A claim (Dwelling coverage (Coverage A) explained). A garage, shed or fence the car hits is a Coverage B claim (Other structures coverage (Coverage B): fences, sheds and garages). Vehicles also appear as a named peril for belongings, so furniture, electronics and clothing wrecked in the crash are paid under Coverage C, normally at actual cash value unless you carry replacement cost on contents.

A crash usually triggers several parts of the policy at once:

The car itself is not covered property under a homeowners policy; the vehicle belongs on an auto policy. Your deductible applies to the whole loss under the homeowners claim.

What the driver's insurance covers

An at-fault driver's property damage liability coverage pays for damage the driver causes to other people's property. According to III, that usually means someone else's car but also includes lamp posts, telephone poles, fences, buildings and other structures. If the driver was negligent, this is a direct claim against that driver's company, without your deductible.

Three limits to understand:

1. The driver's limit may be small. Every state sets minimum liability limits. Texas, for example, requires $25,000 of property damage liability coverage, according to the Texas Department of Insurance. A serious structural repair can exceed that quickly, and the rest falls to the driver personally.
2. The other insurer can say no. The Texas Department of Insurance, in its guidance on claims against another driver's insurer, notes that the company might deny that its driver was at fault, argue both drivers were at fault, say its driver lacks enough insurance, or simply not respond. You have no contract with that company.
3. There may be no insurance at all. Hit-and-run and uninsured drivers usually leave your homeowners policy as the only practical source of payment for the house.

When the driver is a member of your own household, auto liability policies typically exclude damage to property owned by the insured. Your homeowners policy responds, and the auto policy's collision coverage handles the car.

Which claim to start with

You can usually pursue both. A workable order for a significant loss:

1. Report the loss to your homeowners insurer right away, even if you plan to claim against the driver. You owe your insurer prompt notice.
2. Give the driver's information to both your insurer and the driver's company. The police crash report is the key document.
3. Let your insurer pay and pursue subrogation. If the driver's company reimburses your insurer, you may get your deductible back as part of the recovery.
4. Do not sign a release or accept a cash settlement from the driver or the driver's insurer without telling your own insurer. Your policy gives the insurer rights of recovery against the driver once it pays, and a release you sign can undercut them.
5. For a small loss, such as a damaged fence or a cracked window, claiming against the driver's insurer may be faster and costs you no deductible. Your own insurer is the fallback if the driver's company stalls.

A worked example (hypothetical)

Say a driver loses control and goes through the front of your living room. The repair estimate is $85,000 for framing, a window wall, drywall and flooring. Your contents loss is $6,000 at actual cash value, and the family spends $4,500 on lodging while repairs are made. Your homeowners deductible is $2,500. Say the driver carries only a $25,000 property damage limit.

• If you rely on the driver's insurer alone, the most it owes is $25,000, leaving roughly $70,500 of this loss unpaid unless the driver has other assets.
• If you claim on your homeowners policy, the total is $95,500, less the $2,500 deductible, so the policy pays $93,000. Your insurer then seeks reimbursement from the driver's company, which is limited by the driver's coverage.

The point is not that one route is better but that a low liability limit makes your own coverage the dependable one for large damage.

What to do in the first hours

1. Make sure everyone is safe, call 911 and keep clear of the vehicle. Cars can leak fuel or damage gas, electric and water lines. Ask the utility to shut off service if lines are damaged.
2. Get the police report number and the driver's name, plate, insurer and policy number.
3. Photograph the vehicle in place, the damage inside and outside, and the surrounding area before anything is moved. Use the home insurance claim checklist and read the first 48 hours after damage to your home.
4. Have the house checked before anyone sleeps in it. A vehicle can knock a bearing wall out of line or crack a foundation. If the damage leaves the home unfit to live in, Coverage D pays your extra living costs, and building officials may also post an unsafe notice.
5. Protect what remains. Board and tarp openings. The policy requires it, and the reasonable cost is reimbursed (reasonable repairs: what you can fix before the adjuster comes).
6. Expect your lender to be involved. Under the mortgage clause, Coverage A payments are made to you and the mortgagee, as their interests appear. why your mortgage company is on the claim check explains how those checks are released.

Hidden and delayed damage

Impact damage is rarely limited to what you can see. Racked walls, shifted framing, cracked foundation walls, bent anchor bolts and damaged underground utilities may not show until doors stick or cracks open weeks later. Ask the adjuster to bring or approve a structural engineer for any serious impact. If new problems appear after the claim closes, claims for hidden damage discovered later describes how to reopen it. Cause matters for foundation cracks. Cracking from a vehicle's impact is a covered loss, while cracking from ordinary settling is excluded, as foundation cracks and settling: what's covered explains.

Key takeaways

• Damage by a vehicle is a covered peril on a standard HO-3. The house is paid under Coverage A, and belongings and living costs are covered too, after your deductible.
• The driver's property damage liability insurance can also pay for the house, but state minimum limits can be far below the cost of a major repair, and the driver's insurer can dispute fault.
• Report to your own insurer promptly even if you plan to claim against the driver, and do not sign a release with the other side without telling your insurer.
• If the driver has no insurance or leaves the scene, your homeowners policy is usually the source of payment.
• Get a structural engineer involved on any serious impact and expect hidden damage, because walls and foundations can be affected.