Home insurance and car insurance are usually two very different worlds that don't often come into conflict. Car insurance covers auto accidents, home insurance covers homeowners concerns, and your coverage is never complicated. Well what do you do in the instance that something strange like that happens? What do you do when a car runs into your house?



I ask because something similar recently happened to me. A friend of mine lived in a little 2-bedroom house in east Texas. Last week, a drunk driver careened over the curb, knicked their garage, then drove straight through their living room window.

Normally, any act of vandalism in situations like this get paid through the other party's homeowners insurance. Homeowners insurance policies often protect damage we (unintentionally) cause to other people's home. But because the vandalism happened to be with a car, and not with a baseball bat or a rock, homeowners insurance doesn't apply.

My friend tried contacting the man's auto insurance provider, who claimed that in cases of property damage (like this), they would only pay the replacement costs of the living room and the possessions, minus the depreciation on the house. This means my friends get almost nothing for the tens of thousands of dollars of damage.

So how can you keep this happening from you?

Well, where auto insurance fails, homeowners insurance succeeds. Guaranteed replacement coverage will cover the full cost of repairing your home—or in this case the tv, couch, and living room—with no strings attached. You only have to pay the deductible. And even then, there's good news.

What kind of good news? Let's say that you're with Allstate, and the drunk driver is with State Farm. You pay your deductible to Allstate, who then turns around and demands State Farm to pay the full amount of the damage. State Farm plays ball, and gives Allstate the full amount for the damage. Allstate turns around and hands back that full amount, as well as your deductible. And since the driver was drunk, and the damage was in no way your fault, this doesn't count as a fault claim against your policy. That means your premiums won't change. The reason for this is an interesting loophole in the collision of the homeowners insurance world and the auto insurance world. When the Auto Insurance Company pays you directly, they have the right to take out the depreciation of your property. However, when your Homeowners Insurance Company files the claim for you, the Auto Insurance Company is forced to pay back the full amount of the claim.

This is just one of many loopholes that could save you money on insurance. It definitely pays to be well informed.